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...
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...
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...
We are excited to bring Providence back on the market after a break for the holidays! As you can see from the pictures below, there is nothing quite like this anywhere in North Fulton, or really, anywhere in Metro Atlanta quite like this.
Providence is a very sophisticated, classic American home custom designed by Stephen Fuller. The setting - your choice of either 30 or 60 acres (both with lake frontage), is private and peaceful and the home itself is a magnificent achievement of understated elegance and symmetry inspired by Thomas Jefferson's Monticello and George Washington's Mount Vernon estates.
If you are interested in viewing this home, please contact me directly and I will arrange a private showing. You can find more photos and a video at Providence's dedicated website, www.estatesinmilton.com. Call me directly at 404.630.3187. Enjoy the photos!
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...
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...
We should have had this up before Christmas, but our schedules just couldn't make it work. Providence is an exceptional home by any standards, but the warmth you feel during the Christmas Season is something that photographs can just begin to help you explore. Nevertheless I gave it an effort yesterday. I only had about an hour and a half for the everything and the home is large requiring multiple lights set up to fill the rooms. This is realy only a glimpse, but worth a quick look.
My plan was to take the exterior shots at dusk and use them as the intro photos here, but for various reasons we couldn't get those shots. I think the ones I was able take will help give you an idea of what it's like to host parties and have family over for the holidays. I know this home is for only a few, but if you are someone who appreciates the finest craftsmanship and quality, you need to come visit. It is truly a masterpiece. You can see the full virtual tour here.
Dinner is Served
Make sure you bring lots of friends and family...
Gather in the Formal Living Room
Listen to the piano, watch the fire and think of how you can theme this room for Christmas!
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...
The comprehensive report on the fourth quarter of 2010 is in. I would like to temper what looks like good news by saying that some of this is government induced and therefore not sustainable over the long term unless the government inducement creates enough sales to reduce the inventory levels significantly as there is almost a certainty that the sales volume will taper off at the end of the tax credit. Perhaps the most important graph below is the median sales price graph with a trendline on it. Please take a look at that graph. Prices are up and when you see the broad view it may change your perspective on the market. If you have any questions or comments, please leave them in the comments section at the bottom and I will post them/answer them for you as quickly as I can...
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.
This information is compiled by Chartmasters for Keller Williams Realty Consultants. It is far more comprehensive and accurate than what you may find in the AJC or anywhere else. I am fortunate to work with an organization who can provide its agents critical information that we can use to help clients in a market that requires this information more than ever. It's also right up my alley as I enjoy understanding the market. This is a graphics heavy post of charts so if you have any questions, please reply in the comments below and I will answer or clarify anything you may see. As soon as I can find a link, I will post the credit to Chartmasters, I just can't seem to find it online right now. Nevertheless, the charts below will shed some light on what is really happening in this market. Information like this can empower you to make a decision about real estate more than anything else...
Summer of 2009 is coming to a close quickly and some of the best deals in a generation are leaving with it. Were you able to capitalize on those deals or are you still waiting for prices to drop? If you're waiting, here is a recap of what you missed and why you may reconsider your position of waiting...and oh yeah...it looks like prices aren't really dropping any more - at least for good properties and especially in the more sought after areas of Atlanta
The average price for a home has dropped 8% in North Fulton since the summer of 2008, but, prices are trending up, sales volume is trending up and inventory is trending down. We are still down in price from the summer of 2008 because pricing continued to decline until February of 2009 (they have been rising since). It seems as though market forces are correcting the market even without the inducements provided by the government and we are really expecting a surge of closings as the $8,000 tax credit expires at the end of November. Whether it gets extended or renewed is up for debate. I hope they renew rather than extend. I think it will induce more sales that way.
Nevertheless, deals are going fast. Unfortunately there are still far too many know-it-alls that think prices in Atlanta are going to be dropping another 15%-20%. I feel bad for these people because they fall into the "clueless" group and will miss the deals. Too bad, but, I suppose I can't convince everyone - nor should I try to, I suppose.
Here are some statistics that indicate real changes for the better in the market:
- Positive year over year closings (more this year than last, sales volume is up).
- Total price declines are continuing to decrease and would almost disappear by precluding condos and townhomes.
In March, I wrote about what I thought was going to happen this summer and moving forward in the Atlanta market. It does appear that what I thought might happen is actually beginning to take place and that is good news for a real estate market that is in desperate need of something positive and tangible to hold onto. Many of you may have read reports earlier this year in the AJC indicating price increases in certain areas of the city, but, they failed to place the fine print in an easily readable place in the article and the realities are that those reports are not very accurate. Fortunately, this report is very accurate as we won’t neglect to include foreclosures and other necessary parts of the equation that make up today’s market.
First, the actual number of homes for sale in Atlanta is down considerably from the same time period (May) of last year. Last year, there were 69,638 homes for sale. This year there are a full 16,000 less homes for sale at 53,081. That’s a full 23% drop in inventory and if you have read anything I have written, you know that lowering inventory must happen before prices can stabilize. Let's not get ahead of ourselves and talk about increasing prices just yet. Let’s just work towards stable because no sooner will we say stable than we will be talking about increasing prices – we are not there yet. This is still going to take a while and there is still at least one more very large shoe to drop with foreclosures entering the market in the largest numbers we’ve seen to date. We’ll see if the banks can push them out as fast as the rumors say they will.
Second, the forward looking activity index of pending sales finally shows more pending sales than we had during the same time period (May again) of 2008 – barely - but, up it is! In May of 2008, there...
In a perfect prelude of what was to come, the sun rose on a clear, cool Orlando morning for the Keller Williams Family Reunion this year. This was my first time attending and I really didn't know what was in store. Many of the agents in my office who had attended previous KW Family Reunions were either excited for me or sorry that they would not be attending so I was beginning to get excited about the prospects of meeting new agents and learning a great deal in a compressed environment to improve myself, my business and to be able to bring something back with me that I could share with others. What happened was far beyond my wildest expectations.
Day 1 - Sunday and The Vision Speech
Sunday began with me attending my first of what was to be 5 technology classes over the course of several days. Since this was really what I want to use to improve my business, I felt that I would spend the most time in these classes - basically following the 80/20 rule. What happened over the course of the entire Family Reunion event was that the classes I expected to get the most from, I got the least and the classes I expected to help the least turned out to be the ones that I now feel were the most important. Funny how things like that happen. After the first early morning class, everyone who attended from my office met up and walked over to the annual Keller Williams Family Reunion vision speech by Gary Keller. I can't find a link to the whole speech, but, a pretty decent synopsis would go something like this:
Change your expectations. Expect that the next six months are likely to get worse before things get better. Plan on unemployment going higher. Plan on more bailouts, more federal intervention and more worries and run your business with that mindset. Stop with fancy tricks and marketing...
Traditionally, February in Atlanta (right after the Super Bowl) is the beginning of the end for the slow winter season in the real estate market. After 2008, most experts now at least see the light at the end of the tunnel. Prices have come down and inventories have been decreasing for the last 5 months. What this means going forward is a beginning of the end for further price declines and summer should bring back some balance to the overall real estate market in Atlanta.
Of course, this change will come slowly and it's possible for certain segments of the market to continue price declines for several more months. Most areas north of I-20 should begin to see a leveling off before many of the areas south of I-20. Some segments of the market are already nearing more "normal" levels of inventory as it relates to sales volume. For example, housing starts have come to a complete halt and inventories of existing finished new homes are dropping faster than any other segment due to the lack of new starts. At the current rate of sales, new construction will be at seller's market inventory levels by the end of the summer.
New Construction Market
What this means for you if you have been waiting for the time to buy is that it is here now. In fact, many of the best deals on new construction are already gone. There are sure to be more discounts on certain properties, but, choices are becoming more limited. The time to act in this market really is right now. For example, Gramercy Park in Alpharetta sold the first 2 homes for $730,000 and $740,000 in June and August. Today, similar floorplans are priced below those sales prices with the remaining homes listed from $639,000 to about $720,000. Basically, we have reached the point of zero sum profits and many losses for builders on this type of property....