Many economists argue that the Great Recession was made great by the widespread failure of mortgage products that were used to fuel the run up of home prices that ended in late 2006.
Two scholars at New York University, Ingrid Ellen and Samuel Dastrup, write that the “Great Recession, like previous recessions, has obviously brought about a sharp increase in unemployment, but one of its truly distinctive features is the severe housing crisis layered on top of all the labor market problems.”
These findings indicate that a true recovery from the Great Recession will not occur until the downward movement in residential real estate trends begin to change.
In an exclusive analysis, Tallahassee Reports has developed two charts using data publicly available from the Tallahassee Board of Realtors to provide information on residential real estate trends in Leon County since 2007.
The first chart graphs the number of detached single family home sales each year from 2007 through 2013. Sales for 2013 are annualized.
The chart shows that the sales activity declined from 1,960 sales in 2007 to just under 1,499 sales in 2009. After a minor increase in transactions in 2010, the number of homes sales in Leon County increased by approximately 200 sales over the next two years.
The numbers for 2013 indicate that the residential real estate sector is picking up momentum. Annualize transactions show that the market is on a pace to close over 400 single-family home sales in 2013. That would double last years increase.
Mark Trafton, the President of Armor Realty, told Tallahassee Reports that the “bottom line is that our market is finally on the rebound….we’ve been kind of bouncing along the bottom for several years now.”
The second chart provides information about the sale prices of single-family residential homes in Leon County.
The graph of average sales prices from 2007 to 2013, show a steady and dramatic decline residential home values from $248,000 in 2007 to $200,900 in 2011. This trend has only begun to significantly reverse itself in 2013 and is a good sign for the economy.
Economists argue that rebounding home values not only help the real estate sector but increase consumer spending by providing a since of security for those homeowners who had lost equity during the downturn.
Penny Herman, owner of Penny Herman Reality, said “that overall we have had an upward trend in the real estate market. In fact, there is a shortage of listings in specific segments of the market which has driven up prices.’” She added, “for the first time in awhile we are seeing multiple bids, homes selling in one day and new construction is picking up.”
The graph shows that it will take another year or two of increases in home prices for a trend to develop, but the latest information does indicate the residential real estate market in Leon County is headed in a positive direction.