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Tag Archives: real estate

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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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…

5 Keys To Finding THE Deal…

I can’t think of a buyer I’ve talked with in the last couple of years that has not been looking for “a deal”.  Of course, the definition changes for each individual, but there is always a “deal” component.

New development near Drumrooske Pristine and r...

New development near Drumrooske Pristine and ready to be occupied, but there is no rush of buyers in the current financial climate. (Photo credit: Wikipedia)

There are a few keys that go into getting that deal, though…

  • Be READY.  Not just ready, but READY.  The first key to getting a good deal is to be ready to jump on it when it appears.  I have watched some great properties at excellent prices hit the market and get multiple offers on the same day.  Despite the idea that persists among buyers that this is a “Buyer’s Market“, if you are looking at properties under about $300k (depending on area and neighborhood), it isn’t.  That is borne out by the Market Reports, too.
  • Have your financing lined up.  I can’t stress enough that buyers need to pre-qualify.  Not a weak, “chat on the phone” for a minute kind of pre-qual, but a “pull credit reports and let the lender know EXACTLY what is going on” pre-qual.  Some lenders may refer to it as a pre-approval.
  • Be “In the Know”.  Sign up to get listings delivered every day.  If you don’t jump fast, the best properties will be gone.  When the property that meets your needs and desires hits the market, you want to know.  It doesn’t matter how approved you are if you don’t know the properties that are hitting the market.
  • Along the same line, being in the know means looking at property in order to recognize the deal when you see it.  There really isn’t a substitution for getting into properties and seeing what they look like, smell like and how they flow.  Pictures help… lots of pictures help more… but that isn’t a replacement for seeing some properties.  It also helps with the mental frame of mind to be prepared to make an offer.  If you have seen several properties, you may be less likely to wonder if the next property is going to be just a little better.
  • Avoid “Analysis Paralysis”.  Look at the deal.  Be ready when you recognize a good deal.  Make sure you are comfortable.  Pull the trigger.  I’ve watched a lot of buyers lose the house that they really loved because they wanted to think about it for just a couple more days.  It might still be there… or it might not.  The better the deal, the less likely it is to stick around.

Failing all of that, there is another thing which goes a long way toward getting a deal.  Don’t care about the house…  That is why investors get such great deals.  They offer and then move on.  If they get it, cool.  If not, still cool.  It isn’t about the house… it is about the deal.  Of course, they don’t actually live in the houses they are buying like that.

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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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