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Tallahassee Homes Overvalued

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Tallahassee Homes Overvalued

Tallahassee's homes are 22% overvalued according to a CNN Money report. But the probelm isn't just Tallahassee... its a Florida problem. The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost -- $180,956 -- according to the analysis.

National City arrives at its estimates of what the typical house in these markets should cost by examining the town's population densities, local interest rates, and income levels. It also factors in historical premiums and discounts for each area.

The Sunshine State had 15 different markets on the list of extremely overpriced metro areas and all 15 had grown more overpriced during the quarter.

Naples, FL ............................+84%

Port St. Lucie, FL ..................+72%

West Palm Beach, FL ............+57%

Sarasota, FL ........................+56%

Miami, FL .............................+55%

Vero Beach, FL ....................+54%

Fort Lauderdale, FL ..............+53%

Cape Coral, FL ....................+52%

Palm Bay, FL ......................+49%

Panama City, FL .................+46%

Deltona, FL ........................+44%

Fort Walton Beach, FL .........+43%

Ocala, FL ...........................+35%

Tampa, FL .........................+34%

Pensacola, FL ....................+33%

Orlando, FL .......................+33%

Jacksonville, FL .................+31%

Lakeland, FL .....................+23%

Gainesville, FL ..................+23%

Tallahassee, FL .................+22%

So as you can see Capital City, you're homes are the least overpriced of all Florida cities studied, but 22% overpriced non-the-less.

Here's the story

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I expected Jacksonville, Tampa, Orlando & Miami to be on there but Tallahassee comes as a surprise to me. I think part of the reason for the overvalue is there's a profit involved. Panama City is at 46%, which is a big surprise because it's not all that big, mainly beaches.

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The Overvaluation is based on the income and the ability of the people to purchase the homes in the given area. I appears the empty nester areas have the highest over-valuation because most of those residents collect retirement incomes, although they may have substantial savings in the bank.

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But at the same time, most empty nesters' retirement income stems from Social Security, and they only get $500 a month so unless they are still working, making 6-figures, or retired and rich then I don't see how they could buy homes above $100K.

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Tallahassee home prices are definitely higher than I expected but I think a decent value compared to the rest of Florida.

A problem arises when the prices of homes outpaces the incomes of prospective and current homeowners. Florida is facing a huge problem of not bringing in new jobs that pay well. You see a lot of reports that Florida added a couple thousand new jobs, but they are mostly low paying jobs in the service industry. Combine low paying jobs with a hot housing market and you get the results of Florida having a lot of cities where housing is not affordable for most people.

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But at the same time, most empty nesters' retirement income stems from Social Security, and they only get $500 a month so unless they are still working, making 6-figures, or retired and rich then I don't see how they could buy homes above $100K.

Well, 500$ I think is a gross underestimate. With workers retirement funds, SS, pensions, etc, they should be bringing in much more than $500/month. And retirees definetely can afford more than a 100k home, we can attribute much of the housing boom in Florida (more specifically central and south, but beginning to move to north) to retirees making permanent residences here.

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That's the biggest issue I had about those reports of job creation, they were mainly low-paying ones. All these educated college grads here and we can't bring jobs that match their skill level, smh.

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You see a lot of reports that Florida added a couple thousand new jobs, but they are mostly low paying jobs in the service industry.

You hit the nail on the head. That is part of the statistic that the government will not say. Because regardless, they created thousands of new jobs.

The housing market is starting to slow though in Florida...prices wont decrease, in my opinion, but only level off until salaries can catch up.

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This report listed no housing markets in Florida that were not "overpriced." This kind of journalism is about creating anxiety and controversy, not providing a sound analysis of the factors that contribute to differentials in housing costs across geographic areas. While there is no disputing that Florida has some truly overheated real estate markets, Florida is also a state where a greater and greater percentage of the owners / residents of the most expensive properties are living on the returns of their accumulated wealth. This would naturally result in a picture of many local economies that skews to lower-income service jobs, as the workforce is there to provide for the needs (restaurants, shopping, attractions) of the wealthy investor-class. On the surface (and this is a very superficial CNN report) it would appear that there is not the money to support all of the pricey homes. But we know that this is not true because Floridians are buying these homes and paying for them on time every month and contributing to a surplus of state tax revenues.

I have not seen any reporting that suggests that Florida's overheated real estate market is going to drive people away from the state. Wheere will they go? The other prestige markets (New York, California) are equally inflated. People will continue to move to Florida and housing options for each economic class of new resident will be there - renting, moderately-priced suburban homes, low-cost homes in unincorporated areas. If this were not the case, we would not see a steady influx of 800-1000 new residents per day.

As for us on this forum, I think that being the 'least-overvalued' metro area in the state is a very good sign. This ranking should fix Tallahassee as the most cost effective place to live IN FLORIDA. People are not going to leave sunny Florida for Montgomery or Wichita or Lubbock no matter what the savings in housing costs. Just as most people do not migrate out of New York or California or Washington, once you are living in a desirable market, you and the market find ways for you to stay there. Businesses and individuals, once settled in a state are far more likely to move within that state than to leave, expecially when the tax burden of living in another state is virtually guaranteed to be far greater. I suspect that this report will make Tallahassee out to be a more desirable destination for people and companies considering a move to Florida. Even at 22% "overpriced."

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The leveling of prices is what I see happening right now. I'm glad our market didn't get too carried away with the rising cost of housing because the report said the 66 hyper-inflated markets will be subject to price corrections, we weren't one of those.

I am curious about this: In recent years many homes have been built in the Tallahassee, some of very high quality. In touring homes in last years Parade I noticed the interiors are far more luxurious than you'd think looking at the outside, furthermore, the homes (some of them) are much larger. What do you all make of the quality of the newer homes? Do you think the quality is worth the extra money?

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The leveling of prices is what I see happening right now. I'm glad our market didn't get too carried away with the rising cost of housing because the report said the 66 hyper-inflated markets will be subject to price corrections, we weren't one of those.

I am curious about this: In recent years many homes have been built in the Tallahassee, some of very high quality. In touring homes in last years Parade I noticed the interiors are far more luxurious than you'd think looking at the outside, furthermore, the homes (some of them) are much larger. What do you all make of the quality of the newer homes? Do you think the quality is worth the extra money?

I cant wait till the climb "officially" slows in Central FL. Although like I said, it i showing signs of doing so.

Quality/luxury is always worth the extra money, IMO. I think people will be willing to pay more for quality, especially in homes, because that is where the spend a majority of their time. People will not want to squeeze money on important investments such as that.

Like P. McClane said, and I hinted at, the price of the market has obvioulsy not slowed down consumers willingness to purchase. If people really want to live in Florida, they will do so at any costs.

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As for us on this forum, I think that being the 'least-overvalued' metro area in the state is a very good sign. This ranking should fix Tallahassee as the most cost effective place to live IN FLORIDA. People are not going to leave sunny Florida for Montgomery or Wichita or Lubbock no matter what the savings in housing costs. Just as most people do not migrate out of New York or California or Washington, once you are living in a desirable market, you and the market find ways for you to stay there. Businesses and individuals, once settled in a state are far more likely to move within that state than to leave, expecially when the tax burden of living in another state is virtually guaranteed to be far greater. I suspect that this report will make Tallahassee out to be a more desirable destination for people and companies considering a move to Florida. Even at 22% "overpriced."

Well said P. McLane! Wow... you put so much thought into what you say and I value that. I love when I learn things on here... I learned alot from you in reading your last post and I agree with all you had to say.

I also feel its a strong sign that our market is the least overpriced in FLA. Hopefully we'll continue to work on ways to create work for our under-employed population. I think we should really begin to use our local talent to reverse the trends of American companies moving R&D, and production facilities overseas to save money. I think with a little creativity we can develop a way to produce the same services much cheaper than in times past, or atleast create products, such as Turbocor's compressors that pay for themselves and save energy and resources for people.

I see FSU has recently lured the Semiconductivity Lab from Madison, WI, and who knows... their work may help us develop a more efficent method for transfering electricity thus saving us resources, and in the process creating jobs and reducing our dependency on oils.

Just a thought.

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I am curious about this: In recent years many homes have been built in the Tallahassee, some of very high quality. In touring homes in last years Parade I noticed the interiors are far more luxurious than you'd think looking at the outside, furthermore, the homes (some of them) are much larger. What do you all make of the quality of the newer homes? Do you think the quality is worth the extra money?

I think it would help if we established the price point at which a single family home in Tallahassee becomes instant 'luxury.' 300K?

You can buy a three-bedroom, two-bath home in Tallahassee for 150K, but it will likely be older and in need of repairs and upgrades amounting to 40 or 50k. With a 50K upgrade, most any small home can become 'luxury' - new roof, new floors, new paint, countertops, fixtures, ceiling fans, patio. But then there is the issue of LOCATION that truly defines the class of a home. A very small home (1000 sf.) with primo upgrades in Lafayette Park will be called 'luxury.' A larger home (2200 sf.) in the northwest with solid but uninspired interiors would probably not make rank. Both cost 250K.

As for new homes, I wonder about the developments out Thomasville Road - Hermitage, Preakness. These are collossal brick edifices and there is no doubt that they are luxurious inside and out. But the price tags are staggering 500-600K. And maintenance would be prohibitively expensive for anyone who can just scrape the mortgage. I am of the school that says buy modest in the right area and upgrade, upgrade - even gradually. In the end, you should always be able to afford your investment, which makes day-to-day living feel a lot more luxurious.

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As for new homes, I wonder about the developments out Thomasville Road - Hermitage, Preakness. These are collossal brick edifices and there is no doubt that they are luxurious inside and out. But the price tags are staggering 500-600K. And maintenance would be prohibitively expensive for anyone who can just scrape the mortgage. I am of the school that says buy modest in the right area and upgrade, upgrade - even gradually. In the end, you should always be able to afford your investment, which makes day-to-day living feel a lot more luxurious.

I'm with you. I was raised by a woman ( my mother ) who believed in nothing other than buying an older home that "nobody wanted" and fixing it up. We sure did move into several ugly homes when I was a boy, but we always moved out of a beauty.

I actually think fixing up a home creates a better bond between home and owner than one that is already "nice" when you move into it.

To add to this... nothing creates more value in a home, than good landscaping.

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To add to this... nothing creates more value in a home, than good landscaping.

I completely agree...it can be one of the biggest boosts in resale value.

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I've seen some of the most attractive homes built only to have one of the worst yards I've ever seen... it should be a crime to have an ugly yard.

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I've seen some of the most attractive homes built only to have one of the worst yards I've ever seen... it should be a crime to have an ugly yard.

Of course it is always great for the seller to have a beautifully landscaped yard to stroll the buyer through. BUT, with great landscaping come liabilities of money and time. A house with great floors, nice bathrooms, and a new kitchen, but a sorry yard will sell - the buyer can then invest as much or as little in the yard as is affordable and interesting. They are not all gardeners.

A home with a fantastic garden but with dated appliances, vinyl and old carpet, and a bathroom color scheme from 1970 will not sell so fast. Most people know this: three weeks after moving in the garden will be overgrown or dying and the kitchen, bathrooms, and floors will still be old.

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Ahh P... why'd you have to take all of the air out of my ballon like that!? Point well taken.

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Here is my take on the real estate market...

Supply and demand has created a huge disparity in the housing market from state to state. There is also a huge disparity across the state of Florida. IMO real estate in Tallahassee is very affordable compared to central and south Florida. It is also very affordable compared to the top markets in the country.

Comparing apples to apples Tallahassee prices are about 1/2 of their south/central Florida equivalents. I think this is making Tallahassee inviting to a larger audience, especially retirees and entrepreneurs who have the luxury to pick and choose where they wish to live. We decided to cash out of our central Florida home after the price doubled in 3 years. We choose Tallahassee because home prices are relatively reasonable. I think many more may do the same in the next few years. Our neighbors building a couple doors down are moving here for the same reason from a different part of Florida.

If this trend continues and Tallahassee remains on the more affordable side, we could see a big population boom because of it. Most people assume that jobs are the main driving force in the house market but Florida is far more complicated. Retirees, the second home market, as well as companies and individuals looking for an income tax-free state have an enormous influence. Studies such as the one that prompted this thread do not take these complicated factors into account.

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That's some very solid reasoning from celebrated. Thanks for elevating the discourse on what I am reading as one of the most important factors to influence the growth of metro Tallahassee.

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I second that! Celebrated doesn't often say anything and when he does its always well said. I can follow his reasoning very easily and I hope he's right. A report from the news last year showed over 10,000 people had moved to Tallahassee in 1 years time, if true, that would be the biggest net gain our city has seen over the course of a year in quite a while. People questioned this report because we didn't have the jobs to support the increase in population, but as you've both pointed out, Florida is a special market with the ability to grow without the jobs. I hope whatever we are doing to attract people to us, we continue to do.

When I worked in the city manager's office, I used to always tell the bosses how fond I was of the fountains, neat landscaping, and awesome bridges I'd see driving through some more "luxurious" areas of Florida like Boca Raton, areas near Palm Bay, St. Augustine and such. I had always felt as a state capital, we lacked the type of flair that would attract someone looking to find Florida's most beautiful city.

I now have more appreciation for Tallahassee's natural beauty, but do you all think all of the "cosmetics" done to the public landscapes of these fast growing communities play a role in the rate in which people are attracted to them?

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Yes, but there has to be solid reasoning behind all the cosmetics done to public landscapes. Otherwise, if you do cosmetics just for the heck of it, then you are wasting your time and money.

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For what better reason than to make your community its most beautiful.

If planting palms and installing fountains are working to lure residents to communities south of us, surely it could work for us, right?

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If planting palms and installing fountains are working to lure residents to communities south of us, surely it could work for us, right?

Yes.

This is one of the most important factors in establishing an urban identity. How does the city look to people seeing it for the first time? I host out-of-town guests very often, and their impression of downtown Tallahassee is always very positive - beautiful flower beds, well-tended public green spaces, nice fountains at the Capitol and Kleman plaza. We are lucky to have such grand and impressive local flora (live oaks with spanish moss, magnolias, azaleas, camelias) and the continuing design of our city center MUST play off of that grandeur.

I am not big on palms, because you can find them most anywhere south of us AND I think that they look best when juxtaposed with water (beachfront or riverside). We are a genteel, southern forest city, with the brick pavements and warm tones that makes a very dignified statement. I hope to avoid any tropical pastelization of our downtown.

Though our histories and urban plans are radically different, I often compare downtown Tallahassee with Savannah, GA, re: the live oak canopy and flower gardens. If I had an audience with the city beautification committee I would recommend more plazas (extending south and west from downtown), more planters, more fountains, more large-scale public sculpture (and not all by Proctor and Nicholson.)

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