The Tallahassee real estate market in Florida was hit harder than most markets across the country. Despite drastic improvements to the economy, however, there is still plenty of ground that needs to be made up. As a result, a larger percentage of homeowners in Tallahassee have found themselves owing more than their homes are actually worth. That said, real estate in Tallahassee is nothing less than a commodity for today’s budget-conscious investors. Both traditional sales and distressed properties appear to offer investors a lot of potential. There’s no doubt about it: the market is improving, and should continue to do so for the foreseeable future.
Population: 193,551 (latest estimate by the U.S. Census Bureau)
Median Household Income: $42,418 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 12.04%
Foreclosure Rate: 1 in every 2095 (4.7%)
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Median Home Price In Tallahassee
Median home prices in the Tallahassee real estate market have increased for the better part of seven years. Since October 2012, in fact, home values have increased approximately 34.6% in the city of Tallahassee. After years of historic appreciation, today’s median home value is now somewhere in the neighborhood of $183,100. Median home values across the United States, on the other hand, increased 51.9% over the same period of time (October 2012 to October 2019), and now rest at $231,000.
While the latest bout of appreciation in the Tallahassee housing market hasn’t been able to match the pace of the United States real estate market, its latest ascent may be attributed to the same primary factors elevating housing prices across the country: a stronger economy, more optimism in the housing sector, and a lack of available inventory. The residents of Tallahassee have seen their local economy improve year-over-year, increasing the number of people looking to actively participate in the housing market. More people can afford to buy in Tallahassee than in years past, which has improved market sentiment. It is worth noting, however, that there simply isn’t enough available housing to satiate today’s demand. Not nearly enough homeowners are putting their assets up for sale, leading to increased competition and prices.
The lack of available housing in Tallahassee has been acknowledged, but the solutions will take some time before they are implemented. Until more real estate is listed for sale, prices will continue to increase, to the tune of about 2.2% over the next 12 months.
Despite returning to pre-recession levels, median home values in Tallahassee have managed to remain relatively affordable. With a price-to-rent ratio of about 13.26, it is actually more affordable to buy real estate in Tallahassee than to rent, which should play out well for local real estate investors.
Tallahassee Foreclosure Statistics
According to RealtyTrac, a nationally recognized real estate information company that specializes in distressed properties, Tallahassee has a relatively high distribution of distressed properties. With approximately one out of every 2,095 homes in some stage of distress (default, auction or bank owned), Tallahassee boasts a foreclosure rate of 4.7%, which remains higher than the 3.9% bar set by the rest of the country, and lower than the 4.9% set by the state as a whole.
While most of the county has seen a decrease in foreclosure activity, recent data presented by RealtyTrac suggests Tallahassee foreclosure trends contradict the national trajectory. “In September, the number of properties that received a foreclosure filing in Tallahassee, FL was 2% higher than the previous month and 15% higher than the same time last year,” according to RealtyTrac. As a result, there are now about 545 properties in Tallahassee, FL that are in some stage of foreclosure. Of those distressed assets, the majority can be found in the following neighborhoods:
32310: 1 in every 989 homes is currently distressed
32305: 1 in every 1,154 homes is currently distressed
32303: 1 in every 1,552 homes is currently distressed
32309: 1 in every 1,834 homes is currently distressed
32301: 1 in every 2,157 homes is currently distressed
Tallahassee Real Estate Investing
Tallahassee real estate investors, much like every investor across the county, tend to favor distressed assets. Placing an emphasis on distressed homes increases their odds of locating deals with potentially larger profit margins. That said, there’s one type of distressed property Tallahassee real estate investors should pay special considerations to: auction homes. Representing 39.3% of Tallahassee’s distressed property market, auction homes are the largest distribution of foreclosed homes in the city.
As their names suggest, auction homes are assets that were seized from homeowners who were unable to keep up with mortgage obligations, only to be placed up for auction in an attempt to recoup losses for the loan originator. Auctions award savvy Tallahassee investors with the opportunity to secure deals with good profit margins. Therefore, today’s investors should visit local auctions to tip the scales in their favor. Pulling from the largest pool of distressed assets should increase their odds of landing a good deal.
In addition to auctions, Tallahassee real estate investors should pay special consideration to pre-foreclosures, which make up 37.7% of the distressed property market. While not technically in foreclosure, pre-foreclosures are merely at risk of foreclosure. Nonetheless, these assets may be owned by motivated sellers who are better off selling sooner rather than later. Therein lies the greatest benefit of targeting pre-foreclosures: oftentimes homeowners are willing to part ways with their properties at a discount in order to sell within a quicker period of time. To find pre-foreclosures, local real estate investors need to list their local courthouse, where all the information is made public.
Of course, knowing where to find real estate deals in Tallahassee is only part of the equation. Once investors secure deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Tallahassee real estate investors?
Investors should be able to incorporate all three of today’s most popular exit strategies into their business models: wholesaling, rehabbing and long-term rentals. However, real estate in Tallahassee appears to lean in favor of wholesaling and rehabbing. While passive income rental properties are more than a viable option, the city’s price-to-rent ratio encourages homeownership. Not only can more buyers participate in the market today, but they would rather buy than rent, which drives up demand for investors with inventory of their own.
Tallahassee Real Estate Market Summary
The Tallahassee real estate market has been hit harder by foreclosures than most cities across the country. It is worth noting however, that while many would view the high distribution of forecloses as an “Achilles heel” for any market, Tallahassee real estate investors have used it to their advantage. The number of foreclosures currently present in Tallahassee suggests there’s ample opportunity to secure a deal below market value. On top of that, demand remains present in the face of rising home values. Investors who take action now may find themselves with a lot of opportunities on both the buying and selling ends of each transaction.
Have you thought about investing in the Tallahassee real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Tallahassee in the comments below.
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