A Tale of Two Markets - Don't Be Fooled!

Posted by Ryan Ward on Tuesday, May 2nd, 2017 at 10:32am.

If you watch the news, read Facebook or know a real estate agent, you've probably heard abut how amazing this real estate market is and how much prices have gone up and it's a great time to sell. Did you also know that certain segments of the market are actually far more favorable to buyers than to sellers? Read on to learn what's really going on in the market...

The market really is actually split into two segments. For one segment, it's a sellers market and for the other, well, it's a buyers market. Do you know which is which?

There is a natural break in the real estate around the $500,000 home price mark. In large part this is because conventional financing in Atlanta goes up to $424,100. If you want to buy a $500,000 home and avoid a jumbo loan with higher rates, you need to put down $75,900 plus you need money for closing costs. This generally means that buyers must have a 20% down payment for loans on purchases over $500,000 and that limits the number of buyers and therefore demand and therefore prices.

The difference between the $500,000 and below market is staggeringly different from the $500,000 and up market. I'll show you 3 different markets in Metro Atlanta that point to this difference and if you jump into this market as a consumer, you need to be armed with this information because it could cost or make you 10's of thousands of dollars.

Point to Remember: If there are less than 6 months of inventory of homes, it is a sellers market and above 6 months of inventory it is a buyers market.

North Fulton

In North Fulton, it is a very strong sellers market below $500,000 and a buyers market for homes above $500,000. Let's look at the numbers:

Below $500,000:

  • Active listings - 335 homes
  • Sold listings in the last 3 months - 576 homes
  • Average number of sold homes per month - 192
  • Inventory of available homes - 1.75 months of inventory

What this means: With under 2 months of inventory, this is a very very strong sellers market.

Above $500,000:

  • Active listings - 847 homes
  • Sold listings in the last 3 months - 263 homes
  • Average number of sold homes per month - 87.66
  • Inventory of available homes - 9.66 months of inventory

What this means: With over 9 months of inventory, this is a strong buyers market. Homes are overpriced, there are too many available and buyers have a strong position to purchase homes at a discount.

Cumming

In Cumming, the numbers are not as strong for sellers even under the $500,000 but especially on the west side of Georgia 400 where there is so much new construction being built it's actually very hard to estimate the true amount of inventory.

Below $500,000 West Side:

  • Active listings - 292 listed homes but unlisted new construction and lots ready to build everywhere. This number is probably closer to 400
  • Sold listings in the last 3 months - 256 homes
  • Average number of sold homes per month - 85.3
  • Inventory of available homes - 4.69 months of inventory (conservatively low based on the true number of listings)

What this means: Homes are sitting longer than in North Fulton. 100 of the 292 available listings have had price reductions and are still not under contract. There is an over saturation compared to what you may hear reported by news or many other real estate sources.

Below $500,000 East Side:

  • Active listings - 192 active listings
  • Sold listings in the last 3 months - 187 homes
  • Average number of sold homes per month - 62.3
  • Inventory of available homes - 3.1

What this means: Homes are sitting longer than in North Fulton but without the massive amount of new construction, the east side of Cumming is still a strong sellers market.

Above $500,000 - all of Cumming:

  • Active listings - 279 homes
  • Sold listings in the last 3 months - 91 homes
  • Average number of sold homes per month - 30.3
  • Inventory of available homes - 9.2 months of inventory

What this means: With over 9 months of inventory, this is a strong buyers market. Homes are overpriced, there are too many available and buyers have a strong position to purchase homes at a discount. Numerous price reductions.

East Cobb

East Cobb is similar to the other northern markets in Metro Atlanta but with more contemporary style homes in the under $500,000 market.

Below $500,000:

  • Active listings - 361 homes
  • Sold listings in the last 3 months - 556 homes
  • Average number of sold homes per month - 185.3
  • Inventory of available homes - 1.95 months of inventory

What this means: With under 2 months of inventory, this is a very very strong sellers market. Buyers will need to pay at, near or above list price on the best homes if they want to purchase one.

Above $500,000:

  • Active listings - 373 homes
  • Sold listings in the last 3 months - 129 homes
  • Average number of sold homes per month - 43
  • Inventory of available homes - 8.67 months of inventory

What this means: With almost 9 months of inventory, this is a buyers market. Homes are overpriced, there are too many available and buyers have a strong position to purchase homes at a discount.

Who is in the Best Position in This Market?

Well, this is a great time to sell if you are in the sub $500,000 price point and looking to move up to a bigger home above $500,000. There probably won't be a better time to sell and it's a great time to leverage the market in your favor to get a move-up home where you have the leverage to buy.

Who is in the Weakest Position?

New construction anywhere in North Atlanta because it's all over $500,000 and sellers looking to downsize from resale homes. The available inventory is beginning to push prices lower although there is strong resistance from sellers in the resale market who aren't quite ready to believe this. Homes above $500,000 are sitting longer and to sell, you must compete on price so this is where the reports of a strong market couldn't be farther from the truth.

What Should You Look for as a Consumer?

If you are thinking about buying or selling, make sure you understand these differences. The true real estate market is far more nuanced than any headline you read and far too complicated to get pricing information from sources such as Zillow. If you are getting into this market as a buyer or a seller, ask questions of your agent to make sure they understand these differences and if they don't make sure you find one who understands, can articulate and consult you on how to position yourself for success in this market.

Comments or Questions?

As always, leave a reply below and we will be happy to help you any way we can. Thanks for reading and have a great day!

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About the Author

Ryan Ward is the CEO of Premier Atlanta Real Estate, LLC with Keller Williams Realty Consultants. Ryan began selling real estate in 2004 and began running a small team of agents in 2006. Ryan considers the real estate business to be a fusion of the Professional and Service industries and credits their success to remaining true to these principles. Ryan is also an expert on marketing and internet technologies as well as the local real estate market. Ryan is a member of the Institute for Luxury Home Marketing, Certified Luxury Home Marketing Specialist, Keller Williams Luxury Homes division, Global Property Specialist and a member of the local, state and national Association of Realtors. He has also served on the Associate Leadership Council for Keller Williams.

Contact Ryan directly on his cell phone: 404-630-3187
Premier Atlanta Real Estate

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