They asked Warren Buffet about the real estate market, “How do you know when you’ve hit bottom?” He replied, “…about a year later”. I have great news about the Metro Atlanta real estate market. Best of all, we now have a quantifiable trend. Before whenever we had good news, there was always an “asterisk” next to it, like in 2010 when the good news was a result of an outside influence, the tax credit. OR like last year, when one distinctly positive trend was over-shadowed by a negative one: in 2011 sales were up 15% but prices still dropped.
Here we go! Market Stats for Metro Atlanta* as of Q3 2012:
· 12% increase in sales price in Q3, which followed a….
· 5% increase in sales price in Q2
· First back to back quarterly Price increase since 2007!!!
· 12% increase in number sold
· Average Days on Market Down 28% from 76 down to 106
· Distressed sales, although still high, are down 10%
And most notably (queue the dramatic intro music)……
4.8 months absorption, putting us WELL IN TO A SELLER’S MARKET. Wahoo!
Bottom LINE:
Seller’s: Let’s talk. We are in a seller’s market almost everywhere, and we have a severe shortage of quality listings out there. I have been able to take chances with many listings on the high side and have won!
Buyers: Yes, you missed the absolute bottom. The GOOD news is: a) you KNOW the bottom has passed, and b) the rates are 1% lower than last year which equates to the same payment as a home 10% cheaper. You win again!
Details for all you ‘stat nerds’ like me:
We saw a “seller’s market”** appear in Q2 of this year. And although I saw it coming, I was not screaming “we are in a seller’s market!” because that low absorption number was driven by an irrationally high number of sales in the lowest price points. In the middle and upper price points ($200k+), we were still in a buyer’s market, and in most higher priced areas, like Buckhead and Intown, we lagged in our correction.
So here is the REALLY good news: We are in a “Seller’s Market” all the way up to the $500k price point!. Those higher price points: $500k-$750k are at 8.3 months absorption, which is at the cusp of a “balanced market”, and the $1mm+ market is running 18 months….which sounds like a lot, but that’s down from 25 months last year and 4 YEARS the year before. Those numbers are dropping faster than I ever would have imagined! Can I get another “wahoo”!
Now, don’t get cocky…we have a way to go before prices completely recover. But for the first time in a long time, we can see where that will happen, AND in opposition of many “negative nelly” economist, it WILL be in OUR lifetime. If this current trend continues, that price recovery could be in 1-3 years! (That’s optimistic by the way and is contingent on way too many factors to mention).
* My “Metro Atlanta” consists of the 8 “inner” counties: Fulton, Dekalb, Gwinett, Cobb, Paulding, Douglas, Cherokee, and Forsyth.
**The ‘supply demand ratio’ is commonly called MSI = “Months supply of inventory” or “absorption”.
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