The “Best” Deal?

Buyers and sellers in the Plazuela de los Sapos, Puebla, Mexico (Photo credit: Wikipedia)

It might be one of the most asked questions I get from both Buyers and Sellers…

Is this the “best” deal?

The problem is that there is almost never an answer. It isn’t as simple as a mathematical equation… unless there are variables to include for things like emotion, comfort and other intangibles. The other problem is that just trying to figure out if THIS is the best deal can change the answer to the equation.

People have a tendency to “dig in” when they are pressed. Buyers or Sellers hit a limit to what they want to do, and often they hit that limit harder when the other party is trying to test the limits.

We’ve all heard the story of the boiling frog… If you put him in a pot of boiling water, he jumps out, but if you put him in comfortable water and slowly heat it, he will sit there and boil.

boiling water עברית: מים רותים (Photo credit: Wikipedia)

It works the same with buyers and sellers. If a Buyer sends an offer with a very low price (we’ll leave aside value v pricehere…) to start negotiations, the Seller often digs in and won’t accept an offer that they might have accepted had negotiations started from a more acceptable point. Conversely, if a Seller starts with a list price that is too high, the Buyers may just not submit an offer… or they might pick the property apart and submit a lower offer than they might have otherwise.

Of course the thing to remember is that it certainly ISN’T the best deal if it never happens…

Emotional Traps of Selling Your Home (jcorcoran1.wordpress.com)
Does a seller have to respond to my offer? (findwell.com)
Traditional ‘Rules’ of Home Buying Return (money.usnews.com)

Suwanee, GA, Market Report, April 2012

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This map shows the incorporated and unincorpor...

Image via Wikipedia

Market stats for Suwanee, GA, April, 2012 indicate that there were 426 properties on the market (up from 420 last month). Overall, there was about a 5.4 month supply of properties (down from 6.2 last month). April had 75 sales. Compared to April, 2011 (75), this year was flat. Inventory was down compared to 2011 (624). There were 100 sales last month. Although sales were flat, the decreasing inventory has made this year look a lot better.

In the Under $200k arena, there were 117 listings in Suwanee, GA, with about a 3.5 month supply (178 and 6.9, respectively last year). This April’s sales were WAY down, at 28 (37 last year, 42 last month). This was definitely the strongest price segment in Suwanee. And one of the strongest in the whole county. The next level up is coming up fast. There are a few other segments in the county getting close, though.

Between $200k and $400k, there were 200 listings for sale (295 last year, 195 last month), and 5.8 months of supply. Sales in April, 2012 were 35 (42 in March), compared with 28 for the same period in 2011. Sales have been bouncing between very strong and average for the last few months. I’d like to see some consistency around 40-50 sales for the next couple of months. This shouldn’t be a “peaky” market/price segment. Unlike most of the county, this is the largest price segment in the area, and its direction plays a major part in how the area looks.

From $400k to $600k, there were 57 homes on the market. The absorption rate was at 7.1 months (9.3 in March). There were 10 sales in April (10 in March)… up from 3 last April. Looking at the three month average, there were 24 sales this year and 12 for the same period last year. This segment had gotten dramatically stronger in the last couple of months, but stayed sort of weak this month.

In the $600k to $800k arena, there are 22 listings, with about a 11 month supply. Sales at this level are not consistent, but there were 0 this month (3 last month). Looking at one month makes the numbers jump around. For the last three months, sales were 6… For the same time last year, the sales were 3. With the huge decrease in listings over the last couple of months, I was looking for this to become one of the strongest $600k-$800k area in the county. But until I see 3-5 sales a month on average, I can’t call this one strong.

The range from $800k to $1m, there are 4 homes listed and 12 months of inventory on the market. There were only 4 sales at this price level last year (1 in April, 2 in July and 1 in August) . This is a tough segment to try to sell in right now, but if inventory stays low, it won’t be quite as rough. But there still needs to be some more sales activity.

In Suwanee, GA, Above $1m, there are 26 properties listed. The current absorption rate indicated about 19.5 months of inventory, but because of the smaller numbers of sales, this could be significantly impacted by just a couple of sales (2 for March and 2 for April). In this segment, we should be seeing reduced inventories… There were 22 homes listed in this segment at this time last year.

Suwanee, GA is a suburb of Atlanta in Gwinnett, Forsyth and (just a little bit) in Fulton Counties. The population is 2000 was 8,725, but that only included the area inside the city limits, and it had seen tremendous growth since that census. Money Magazine rated Suwanee in the “Top 10 Best Places to Live” in 2007, and it is one of the wealthiest parts of Georgia. Recently, the City of Suwanee has revamped their old town, adding a large park with a bandshell, condos, town homes and small businesses. It is also home to North Gwinnett High School, Peachtree Ridge and Collins Hill. I have a page dedicated to Suwanee Market Data.

Suwanee, GA, Market Report, March 2012 (lanebailey.com)
Suwanee, GA, Market Report, February 2012 (lanebailey.com)
Suwanee, GA, Market Report, January 2012 (lanebailey.com)
Suwanee, GA, Market Report, December 2011 (lanebailey.com)
Suwanee, GA, Market Report, November 2011 (lanebailey.com)
Suwanee, GA, Market Report, October 2011 (lanebailey.com)
Suwanee, GA, Market Report, September 2011 (lanebailey.com)
Suwanee, GA, Market Report, August 2011 (lanebailey.com)
Suwanee, GA, Market Report, June 2011 (lanebailey.com)
Suwanee, GA, Market Report, May 2011 (lanebailey.com)
Suwanee, GA, Market Report, April 2011 (lanebailey.com)
Suwanee, GA, Market Report, March 2011 (lanebailey.com)

Atlanta Metro Zillow Home Value Index

Atlanta Metro Home Values – Interactive chart

Lane on AREF Radio

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Last week I was a guest on Atlanta Real Estate Forum Radio. We actually recorded the podcast a few weeks ago… it was a lot of fun. In my segment we talked about what guys really want in a garage. Take a listen… let me know what you think. I’d love to get your feedback.

House and garage Between Sarclet and Thrumster. (Photo credit: Wikipedia)

You can check out the original post on AREF’s website here.

USA Today thinks prices are heading up…(lanebailey.com)
Listing Inventory is Starting to Rise…(lanebailey.com)
Prices Up? Prices Down? WTH??(lanebailey.com)

USA Today thinks prices are heading up…

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And they very may.

map for us unemployment numbers (Photo credit: Wikipedia)

According to the article I ran across this morning, house prices should go up about 4% each year for the next year. I can see that… especially on the entry level of the market. On the upper end of the market, though, it isn’t looking like we’ll see recovery for a little while. Between taxes and other policies that aren’t that friendly towards small business, there isn’t a lot of short term optimism with many of the folks that buy more luxurious homes.

So… my take is this. I see the lower end of the market performing well over the next few years. The higher end of the market more tricky. The middle of the market, as well.

On the entry level, investors are scooping up properties. Prices have stabilized and we will likely see increases regardless of the political or business climate, unless there is a MAJOR reversal. Many of the investors are buying and holding properties as rentals, and there are simply a lot of people out there that have good income but cannot buy because of foreclosures and short sales. That will drive the entry level pricing picture.

selfmade image of U.S. Unemployment rate from 1890-2009 (Photo credit: Wikipedia)

At the middle of the market, there are a few competing stories. Many of the move-up buyers are stuck in their current homes or have been through foreclosures and short sales. But, there are some that will look at snapping up a deal when they feel comfortable about their employment prospects. Right now, that simply isn’t the case. We all hear that the Unemployment Rate is dropping, but what we are NOT seeing is the Employment Rate moving up. The drop in “unemployment” is mostly tied to people giving up looking for work. In fact, the Workforce Participation Rate is at a low point. So, if people in the middle start to feel that the economy is stable, they will buy homes.

On the upper reaches of the market, there are a few different stories as well. Foreclosures and Short Sales are a factor, but not as often as on the lower segments. But, comfort is a major factor. Most of these folks are business owners or senior employees. Taxes and regulations are playing a major role in their decisions. Talk from Washington of major tax increases and more difficult regulation are making them hold off… even when they see a bargain. A more business friendly tone in DC could turn the tide for these buyers.

The big question… Where do YOU think the market is going, and why?

Are We At The Bottom Yet?(lanebailey.com)
Why the housing recovery remains a long way off(cbsnews.com)

Inflation Is Coming (themarlincompany.com)

Norcross, GA, Market Report, March 2012

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Image via Wikipedia

Market stats for Norcross GA, March, 2012 indicate that there were 253 properties on the market. Overall, there is about a 5.5 month supply of properties. The last year has been fairy strong… although April and May weren’t that strong (April, 2011 was below 2010)… it hasn’t slowed much, if at all. February saw 51 sales, well under the 59 for February, 2011, and slightly over the 48 for February.

In the sub-$200k arena, there were 136 listings, with about 3.7 month supply. Sales are well off from last month and from a year ago in this segment, which is the main driver of sales in this area (36 v 43 in Mar11 & 42 Feb12). For the last seven months, the AR has been tilted in favor of sellers. This still looks like one of the strongest price/area segment in Gwinnett County, GA. At just over a 3½ month A/R, this is VERY strong for sellers.

Between $200k and $400k, there were 82 listings for sale, and about 11.7 months of supply. This segment had been weakening for the last few months. But, the 11 sales were OK compared to last year’s 10 sales, but kicked last month’s 4 sales. Even though it isn’t gangbusters, it is certainly better than the 28 months of inventory we had in December, 2010. We really need a strong March for this segment to look good. Right now it is among the weakest in the county.

From $400k to $600k, there were 30 homes on the market. The Absorption Rate is around 18 months. The AR had been fairly steady for months, then shot WAY up in January. March’s 3 sales were up from the 1 the month before and down from last year’s 5 sales. This had actually been a pretty good area for homes in this price range to sell… The good news is that it would only take a few sales to put it back in a balanced range.

In the $600k to $800k arena, there were 2 listings on the market. Inventories doubled compared to last year. The Absorption Rate is at 6.0 months of inventory… but with only 4 sales in 2010 and 4 sales in 2011, the last in November, obviously it is easy to bump one way or the other. One reason for the strong looking Absorption Rate last month was that there were so few listings. February had 1 sale. The were 0 sales for Mar12, 1 for Mar11.

The range from $800k to $1m, there were 0 homes listed on the market and 1 sale in March. There were no sales last year, nor last month. Unfortunately there isn’t enough data for a good A/R number.

Above $1m, there were 3 properties listed. But because of the smaller numbers of sales, the absorption rate could be significantly impacted by just a couple of sales. There is simply not enough activity for an A/R figure. The last sale was January 2011.

Norcross, GA is a suburb of Atlanta in Gwinnett County. The population is 2000 was 8,410 but that only included the area inside the city limits, and it has seen tremendous growth since that census. The City of Norcross revamped their old town a long time ago, and it has served as a model for other towns in the area. It is also home to Meadow Creek and Norcross High Schools. One of the things that Norcross is known for locally is the beautiful older homes in the downtown area. They have maintained their historic flair quite successfully.

I have a page dedicated to Norcross Market Data.