Tallahassee, FL Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Tue, Aug 31 2021

Jump To Another Year In The Tallahassee Real Estate Market:

The Tallahassee real estate market in Florida experienced every end of the spectrum in as little as one year. Heading into 2020, real estate in Tallahassee was firing on all cylinders. However, the pandemic quickly dispelled all of the momentum local real estate had managed to generate in previous years. Once the Coronavirus was officially declared a pandemic, nobody wanted to buy or sell real estate, which took a toll on the market. However, now that we are well into 2021, real estate has made an impressive comeback on the heels of historically low interest rates. To spur activity, the Fed lowered rates well below three percent, and buyers listened. As a result, demand increased dramatically over the course of the pandemic, and competition quickly shaped the way real estate in Tallahassee would unfold.

Tallahassee Real Estate Market 2021 Overview

  • Median Home Value: $227,806

  • Median List Price: $250,988 (+8.3% year over year)

  • 1-Year Appreciation Rate: +16.0%

  • Median Home Value (1-Year Forecast): +10.3%

  • Weeks Of Supply: 11.6 (-2.3 year over year)

  • New Listings: 144 (+3.6% year over year)

  • Pending Sales: 105 (+12.9% year over year)

  • Homes Sold: 140 (+1.4% year over year)

  • Median Days On Market: 43.6 (-13.6 year over year)

  • Median Rent: $1,436

  • Price-To-Rent Ratio: 13.21

  • Unemployment Rate: 5.4% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 194,500 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $45,734 (latest estimate by the U.S. Census Bureau)

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Tallahassee real estate investing

2021 Tallahassee Real Estate Investing

Tallahassee real estate investing trends were largely the result of the current pandemic. When the Coronavirus initially caused a nationwide shutdown, local real estate suffered. Fear and uncertainty kept buyers and sellers on the sidelines. However, the initial reaction to COVID-19 set in motion a series of events that would change the way the Tallahassee real estate investing community would operate.

Most notably, the Fed dropped interest rates to their lowest point ever to attract buyers, and the plan worked. With rates lower than they had ever been, buyers came out in droves. However, it is worth noting that the local supply of houses wasn’t ready for such an influx of activity. A few short weeks after rates were dropped, homeowners increased prices to meet demand. Prices increased almost instantaneously, and the first three quarters of 2021 have seen the median home value in Tallahassee appreciate by as much as 9.5%. While a modest 9.5% increase may not seem like much on the surface, homes have increased 16.0% in the last year and a lot more in the last decade. All things considered, real estate in Tallahassee was becoming relatively expensive, which forced investors to look at different exit strategies.

Many Tallahassee real estate investors turned to rental properties with homes more expensive than ever and interest rates under three percent. The move helped investors pivot away from shrinking profit margins on rehabs and flips and towards more viable investing methods. In particular, rental properties awarded investors more attractive ways to make money. In addition, the recently introduced borrowing costs both justified higher acquisition prices and increased monthly cash flow. At the very least, lower rates meant investors could pocket more of the rent they collected.

If that wasn’t already enough, Tallahassee’s 13.21 price-to-rent ratio suggests it is more affordable to buy than rent. Typically, a 13.21 ratio would work against landlords, as more people would be looking to buy. However, much like everywhere else, Tallahassee lacked inventory. With a mere 11.6 weeks of supply, listings are far from capable of keeping up with demand. Even people who are ready to buy will be forced to continue renting. Real estate investors in Tallahassee are, therefore, less likely to experience vacancies. That’s not to say vacancies are impossible, but rather that a lack of listings has mitigated their risk.

To be clear, the Tallahassee real estate investing community is fortunate enough to have many exit strategies at its disposal. Still, none appear more attractive than long-term rental properties at the moment. Demand, combined with lower borrowing costs and high home prices, will drive renters to landlords for the foreseeable future.

2021 Foreclosure Statistics In Tallahassee

According to ATTOM Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, a total of 65,082 U.S. properties received a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first six months of the year. “That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago,” according to the report.

There’s no doubt about it: foreclosures have decreased for the better part of two years. That said, the numbers can be deceiving; they are only down because of government intervention. In response to the pandemic, government assistance and forbearance programs prevented banks from foreclosing on distressed homeowners. It is worth noting, however, that those programs are already starting to expire. It is only a matter of time until the safety nets are taken away everywhere. Once the protection is gone, it’s safe to say foreclosures will increase.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

Foreclosures will rise, and the Tallahassee real estate market isn’t expected to be an exception. For starters, Florida had one of the highest foreclosure rates in the first half of this year. According to ATTOM Data Solutions, “States with the highest foreclosure rates in the first half of 2021 were Delaware (0.10 percent of housing units with a foreclosure filing); Illinois (0.09 percent); Florida (0.08 percent); Ohio (0.08 percent); and Indiana (0.08 percent).”

As the seventh-largest city in Florida, Tallahassee is partially responsible for the latest increase. Additionally, the city’s unemployment rate still has some ground to make up to get back to pre-pandemic levels. Therefore, it’s safe to assume foreclosures will increase sooner rather than later. As a result, the Tallahassee real estate investing community will want to start lining up financing as soon as possible. Those who are well-positioned may be able to simultaneously help the influx of distressed homeowners and secure deals.

2021 Median Home Prices In Tallahassee

Tallahassee real estate news appears to be positive on the home value front, which begs an important question: Is now a good time to buy Tallahassee real estate? Better yet, is Tallahassee real estate a good investment? Median home prices in the Tallahassee real estate market have increased for the better part of nine years. Since May 2012, in fact, home values have increased approximately more than fifty percent. After years of historical appreciation, today’s median home value is now somewhere in the neighborhood of $227,806. Median home values across the United States, on the other hand, increased more than seventy percent over the same period of time and now rest at $298,993.

Here’s a list of the Tallahassee neighborhoods that have appreciated the most in the last 20 years (according to NeighborhoodScout):

  • W Tharpe St / San Luis Rd

  • Lake Bradford Rd / Jackson Bluff Rd

  • Apalachee Pky / Chaires Cross Rd

  • Flagler College-Tallahassee / W Pensacola St

  • Florida State U / W Tennessee St

  • Centerville Rd / Mclaughlin Dr

  • Iamonia

  • Mahan Dr / Capital Cir NE

  • Old Saint Augustine Rd / Williams Rd

  • Oak Knoll Estates / Bridle Path Acres

Homes in Tallahassee have been on the rise for the better part of a decade, but the last year saw more growth than usual. In response to the increase in demand and a lack of available housing, the median home value in Tallahassee has increased 16.0% in as little as a year. What’s more, home prices should continue to increase as long as supply remains insufficient. Since many builders were sidelined over the course of 2020 and well into 2021, new builds are still a ways away. Therefore, prices are expected to rise for the foreseeable future, or at least until new listings are brought to market.

Tallahassee Real Estate Market: 2020 Summary

  • Median Home Value: $191,568

  • 1-Year Appreciation Rate: +2.1%

  • Median Home Value (1-Year Forecast): +2.3%

  • Median Rent Price: $1,195

  • Price-To-Rent Ratio: 13.35

  • Average Days On Market: 69

  • Percent With Negative Equity: 11.1%

  • Unemployment Rate: 2.9% (latest estimate by the Bureau Of Labor Statistics)

  • 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%)

Tallahassee Real Estate Investing 2020

Tallahassee real estate market trends took a dramatic turn once the Coronavirus was officially declared a pandemic. Heading into 2020, real estate was riding a wave of nearly a decade’s worth of growth. However, the introduction of COVID-19 became the first real threat to real estate in Tallahassee since the previous recession. Nearly all of the market’s real estate activity came to a stop in a matter of weeks. Buyers didn’t bother shopping, sellers pulled their listings from the market, and mortgage underwriters were prevented from working due to government-mandated “stay-at-home” orders.

The pullback in the Tallahassee real estate market lasted all of a few weeks. It didn’t take long for the Fed to spur activity by lowering interest rates. At the end of the first quarter, the average commitment rate on a 30-year fixed-rate mortgage was well below three percent. Rates were so low, in fact, that buyers came out in droves to compete over the little inventory that was still on the market. Before long, increased competition enabled homeowners to increase listing prices in proportion with demand. The resulting increases caused homes to appreciate at an alarming pace. Over the last three quarters of 2020, the median home value in Tallahassee increased 6.1%. For some perspective, the median home value in the United States increased 6.3%. Therein lies the real catalyst behind Tallahassee real estate market trends: increasing prices.

Prices increased so much over the course of 2020 that real estate investors in Tallahassee were forced to reevaluate their exit strategies. Instead of prioritizing rehabs, which reflected less than attractive profit margins, investors took advantage of low borrowing costs to secure rental properties. As a result, lower interest rates simultaneously justified higher acquisition costs and increased monthly cash flow from rentals places in operation. At the very least, lower monthly mortgage obligations meant rental property owners could pocket more cash with each rental payment.

Tallahassee Real Estate Market: 2016 Summary

  • Median Home Price: $187,300

  • 1-Year Appreciation Rate: 3.8%

  • 3-Year Appreciation Rate: 13.5%

  • Unemployment Rate: 5.1%

  • 1-Year Job Growth Rate: 2.0%

  • Population: 186,411

  • Median Household Income: $68,214

Tallahassee Real Estate Investing 2016

The Tallahassee real estate market made small but important improvements in 2016. For the most part, Tallahassee real estate news spoke in favor of the local market. Home prices increased relative to previous years, as appreciation rates maintained pace with the rest of the country. At the time, increases extended the trend of positive growth since the recession, benefiting homeowners and investors alike.

The local economy, home affordability, and new housing construction worked in favor of real estate in Tallahassee. Upgrades in unemployment, including job growth (which has fared better than the national average), produced favorable results for the Florida city. In addition, home affordability, which (at the time) was among the lowest in the country, helped residents spark a great deal of activity in the area.

The median home price was $187,300 in 2016, compared to the national average of $239,167. While lower than the rest of the country, home prices were up over the previous year. The second quarter produced one-year and three-year appreciation rates of 3.0% and 13.5%, whereas the national average achieved 4.9% and 17.8%, respectively.

Homeowners paid 10.6% of their income to mortgage payments, versus the national average, which paid 15.8%. While historically strong, the local market experienced further improvements over the first quarter of the year. Conversely, new housing construction—or a lack thereof—played a large role in home prices. Construction reached 8.0% during the second quarter, with single-family housing permits settling at 7.8%, compared to the national average of 10.6%. All in all, the market saw new construction builds move things forward.

Tallahassee Real Estate Market: 2015 Summary

  • Current Median Home Price: $170,500

  • 1-Year Appreciation Rate: 6.6%

  • Unemployment Rate: 5.1%

  • 1-Year Job Growth Rate: 3.5%

  • Population: 186,411

  • Median Household Income: $44,420

Tallahassee Real Estate Investing 2015

Tallahassee, Florida, was one of the hardest-hit areas after the real estate market collapsed. Foreclosures were double (and in some years triple) the national average. While foreclosure rates in 2015 were higher than the national average, they saw a severe decline over the previous three years. As a result, home prices and equity appreciation rose (along with attention). New construction increased, and unemployment improved overall. The Tallahassee housing market was improving every month at the time.

The median home price was $170,500 in 2015, representing a 6.6% increase over the previous twelve months. Nationally, prices grew at a 6.7% clip, just slightly higher than the city of Tallahassee. Perhaps even more impressively, local real estate appreciated by as much as 24.1% in the three years leading up to 2015. The gains in equity, at the time, were incredibly attractive to real estate investors.

Tallahassee real estate, like most of Florida, has made great strides since 2015. Foreclosures remained a concern, but they seemed to be on the mend. Of course, years later, local real estate still exhibited a high propensity for foreclosure.

Tallahassee County Map:

Map of Tallahassee neighborhoods

Tallahassee Real Estate Market Summary

The Tallahassee real estate market has suffered the same fate as the rest of the country; that is, it wasn’t prepared for what the pandemic had in store for the national housing market. When the pandemic threatened to put an end to nearly a decade’s worth of progression, the Fed stepped in and lowered interest rates. Lower borrowing costs spurred activity, but perhaps more than the market was ready for. It became painfully apparent that supply couldn’t keep up with demand, and prices increased as a result. The rapid rate of appreciation influenced the direction of real estate in Tallahassee, and real estate investors were no exception. To thrive, investors were forced to adopt long-term strategies, which appear to be paying off very well.

Have you thought about investing in the Tallahassee real estate market? Does Tallahassee real estate investing interest you in the slightest? 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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