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Local Supply And Demand Trends In Real Estate

by Joe Manausa, MBA on May 3, 2011 · 1 comment

  

The housing market appears to be slowing fairly consistently in both new supply and new sales, according to my latest gathering of data from the MLS in Tallahassee. I know that most readers here are NOT in Tallahassee, but I can tell you that for my 20+ years in the real estate brokerage business, the Tallahassee housing market has been a good microcosm of the national market.

One report that I update and a weekly basis measures the 30 day trend of homes coming onto the market as well as the 30 day trend of homes leaving the market. Homes that leave the market include sales and canceled/expired/withdrawn listings. By studying the difference between the two, you can tell if the current trend is rising or falling supply levels.

Real Estate Supply And Demand Graph Tallahassee

A few observations that I gain from the graph: Both supply and demand are falling at the same rate. I suspect this is a sign of home sellers who are not serious are less inclined to “test the market” right now and must be holding back until the market strengthens. The red and green trend lines move from left to right, falling at the same rate (over 30% since 2008).

Another observation is the yellow “bumps” in supply change that occur each year in the spring. Notice how only once per year the supply seems to grow, and usually from late February through May. This year, the supply didn’t start to rise until March, and ended during the month of April.

By keeping a close eye on the changes in supply and demand in your local market, you can be the first to know when a cycle change is imminent. This is very handy information for real estate investors who are always looking for a “leg up” on the competition.

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{ 1 comment… read it below or add one }

MH May 9, 2011 at 10:08 am

Interesting stuff – and I think you’re right about supply and demand falling together.

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