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Category Archives: market report

Wayback Wednesday… Optimist of Pessimist?

Wednesday, 15 December 2010 08:16
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Detling Aerodrome Estate. Now used as a busine...
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Two years ago I wrote this post…  And it is almost embarrassing…  I was SO wrong.  So wrong.

Or maybe I was right, but just a couple of years too early (nope, I think that saying I was wrong is closer to the truth).

In effect, my opinion was the real estate was poised for a recovery.  The prices were cheap, and mortgage rates were almost impossibly low.

Prices are lower… and so are interest rates.  There are still deals out there (but at least there is a fight for some of them).  But the fact remains that I misread the market, then.  I tend to be a little more cynical about it now…

But, all of the same forces that were lined up pointing to a recovery, like the media talking it down, investors like Warren Buffet looking at real estate, etc., are still there.

What I hadn’t banked on was unemployment and how it would affect the real estate market.  Unemployment is up about 30% from where it was two years ago.  Despite the bailouts, government takeovers and TARP, people aren’t working.  Until that happens, we won’t see a real estate recovery…  But when it happens, it will happen in a big way.  I still believe that.  It won’t wind back up as fast as things unwound, but the best deals will vaporize from the market.

As mentioned, I have had buyers that have had to compete for properties at the entry level.  It is a glimmer of hope…

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Lilburn, GA Market Report, November 2010

Tuesday, 14 December 2010 08:46
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This map shows the incorporated and unincorpor...
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Market stats for Lilburn, November, 2010, indicates that there are 425 properties on the market (as of November 30th). Overall, there is about a 11.8 month supply of properties.  Lilburn is actually mid-pack among cities in Gwinnett County.  Absorption Rates had been improving since March, until September.  In fact, in March there were 15.3 months of inventory.

In the sub-$200k arena, there are 264 listings, with about an 8.6 month supply.  This represents most of the sales in the market area, and reflects the same improvement in inventory levels, continuously since March, until October.  Sales were on par with November 2009 (28 v 24).

Between $200k and $400k, there are 134 listings for sale, and about 28.7 months of supply. This segment has also been getting stronger each month since March, until September.  There were only 2 sales in September 2010, compared to 11 last year and 6 in October v 18 in 2009.  November held 6 sales in 2010 v 9 in 2009.  The expected end of the tax credit last year started pushing sales down in Nov. 2009.

Snow in Lilburn

Snow in Lilburn

From $400k to $600k, there are 22 homes on the market. The absorption rate is around 33 months. There  were no sales in this segment in May, June, July or October this year.  There were only 4 sales in August and September(combined). November had 1 sale (2 last year). Last summer was much stronger overall.  With just a few sales, just one or two can make a huge difference.

From $600k to $800k, $800k to $1M and Above $1M, there are 5 listings (combined), but too few sales to have any sort of reliable number of months of inventory.  There has been one sale in the last four months, but prior, there had only been a few other sales in 2010 (January, March and August).  One of the listings is above $1M (none between $800k and $1M), and there is no market activity in the last 12 months for that range…

Lilburn is in Gwinnett County, GA, just outside of Atlanta.  As of the 2000 Census, there were 11,307 people in Lilburn, but that is only including people in the city limits, and there has been a lot of growth since 2000 in Gwinnett County.  It was incorporated in 1910.  Lilburn is home to Parkview High School, and also has students that the Brookwood, Berkmar and Meadowcreek clusters. It is also home to Killian Hill Christian School, Providence Chrisian Academy, St. John Neumann Catholic School and Parkview Christian School.  Possibly the most famous resident of Lilburn is General Beauregard Lee, a groundhog with a better winter prediction record that Puxatawnee Phil up in PA. Dominique Wilkins, formerly of the Atlanta Hawks also lives in Lilburn.

I have a page dedicated to Lilburn Market Data.

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Gwinnett Market Report Preview, November 2010

Saturday, 11 December 2010 08:38
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Gwinnett County Historic Courthouse, Lawrencev...
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I was just online grabbing a few numbers for the upcoming market reports for Gwinnett County, GA.  Starting around 12/16/10, we will rolling out the reports for Lilburn, Lawrenceville, Duluth, Suwanee, Sugar Hill, Buford and Norcross, GA.  The reports are pretty in-depth.  They will include:

  • Reports broken out by price segment
    • Under $200k
    • $200k-$400k
    • $400k-$600k
    • $600k-$800k
    • $800k-$1m
    • Over $1m
    • Overall Market
  • Each locality includes the Absorption Rate for each price segment
  • Each segment includes analysis regarding acceleration/deceleration and what factors may be affecting that segment
  • New this month, each price/location will be linked to the search for properties meeting those criteria

Preview…

It isn’t pretty…  Things generally slow down this time of year, and last year was a strong year because of the tax credits that had been scheduled to end around this time (before being extended).  Those things combined to make November look pretty bad.  We’ll be going in-depth starting next week.

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Zestimate Accuracy in the Atlanta GA Area…

Thursday, 09 December 2010 08:54
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Representation of high accuracy and low precision.
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Ever since they were first introduced, Zillow’s ‘Zestimates’ have created a stir.  Some herald them, while other decry them.  But, Zillow’s Zestimates are a great tool for homeowners and those looking at buying, whether they are familiar with the area or not.

But the Zestimates DO have a limit.  They aren’t terribly accurate.  On the good side, though, Zillow is nice enough to tell us how accurate they are for some areas.  But, even the accuracy may need to be interpreted.

Let’s see if we can shed some light on Zestimate accuracy for the Atlanta, GA, area. For the sake of this example let’s assume that the Zestimate is exactly $200,000.  This is a nice, round number that makes calculations easier.

  • Median error for the Atlanta area is 15.3%.  That means that half of the homes have an error of less than 15.3%, while half have an error higher than 15.3%.  In other words, half of the homes that would be valued at $200,000 are worth between $169,400 and $230,600.  the other half are worth more than $230,600 or less than $164,900 (should be around 25% too high, 25% too low).
  • About 58% are actually worth between $160,000 and $240,000.
  • About 36% are worth between $180,000 and $220,000.
  • Only 19% are worth between $190,000 and $210,000.

The bottom line is that Zestimates, in the Atlanta area, are pretty rough.  There is only a 1 in 5 chance of the home’s value being within 5% of the Zestimate.  In other words, it is not a precision tool…

In my experience, most sellers are sure that the Zestimate is too low, and most buyers are convinced it is too high.  It is just as likely to be one as the other…

But Zestimates ARE still useful…

Like any tool, they need to be used the right way.  My Zillow contacts (and I have met and enjoyed talking with several of the fine folks at Zillow) have stated that the distribution of Zestimate error is just as likely to be high as low.  Look at the target in the graphic.  None of the shots hit the center of the target… but the AVERAGE of them is quite close.  And the same holds true of Zestimates.

Taken as a whole, when looking at larger areas (the larger, the better), they provide a very accurate look at the broader market.  But, as we narrow down to more specific areas, they get cloudier and cloudier.

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Gwinnett County GA Overall Market Report… October, 2010

Monday, 06 December 2010 08:22
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Map of Georgia highlighting Gwinnett County
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So, let’s get to the numbers and try to get a handle on what they mean.

At the end of October, 2010, there were 6,138 homes on the market in Gwinnett County, GA.  As expected, there has been a general upward trend in the number of listings all year, but that was slowing… as expected, but bumped up this past month, which wasn’t expected.  While this is a lot of listings, it is low compared to the 10,000+ listings that were on the market a couple of years ago.  There were 553 sales in October.  This was down from 767 sales for October, 2009.  Averaging the result for the last three months yielded an Absorption Rate of 10.8 months of inventory.  Which has been steadily increasing since June (this isn’t an increase that is good).  This has been pretty consistent across the board on price and location segments, although not exactly the same in all areas.

The Under $200,000 market segment was the meat in this sandwich.  For August, it represented 3,885 homes listed.  There were 435 sales during that period.  Averaging the last three month gave the segment an Absorption Rate of 9.1 months.  The rate has been rising since May (rather than the more “market normal” June), having bottomed at just under 7.2 months of inventory.  Year over year sales for October were down from 532 in October, 2009.

In the $200,000 to $400,000 range, there were 1,690 listings county-wide.  The Absorption Rate, currently at about 13.7 months of inventory, has been rising since August.  And while sales are down, listings are down more, which is driving the absorption rate down.  Year over year sales were down significantly, 116 for 2010 v 208 for 2009.  In effect, while there are about half of the listings of the next lower market segment, there are barely more than a quarter of the sales.

Between $400,000 and $600,000, there were 329 listings in Gwinnett County and 6 sales for October, 2010.  Again, the Absorption Rate had been basically dropping since March, 2010, but jumped up significantly based on weak sales.  Currently it indicates about 31.7 months of inventory.  Inventories are down slightly, but sales are abysmal v last year.  For October, 2009, there were 24 sales.  I can only hope there are some sales that are very late going into the system

In the $600,000 to $800,000 strata, the Absorption Rate indicates 27.3 months of inventory.  That rate has been rising since July (it was 10 months, then).  But, in February there was a 38 month inventory of properties.  For October, there were 82 listings in this price range.  There were 2 sales… down from 4 in October, 2009.

As we move up to the $800,000 to $1,000,000 price level of Gwinnett County, GA, homes for sale, we see that there were 49 active listings and 1 sale for October, 2010.  This has an indicated Absorption Rate of 61 months of inventory.  Because the sales at this price level are less consistent than at lower levels, the rate bounces around a lot.  But, there is an upward trend in the absorption rate… which isn’t good.

On the top level, Over $1,000,000, there were 103 listings and 4 sales for October, 2010.  Here we have seen the Absorption Rate on the increase, despite the inventory dropping.  For August there was about 26 months of inventory.  Sales are up significantly from last year (when there were 0 sales…).  Since this is a very wide range (prices from $1,000,000 to over $10,000,000), there are more listings and sales than the next level down.  Also, the homes are generally harder to compare because this realm is populated with custom homes and “one-offs”.

I’m looking forward to seeing the sales data for November soon.

You might have noticed that these reports lag by a month to a month and a half.  The reason for the lag is that it takes until the end of the following month for the data to stabilize.  So, the data for October wasn’t very solid until the beginning of December.  I have tried to use preliminary data, but it always seemed to veer at the last minute…

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