I think you will agree with me when I say:
Home prices, on their face, seem to be high for what you can get in some areas of town. Now it looks like the market may be on the verge of agreeing as well...
There was a lot of optimism going into 2016 for the real estate market to continue with higher prices and higher sales volume. Some of that optimism was due to it being an election year and they tend to be good years for real estate and also with the economy not hitting any speed bumps recently it shaped up to look like it was going to be a banner year.
Where are we now?
January of this year started off a little slower than in 2015 with 78 sales in Alpharetta compared to 84 in 2015 or a 7% decline. In 2015, the median price for a home in Alpharetta (the number where half the homes sold for more and half the homes sold for less) was $308,000. In 2016 the median price was $365,000, or, up 19.5%. The price increases fueled optimism. But February sales were also lower by 28% in 2016 than they were in 2015 and while two months don't quite make a trend, we in the industry started to take notice that demand was lower than expected. March sales were also down 17% year over year and then we started to see a trend. Three months in a row sales were down when compared to the same time period a year earlier. You can see by this chart that year to date in 2016 the sales volume lags behind 2015 for the most current statistics.
Alpharetta real estate sales tend to be more stable than some of the surrounding areas in Metro Atlanta because of the strong local economy, good schools, lower crime statistics and demographics so if we are seeing lower trends here, we would likely see them in other areas of Atlanta as well. But there is more going...
Highland Park Entrance
Highland Park is one of the hottest neighborhoods in Johns Creek and has been for quite some time. Home prices in Highland Park hover right around the average price for all homes in Johns Creek, but the location, to the west side of Johns Creek gives homeowners a little easier access to Georgia 400 than many other neighborhoods and that shorter commute.
In 2015, only 6 homes came on the market in Highland Park and they sold very quickly. The average days on market was 24 days and that was brought up by one home that was initially overpriced and then reduced. Once it was priced correctly, it sold in about 20 days also. What this means is that the average days on the market for the neighborhood is really about 18 days! The most recent home to come on the market was only on the market for 3 days.
Map to Highland Park
With a convenient location to GA 400 and homes that sell quickly, if you are looking for a home in Johns Creek, check out the homes for sale in Highland Park or you can use this link to check out all of the homes for sale in Johns Creek.
If there is one thing we are hearing consistently it's that there aren't enough homes on the market - or - that buyers feel like homes are overpriced. You know what? It's the same thing just coming at it from different angles.
Really, it's this: there aren't enough homes to fulfill the needs of the true buyers that are earnestly looking to buy a home. That means sellers can get more for their homes than buyers think they should which makes them APPEAR to be overpriced to buyers who haven't quite accepted the new realities of the market (that's most buyers). It's old news to those of us in the business working with buyers...
First, we tell them that the market has changed, then they find a house they want to buy only to lose it to another buyer because they made a lower offer. It's likely the other buyer lost one too and finally realized they needed to listen to their agent!
Then, we can't find them another house for a month because inventory is so low that most buyers actually have very few homes to choose from.
So, How Do You Win if You Want to Buy in This Market?
Lots of homes are available to buy, but there is a general feeling from buyers in the market that homes are overpriced or they can't find what they want. You need to shift your thinking somewhat so that you are inline with the changing realities of the market if you want to win the best deal on your new home in this market.
Understand this is a Seller's Market
Unquestionably so! There are no more "deals" as defined by what we have seen in the past few years. If you want the new version of a deal, you need to understand what that looks like today.
This is a seller's market which is traditionally defined as any point where the supply of homes is under six months...
We here on the news or overhear from a real estate agent that "prices are up (or down) by some percent this year so it's "a great time to buy" or some other use of the percent change as it relates to some real estate statistic. What does it mean? How is that computed? Does it matter to me what happens to prices nationally when I want to buy a home in Atlanta or some other area?
If you are an agent and you work with clients, you can probably find some article that states these changes for you to quote. However, the real power of using percent change with your clients is when you are able to whip up these statistics in a much more meaningful way. If you are a buyer or seller, you better have an agent who knows how to whip these statistics up for you because it really doesn't matter what is happening overall in Atlanta or even in one of the suburbs like Alpharetta. They need to be able to tell you what is happening to comparable properties. That's where it really matters and those statistics are too in the weeds to find quoted my our professional organizations or even by local media. In any event, here is how you do it and why it is so powerful.
If you are a buyer or agent representing a buyer (works the same for sellers too) and you want to place an offer or list a home and one sold right down the street exactly the same as this one but it sold three months ago, how do you come up with a price for the home? Are prices rising or falling? By how much? Don't worry, it's not that hard to figure out. You just need to remember one simple phrase:
[New (Price) - Old (Price)] Divided by Old(Price) = Change
A little easier: new minus old divided by old
Let's take an example...
In some area, the average price for homes in June of last year was $325,000. This year in June,...
The number of foreclosure sales in Alpharetta in the last 60 days is down 84% from the same time last year. There have only been 6 foreclosure sales in the last 60 days of this year compared with 38 sales during the same period last year This is an amazing statistic if you think about it!
Foreclosures depress home prices because many buyers prefer them and appraisers use them as comparable sales to arrive at valuations for other homes. This is inline with what RealtyTrac reports nationally showing a 29% decline in Q3 of 2013 compared to Q3 of 2012 of foreclosure sales. Of course, foreclosures have always been below the national averages in Alpharetta, but with only 6 selling in the last 60 days, I believe we can make a few observations:
- With this few foreclosure sales, prices will not be pressured downward any longer. We've seen this trend happening for about 1 year and half, but these numbers really put the end to any further speculation.
- For buyers seeking a "deal", they are gone. It's time we now assess this market from the point of view of value again. Of course, you can still get a deal, but it's based on value, not price.
- For sellers, this is great news because buyers no longer have the low priced options they had in previous years so you will see more real buyers and few low ball offers. This should mean prices wil continue to rise (see Alpharetta home prices if you would like to know what your home is worth) provided the economy does not fall out from under us because of what is happening in Washington (I don't see tha happening).
Overall sales don't seem to be trending up from last year, but with supply so low due to fewer foreclosures and the lack of equity for traditional sellers, we remain in a sellers market. The...
As we enter the 4th quarter, it's a good idea to look back at the end of the 3rd quarter for signs of what we can expect for the remainder of the year. For all of the hype about the newly improved real estate market, there are some strong signs we have slowed down considerably. Here are some quick numbers I just ran for Metro Atlanta and some of the more sought after areas around the city. It certainly does not indicate a strengthening seller's market. Combine these numbers with several consecutive months of increasing inventory and we are looking at starting 2014 more like 2013 than most of us would have hoped.
Now, this isn't necessarily a bad thing, it's just that some of the gains we saw starting in the Spring of 2013 were too dramatic to be sustainable. For example, when we see home prices increase by double digit percentages in a six month period, we are movning too fast. Let's not forget what we are finally climbing out of so a little balance might be just what the market needs to maintain long term sustained growth:
Demand This Year:
- 30 days back = 3,576 homes sold
- 31 - 60 back = 5,005 homes sold
- 61 - 90 back = 5,607 homes sold
- 91 - 120 back = 5,346 homes sold
Demand Last Year for the Same Time Period:
- Last year 30 days back = 4,687 homes sold
- Last year 31 - 60 back = 5,204 homes sold
- Last year 61 - 90 back = 5,351 homes sold
- Last 91 - 120 back = 5,343 homes sold
- This year, last 30 days back for all sales over $100,000 = 2,851
- Last year, last 30 days back for all sales over $100,000 = 2,914
So, for all homes over $100,000 this year compared to the same time...
Homes are selling in 3 days! Rates are going up! It's a great time to buy!!!
All three of those statements are generally true, but they don't really tell you what's going on in its entirety and they certainly don't give you enough information to make an informed decision. They are good talking points, but there is a lot more going on behind the scenes than these three statements make it out to be so I will try to address each one individually.
Homes are selling in 3 days - partially true. Some homes are selling in 3 days, but certainly not all of them. If your home is priced correctly for its condition and location, the average days on market is about 15 days. What's interesting about this is that it doesn't matter what price point we are talking about. In fact, it really doesn't matter which moment in time we are talking about either - even the worst part of the latest downturn in the market. In my view, this is really the first fundamental law of real estate (no, it isn't location because if it isn't priced right for it's condition, it won't sell). If there is a market for your home and it is priced correctly for its condition and location and marketed properly, it will sell in about 2 weeks. For homes between $500,000 and $1,000,000 it's about 21 days and for homes between $1,000,000 and $2,000,000 it's about 28 days and above that all bets are off because the actual market for these homes is quite small (except for Buckhead where the price may be closer to $3,000,000). The question really is what price will it sell for. See chart for more details about days on market. I see these charts every quarter and they just don't change.
Rates are going up - says who? Have you paid any attention to the economy lately? Unemployment is...
Real estate has always been cyclical and it's no different right now. What is different is how quickly the scale has changed directions this time. We are in a stage where the reality of market conditions has shifted much faster than the mentality of many buyers in the market today. In my view, this abrupt shift occured due to fewer distressed sales coming on the market, slightly higher sales volume and the fact that many homeowners who would like to sell are still upside down. Prices are rising, but it will be some time before we get back to peak prices we saw in 2007.
What most buyers are finding out as they enter the market today is that this is definitely not a buyers market. Not only is it not a buyers market, but the lack of inventory to choose from becomes frustrating to them very quickly.
Where are those deals? I thought this was a buyer's market? What's happened???
The deals are gone unless you are looking in the $100,000 price range.
This is worth repeating. The deals are gone.
There are fewer foreclosures and short sales are selling for what they are worth because banks are not just getting rid of them anymore and many sellers still can't sell. What that means for buyers is that they jump in to the market, take their time, find a house, make a low offer and then see someone else buy the house out from under them. It usually takes losing one or more homes before a buyer will believe their agent that the market has changed. The sooner they believe, the sooner they will be in a new house.
If we take a look at the numbers in a few different areas, we can really begin to see the shift...
In the area of Fulton county north of the Chattahoochee River, there are 159 foreclosures and short sales on the market. Of those 159 homes, 112 of them are...
Last October, I wrote that land values were on the rise in North Metro Atlanta and recent activity reinforces that article with more certainty. This is great news for all of us, but especially homeowners who had seen land values drop by about 40% from the highs of the market in 2007. This upward trend was inevitable, but it's been my experience recently with several other pieces of land available that many buyers are still quite reluctant to accept this upward trend as reality. I think there are a number of reasons for the uptick in values. What this means is that if you want to buy land, yesterday was better than today and tomorrow it will cost you more. This is irrefutable at this point and barring another major downturn (very unlikely), will in all likelihood continue. It does not mean however that your home is worth more - just the dirt underneath it. There are other factors in play affecting the values of the existing retail inventory of homes not the least of which is new construction.
Examples and Statistics
Earlier today, we closed on this 2.5 acre property with a small brick ranch that will be torn down on Hopewell just north of Redd for $140,000. That's a sale at 56K an acre for a property with frontage on a fairly busy road with a bit of road noise to boot. Couple that with the fact that a portion of the property was in a flood plain and it would be easy to make the case that an ideal setting would easily fetch over $70,000/acre in today's market. If that's not enough, there was another recent sale on Mid Broadwell that is even more exciting.
Mid Broadwell land sells for $84,000/acre
Luxury homes in Atlanta are available in all of the most sought after areas, but the highest concentration of luxury homes (homes for sale over $1,000,000) are found in Buckhead, Sandy Springs and the areas north of the Chattahoochee River on the east or west side of GA 400. It stands to reason that the closer you get to the city, the higher the concentration of luxury homes will be, but Buckhead and other intown areas do not hold exclusive rights to all of the finest homes available and there are many reasons you might want to look to Sandy Springs, Alpharetta or MIlton (to name a few) if you are in the market for a luxury home. Other areas of note might be Sugarloaf in Gwinnett or Virginia Highland, Ansley Park and Decatur, but those areas are small and therefore not part of this market update.
Buckhead the Bright Spot in the Down Market
Sales and availability of luxury homes in Buckhead have rebounded faster than other areas of the market. Here are the numbers for the numbers through November:
- 228 active listings
- 27 under contract
- 10.5% of listings are under contract
- 20 sales over $3,000,000
That's pretty good for what is supposed to be a soft market especially when compared to the other areas.
Sandy Springs begins where Buckhead ends on the north side of Chastain Park and runs outside of the perimeter essentially to the river, but the highest concentration of high end homes are inside of the perimeter. Here are the numbers:
- 80 active listings
- 10 under contract
- 12.% under contract
- No sales over $3,000,000
Here we see that the percentage of listings under contract is higher than anywhere else including Buckhead, but there are no sales of homes above $3,000,000....
Last Tuesday the bar was raised on the north side of town for land values with a sale that took place on Clarity Rd just across the border from Milton in Cherokee County. The $2,600,000 sale was a nice home, but it was the amount of land that sold with the home is what gets me excited. I've been in the home - I showed it to a buyer and the home with it's 33 acres represents the best sale this year to set a new floor for pricing in this market. based on the the size and quality of the home, the land would have had to be valued at or above $50,000/acre. Given its location in Cherokee County, this should set the prices higher for North Fulton for hopeful sellers.
- 6,100+ square feet according to the tax records
- Small Stable
- 2 ponds
- Numerous acres in the food plain
- 33 +/- acres
- List price - $2,900,000
- Sales price - $2,600,000
- On the market at that price for less than 30 days before going under contract
It goes to show that once you get the price right, the market will always respond (provided there are people buying at that price point - and there are).
This is great news for many of us in the industry including myself as we have been looking for stabilization for some time. I think intuitevely many of us felt like this is where the market should be. Now we have the proof.
If your out there and have been hesitant to make a move it is certainly understandable. There are many other great properties to consider like mine at 1865 Bethany Way
that is being offered with either 30 or 60 acres.
Now can be the right time to buy. A few more sales like this and prices may move from stabiliing to up. There isn't a ton of inventory...
This is something that we (and I think many other agents) struggle with in the market today. We meet with a client and go over what we believe should be the list price of a home and it's seldom a pleasant conversation. Typically, sellers know it's worth less than it was a few years ago, but getting the price right today really is more important than it used to be.
A home gets it's most activity from potential buyers in the early part of a listing period - the first 2 weeks. If it isn't priced for the market, it won't get an offer. Still, seller's feel they need to leave room to negotiate because they feel they need to squeeze every penny they can out of their sale. It's a fair enough idea, but it isn't grounded in what the data says they should do.
First, I'd like to discuss an important concept that regularly gets overlooked by both seller's and agents: It's impossible to underprice a home. Let me reiterate - you can't underprice your home. In a free market, it doesn't matter if you underprice by $1,000 or $50,000. It will sell for as much as the market will pay. Not more, not less.
So let's try to do a better job of recognizing the understandable objection about pricing and do a better job of explaining how the market works. If you list your home for the correct price, it will sell and it will happen fast regardless of your price point. It's not like homes aren't selling (see chart).
As you can see from this chart which shows home sales during this declined market, home sales are actually quite consistent. It's just that only the ones that represent exceptional value sell. If you price it at the right number, it's impossible for it not to sell. So the obvious question is that if you list it low and it sells fast, doesn't it...
This is for anyone looking to run a website with Flash on your iPad...
Update: Just get the web browser called Puffin. Works great and doesn't have a fee like iSwifter
As a real estate agent, the world is my office (yes, I have a brick and mortar office as well, but money is not made inside a real estate office). The basic premise of the mobile office has been upset by the development of a new version of our local MLS system which has elected to use a Flash based solution not compatible with our mobile world. To be polite, I will say it is less than ideal and I feel they should have been more forward thinking in looking out for a growing user base of agents going mobile, but what is done is done and I'd rather focus on solutions than complain. I don't have that kind of time...
I suppose you could try your luck with the Motorola Xoom which purports to have the ability to run Flash, but it just doesn't currently have the App support found at Apple and the iPad 2 has specs that are on par with the Xoom. In my inbox today was an Apple feed linking to this article about the iPad 2 and as I read through it, there was a link on the 3rd page of the article to another article here about an
app called iSWiFTER which runs flash.
Feel free to read the articles if you like, but if you wan to run Flash - I mean real flash, not just flash videos, get the iSwifter app and pay the $2.99.
January is the worst month for home prices in Atlanta and 2011 is no different - although not as bad as I thought. We now have all of the January data compiled and we do have a new bottom for home values in Metro Atlanta that takes us back to levels not seen since 1998.
Closed sales were up and pending sales are up compared with 2010...
...and it's not as bad as it could be - or could have been for that matter especially with the weather we had early on in the month. Single family home (detached) prices are down 3.1% from 2010, but not lower than they were in January of 2009 and attached homes were down 18.4% from 2010. So I think it is more accurate to say that we have a mixed bottom. Technically, the new bottom of the market is January 2011, but I think that labeling the market as the worst it has been is only important for the doomsayers. Since the condo market is dragging us deeper in this hole while single family remains basically flat for 2 straight years (and now beginning a third year), I think it's important to make the distinction. The majority of sales (over 80%) are single family and that bottom was January of 2009. What we have is a technical new bottom and a bifurcation of the market trends as it relates to single family homes vs. condos.
The Hurdle is Financing (and therefore demand) and Foreclosures for Condos
Foreclosures played a large role in the decline in condo values as the median foreclosure price was $85,000. Until we shake out the remaining foreclosure numbers, we are going to have more trouble.
Financing for condos also complicate the problem. If you want to buy single family home it's not really a problem. 3.5% down and you are basically in. That's not the case with Condos where many buildings are not FHA approved making lending guidelines a bit more difficult. Where there is easier money, there are more sales. Since more sales by definition means higher demand, we see a relatively stable single family market and continued difficulty...
If you know me, you know I have been saying this was coming for some time. According to the test scores published in the Atlanta Business Chronicle School Guide, Walton High School is no longer the highest testing high school in Metro Atlanta. The new testing champion is Northview High School (tied with Walton last year) serving parts of Johns Creek and Duluth and the new number 2 is Alpharetta High, which, basically serves zip code 30005. That drops the vaunted East Cobb school from first to third in test scores in one year!
***Disclaimer: Test scores do not inherently make a school "better" and you need to look at much more than the test scores from schools to determine if you want to live within a certain school district. If that's all you are considering as your parameters, you need to do more research. Go to the schools, talk to the principal, take a tour, etc...
Disclaimer aside, as a real estate professional I realize that schools drive buying decisions for many people relocating and one of the first questions asked of me or search parameters given to me is based around finding a home with "good schools." While I can not (and absolutely will not) tell anyone what is a "good" school, test scores are public information. Important public information. There is FAR more to consider including what schools feed into other schools, is the housing stock in my price point in a school district something that I would like to buy, where you work, how long is the commute, what are property taxes, etc, etc..so to only look at test scores is too narrow of a focus to stand on its own merit as a single parameter for selecting a new home.
In any event, I just picked up a large stack of school guides to include in our relocation packages and I always sift through them to see how my school district stacks up. I thought this was newsworthy as Walton has been king for so long. I'll post the 5 highest scoring elementary, middle and high schools when I have had a time to sift...
*Update 7-25-2019 - I have updated this post as it remains extremely useful to many people and as the app store has developed, I've changed apps. Currently, I use GoodNotes 5
**If you aren't interested in an iPad or you don't need to manipulate PDFs and/or sign them, you can probably skip this post. On the other hand, if you are a real estate agent or any other person who may want to get an iPad, but thinks that it is only a toy because all you can do is read the web, you may find this post useful.
I was a doubter. I thought that it was really just a toy, but I really wanted an iPad anyway. Besides, I have a weakness for new electronic toys and I like technology and I like being an early adopter so I really wasn't able to NOT get one.
However, I was still skeptical about ditching my laptop. I'll definitely have more posts about how to make the iPad work for real estate, but understandably, the most important question seems to be centered around contracts and signatures and whether or not writing contracts and signing them would be possible.
The short answer is yes, you can write and sign contracts, but not without Apple's amazing App Store. Below is a tutorial on what you need to know if you want to use an iPad as your most frequently used computing device. It is my goal to do so and I am almost there. First, the contract writing tutorial.
Writing and Signing Contracts "How-To" for the iPad
What you need:
- GoodNotes 5
- An internet connection
- Recommended, Apple Pencil
Goodnotes Can store your PDF files within the app itself. It seamlessly integrates with the File App, Google Drive and Dropbox to import/export documents so keep...
Partial Reprint from the Atlanta Business Chronicle. You can read the full article here:
"The Georgia Senate Thursday unanimously passed legislation aimed at overhauling a property assessment system thrown into disarray by huge market-driven fluctuations in property values.
The bill, which now goes to the House, would restore Georgia homeowners’ loss of confidence in the fairness of the property tax bills they receive from local governments each year, said Senate Majority Leader Chip Rogers, the measure’s chief sponsor.
Homeowners across the state are complaining that they’re being taxed based on assessments that no longer accurately reflect the declining value of their properties, said Rogers, R-Woodstock.
“The assessments are not keeping pace with fair market value,” he said. “Property owners are paying (taxes) on value they don’t own.”
In an effort to ensure greater accuracy, the bill would require local governments to send out assessment notices to property owners annually.
Owners who disagree with their assessments would be given 45 days to appeal, up from the current 30 days.
In setting property values, assessors would have to take into account the effects of foreclosures in the neighborhood."
I find this to be great news for homeowners across the state. I get emails from homeowners who find me online, past clients and friends asking how to go about the process of appealing their tax assessments. With the market in flux the way it is, we need a more responsive government.
This might be worth contacting your state representative...
Bank of America has filed suit against MGIC, one of the nations largest mortgage insurance companies. MGIC has rescinded many of its obligations to pay saying that they aren't contractually obligated to pay for loans that weren't properly underwritten. According to a Bizjournal story, MGIC cut 1.2 billion dollars in payments and Bank of America has filed a lawsuit as well as discontinued using MGIC for its mortgage insurance. Bank of America has also discontinued using MGIC to insure loans.
If you have a loan with less than 20% down, you or your lender has paid for mortgage insurance on your loan. If the loan goes bad, the mortgage insurance company is supposed to pay up. However, with so many bad loans, mortgage insurers are pointing the finger back at the bank in many cases saying that the loans were not underwritten properly. In these cases, the insurance companies won't pay out and in my opinion, shouldn't.
What was missing during the housing boom was accountability. I don't see a problem making sure that the right entity pays for loans going bad unless its another taxpayer bailout.
Here is a little summary I just emailed to a client looking to purchase a second home (condo in Buckhead). I thought the stats were interesting enough to post here so below is almost a direct copy of the email I sent. Please visit our Buckhead real estate page if you are interested in viewing homes and condos in Buckhead:
I’m only looking at 2 bedroom condos which represent the largest and most popular segment and I’m only looking at Buckhead. People that want Buckhead typically do not want Midtown or other areas so I want to make sure I don’t get results outside of the relevant market – you could make the case that it is necessary and on some level I agree so I’ve also included the overall market so that we can draw some relevant comparisons. I’ve separated them out so we can isolate the area. Buckhead is outperforming the greater market as you will see from the stats below. Looking only at the stats, you would not say that it is outperforming the entire market, however, the difference in price points is so significant that although it is under performing statistically, it would be impossible to perform as well as the greater market. The fact that it is so close indicates to me that it is actually a stronger segment than the overall condo market.
Buckhead 2 bed/2 bath:
- Active listings - 495; average price - $436,919
Under contract listings - 61; average price - $281,933
Sold listings last 60 days (November & December) - 65; average price - $231,404
% Pending/Active: 12.3%
That’s 32.5 sales per month or a 15+ month supply. Things could definitely be worse although this isn't what we would historically consider to be good. The glaring disparity is between what is listed for sale and what is under contract and selling. Everyone except sellers seem to understand what market value is....
All 2 beds/2baths:
I've put together the same information two different ways in the charts below. To me, they show some interesting trends. While they don't give a complete picture, they do show how far we have fallen and the three year history begins to be enough to give us a nice perspective.