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Category Archives: sellers

Are We At The Bottom Yet?

Historic downtown Marietta's town square

Historic downtown Marietta's town square (Photo credit: Wikipedia)

It seems that every time someone figures out I am in real estate, the next question is…

Are we at the market bottom yet?

The answer is… that I don’t know.  And anyone that tells you that they DO know is either lying or from the future.  I’m not banking that they are from the future.

Prices in the Atlanta area are WAY down from the highs of 2006-2008.  In some areas, it is more than 50% down from those highs.  In other areas, we are “only” down 30%.  Day after day, I talk with people that are underwater, or just plain mad that their values have eroded to the extent they have.

Right now, there are a couple of things in favor of calling a “market bottom”… beginning with inventories.  We are at historical lows in inventories.  And at a time when we usually see them increasing (Spring), they are still dropping.  Meanwhile, year over year sales are growing strongly.  Those are both good things for the recovery of the market (unless you are a buyer looking to “wait for it to go lower”).  Supply is decreasing and demand is increasing.  That generally should lead to a strengthening of prices.

But all is not “milk and honey” in the real estate realm.  A large percentage of sales in the Atlanta area, and in Gwinnett County, is tied to distressed property… foreclosures and short sales.  Not just that, but those sales are largely at the bottom of the market… entry level houses.  Under the $200k level, the Absorption Rates are generally well under 6 months.  Some are barely above 3 months of inventory.  At the same time, move-up homes are not doing as well.  Passing $300k, A/Rs are mostly over 12 months.  In effect, there is twice as much inventory are there should be for the level of sales.

The latest reports say that the foreclosure pipeline is about to get filled again, too.  With the settlement of the lawsuit between major lenders and most states, banks are free to continue foreclosing on distressed properties.  While there are a lot of people that aren’t happy about that, it is a needed step for recovery.  BUT, we have been hearing about the “next wave of foreclosures” for more than three years.  It has always been just a few months away.  It is still just a few months away.

Here is the bottom line, in my opinion…

If the next wave of foreclosures breaks on the shore, then there will be a round of price erosion.  There will be an increase in supply, and demand likely won’t be able to keep pace… prices will drop.

If the wave fizzles before hitting the beach, we have already seen the bottom in the entry level market, and that bottom will soon pass at higher price levels.

If the jobs picture brightens, the foreclosure wave won’t matter as much.  Demand will pick up much, if not all of the excess supply.

If the jobs picture dims, the market will continue to slide.  The fizzling of the foreclosure wave will keep us where we are, at best.

As a side note, the unemployment rate is NOT a measure of the jobs picture.  We need to look deeper… like at the employment rate.  We actually still have a decrease in the percentage of employed Americans, despite the unemployment rate dropping.  The unemployment rate does not take into account discouraged workers that have left the job market.

So, how do you feel about the people telling you that they know where the market is going?

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Suwanee, GA, Market Report, March 2012

This map shows the incorporated and unincorpor...

Image via Wikipedia

Market stats for Suwanee, GA, March, 2012 indicate that there were 420 properties on the market (down from 443 last month).  Overall, there was about a 6.2 month supply of properties (down from 7.3 last month).  March had 100 sales.  Compared to March, 2011 (53), this year was a stronger.  Inventory was down compared to 2011 (621).  There were 64 sales last month.  This is the first time that I have noted decreasing inventories this time of year.  Combined with the increasing sales, especially at the entry level, the market is looking strong.

In the Under $200k arena, there were 115 listings in Suwanee, GA, with about a 43.9 month supply (133 and 4.3, respectively last year).  This March’s sales were WAY up, at 42 (19 last year, 30 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, though.

Between $200k and $400k, there were 195 listings for sale (299 last year, 195 last month), and 6.9 months of supply.  Sales in March, 2012 were 42 (27 in February), 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.  And for the last few months, despite there being more listings in this segment, the under $200k segment has had more sales.

From $400k to $600k, there were 59 homes on the market.  The absorption rate was at 9.3 months (12.4 in February).  There were 10 sales in March (4 in February)… up by 5 compared to last March.  Looking at the three month average, there were 19 sales this year and 11 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.  I was looking for close to 12 sales for March… we pulled out 10.  That isn’t bad.

In the $600k to $800k arena, there are 21 listings, with about a 10.5 month supply.  Sales at this level are not consistent, but there were 3 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 5 homes listed and 15 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 25 properties listed.  The current absorption rate indicated about 18.8 months of inventory, but because of the smaller numbers of sales, this could be significantly impacted by just a couple of sales (only 1 for December, 2 for January and 2 for March).  In this segment, we should be seeing reduced inventories…  There were 26 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.

Atlanta Metro Zillow Home Value Index

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The 2nd Most Important Part of the House…

Because it is where the food comes from and many of the cold beverages are stored…

We all like a nice kitchen, right?  Even us garage guys…

Gwinnett Market Impressions…

Gwinnett County Historic Courthouse, Lawrencev...

Gwinnett County Historic Courthouse, Lawrenceville GA (Photo credit: Wikipedia)

I won’t have the March sales figures for Gwinnett County for a few more days, but I do have a few thoughts on what I have seen from the Listing numbers I pulled down on the 1st of April.

Listings are down.  And that is weird.  VERY weird.  Not just down year over year… that isn’t weird at all.  But they are actually down from month to month.  And in this market, that doesn’t happen (although I can’t really say that now… because it just happened).  Looking back over the last few years, listings tended to bottom out in January… March would be up over February, April over March.  We’ve been going down for the last two months instead.

Of course, I still hear the media and a LOT of other real estate agents telling me about the “coming wave of foreclosures” just waiting for the banks to decide that they should release them.  If they had the “shadow inventory” everyone is talking about, they would be releasing it.  For this market, there wouldn’t be a better time.  Listings are down and this is when sales are generally moving up.

Looking back at the last year only confirms this.  We’ve seen Absorption Rates under 6 months in most of the segments with the dropping inventories.  (Translation: This isn’t a shocker…).

What does all of this mean?

Map of Georgia highlighting Gwinnett County
Map of Georgia highlighting Gwinnett County (Photo credit: Wikipedia)

I think we are seeing a bottom for some segments… specifically homes priced under $200,000 to $400,000 (I don’t know exactly where the line is… but homes under $200k are solid right now… homes over $400k are looking pretty shaky still).  Could prices erode further? Absolutely.  But I think that without a change for the worse in the economy, we are probably at the bottom of those properties here in Gwinnett County.  The higher price ranges might be bottoming or might not… but I have a lot less certainty over $400k.

There is actual competition for properties at the entry level.  Multiple offers and homes selling over list price.  The homes that are priced “right” are getting snapped up.  Over-priced houses are still languishing on the market, though.  But a couple of years ago, there was hardly a “priced right”.

 

Now we just need to get the higher priced segments moving again…

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Let’s Talk Garages…

Making a cool garage is pretty easy… there are only a few steps to take, and most of them aren’t that expensive… unless you are shooting for a display case for your cars.  Those can get pretty pricey.
Watch the video and let me know what you think.
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