I suppose it depends on how you spin the statistics and I really don't intend on doing that. The general statistics don't really show a decline in prices and that just doesn't seem to feel right so I set out to separate the market into more manageable segments to see if some segments are performing better than others thereby skewing the total statistics. My hypothesis was that the resale market below $750,000 (this is anywhere bnetween 80% and 90% of the market) was doing something worse than the market as a whole. In other words, one portion of the market might be making the total market appear as a much better market than what most sellers and agents are actually seeing.
As I start this post, let me first explain what I did. My goal was to separate out and use the majority of the market - this is the segment that I am concerned about because it is the part that will be most meaningful to the majority of people and can help to shed some realistic light on what you need to do with your price if you really want to sell your house. So, I eliminated all homes that sold above $750,000. The chart below shows how little of the market it represents, how it performs and should help to indicate why it is not giving a true representation of homes for sale in zip code 30004.
When sales volume goes down and inventory stays the same, what happens to prices? This would be something like Economics .101 - A Middle School/High School level economics question. The answer should be obvious - over time, prices will fall setting in motion a series of events which ultimately will bring inventories back in line with sales volume as the pendulum swings in the other direction. It makes sense, but, it's not what we see hapening in Alpharetta and some other areas of North Fulton. It may mean however that prices will fall, but, conventional wisdom would leave me to believe that it would have alread been happening. This first chart shows the decline in sales volume for Alpharetta:
Sales Volume in Alpharetta 2007 vs. 2008
The second chart here shows the sales prices from 2007 to 2008 and if you look closely at the chart, there really isn't anything indicating a drop in prices:
Sales Prices for Alpharetta 2007 vs. 2008
Outside of the price change in October of 2008, there is nothing to indicate that prices are falling and no, a one month decline like that is not enough to draw any conclusions whatsoever. If we see three months of year-to-year sales drops then we will have a trend.
What Happens Next?
I am of the opinion, personally, that there is absolutely nothing that can be done to increase sales volumes to 2006 and 2007 levels short of reinstating subprime loans and I wouldn't wish that on anyone or any real estate market. It is one of the leading causes of why we are where we are right now. Lower interest rates could help, but, not enough...