Keys to a Healthy Tallahassee Home Value Recovery1. Low unemployment. The Great Recession produced high and prolonged unemployment, which only recently dropped to 6.7%. Normal unemployment is between 5 and 6% according to most economists. The Tallahassee unemployment rate is about 6% - a little high by normal standards, but definitely on the way down. This is good news for a Tallahassee home value recovery. A good job market is critical for people to buy homes in Tallahassee.
Tallahassee home value recovery should continue in 2014
2. Low Mortgage Delinquencies. Mortgage delinquencies have been falling steadily for the past year, but they still remain high. The historical average for delinquencies is less than 2%. Nationwide, we are at about 5.8% and it will probably take another 2-3 years to get below 2% again. In Tallahassee, serious delinquencies longer than 90 days are running about 3%. Delinquencies and foreclosures will continue to drag on Tallahassee home values.
3. Home prices consistent with income levels. During the housing boom, Tallahassee home prices rose far faster than income levels. This is was not sustainable. Now that prices have come down 20% or more in most areas, we have more consistent income to price ratios. Income in Tallahassee has been growing between 1 and 2% for the past 3 years. Since home value appreciation is tied to income, we should expect to see a comparable rise in Tallahassee home values of 1 to 2%.
4. Higher home sales. During the housing bust, home sales dropped to levels not seen since the 1940s. We have picked up considerably since 2011. Tallahassee home sales were up about 12% annually in 2013, but still below historical norms. Home sales are forecast to grow in 2014, and that will be good news for rising Tallahassee home values.