Tallahassee, Fla.
The Tallahassee metro area saw the biggest year-over-year drop in median sales price among the 10 markets in fourth-quarter 2010: down 28 percent to $144,000. That drop resulted in a leap in affordability in the market: while 56.8 percent of homes were affordable to households making the median income in fourth-quarter 2009, 84.7 percent were affordable a year later.
Some 38 percent of all real estate sales in the area so far this year have been all-cash purchases, according to Joe Manausa, broker-owner of Century 21 First Realty in Tallahassee.
"Currently, homes are selling below the cost it would take to replace them, and in a market with a growing population like Tallahassee, this will not last forever," Manausa said.
The Tallahassee area's population grew 14.7 percent in the past decade and is projected to grow 13.1 percent in the next 10 years.
"It is a natural 'buy' cycle for buy-and-hold real estate investors, and they currently have little competition due to the weakness in the mortgage markets. Cash buyers are kings right now, and they have the ability to buy homes at a fraction of what they will sell for when the population growth catches up to the oversupply that was created during the boom of the housing market," Manausa said.
"Investors only have something to worry about if they are 'flippers.' We still have a few more years at the bottom of our market, and flippers could well make some mistakes."
Tallahassee-area homes are expected to appreciate 42.8 percent in the next 10 years, with an estimated 182.9 percent ROI, according to SmartZip. As of March 31, Tallahassee had the highest share of active investor loans among the 10 markets: 8 percent, compared with 5.5 percent nationally, according to data from LPS.
As the state's capital, Tallahassee's biggest employer by far is the state of Florida, followed by Florida State University, Leon County Schools and Tallahassee Memorial Healthcare. The area had 7.8 percent unemployment in March and has 33.4 percent projected job growth -- the second-highest expected growth among the 10 markets. (Gainesville, the other Florida market on this list, is expected to see the greatest job gains in the next 10 years.)
That job environment and population growth provide investors with a level of safety not found in many other markets, Manausa said.
"Business cycles come and go, and many areas rely strongly on a singular industry to provide the jobs that attract and retain the population core," he said.
"Tallahassee has a strong mix of state and federal government and three large schools of higher education, and thus is the infrastructure of one the faster-growing states in the U.S."
As with other markets on this list, foreclosures accounted for a significant, but not overwhelming, share of sales in the area. Foreclosures made up 23.7 percent of overall sales in fourth-quarter 2010, a 21.8 percent year-over-year rise in market share. The average foreclosure discount compared to a nondistressed property was 33.8 percent.
RealtyTrac defines a foreclosure sale as the sale of a property that occurs while the property is actively in some stage of foreclosure, including when it has received a default notice, been scheduled for public auction, or been repossessed by the lender.
The term only includes sales to third-party buyers or investors not involved in the foreclosure process and does not include property transfers from the owner in default to the foreclosing bank or lender, RealtyTrac said.
The area also had the second-highest share of loans either delinquent or in the foreclosure process (13.5 percent) among the 10 markets, compared with 12 percent nationally.
In March, the Tallahassee metro area had the highest median age of inventory among the 10 markets, at 142 days. Manausa attributed the relatively long time on market at least partially to oversupply.
"Tallahassee has over 12 months of supply, and our surrounding counties have as much as 30 months of supply of homes. This has an impact on market time when a seller is not realistic about selling price and waits months (or) years to reduce the price to a salable amount," he said.
"Motivated sellers are able to sell their homes in weeks if they are in a price range with liquidity — anything under $400,000."
| Tallahassee, Fla. | Metro | U.S. |
|---|
| Population (2010) | 367,413 | 308,745,538 |
| % ch. population (2000-2010) | 14.7% | 9.7% |
| 10-year projected population growth % | 13.1% | |
| Unemployment rate (March 2011) | 7.8% | 9.2% |
| % pt. chg. in unemployment rate (March 2011 vs. March 2010) | -0.4% | -1% |
| 10-year projected job growth % | 33.4% | |
| Median sales price (Q4 '10) | $144,000 | $175,000 |
| % ch. median sales price (Q4 '10 vs. Q4 '09) | -28% | -2.8% |
| Median list price (March 2011) | $165,000 | $189,900 |
| % ch. median list price (March 2011 vs. March 2010) | -2.4% | -4.8% |
| Projected 10-year appreciation % | 42.8% | |
| % homes affordable at median income (Q4 '10) | 84.7% | 73.9% |
| SmartZip Affordability Index | 130 | |
| Total cost of ownership/rent ratio | 1.09 | |
| Share of foreclosure sales (Q4 2010) | 23.7% | 26.5% |
| % ch. share of foreclosure sales (Q4 2010 vs. Q4 2009) | 21.8% | 4.1% |
| Average foreclosure discount (Q4 2010) | 33.8% | 28.2% |
| % active loans noncurrent (as of March 31, 2011) | 13.5% | 12% |
| % active investor loans (as of March 31, 2011) | 8% | 5.5% |
| SmartZip InvestorScore | 53 | |
| 10-year return on investment (ROI) % | 182.9% | |
| Median age of inventory on Realtor.com in days (March 2011) | 142 | 108 |
| Search ranking on Realtor.com (March 2011) | 115 | |
| Walk Score | 43 | |
Click on the link below for the full report from Inman News
Inman Reports the Top 10 Markets for Real Estate
