Real Estate Market Report: February & March, 2008
We missed last month in posting our market update. Although the market is slow overall, we have been as busy as beavers trying to keep up with all we have going on.
March & April single family sale prices are mixed
The residential marketplace for Clayton and Henry counties continued its decline in February and March of 2008. This was expected, especially in Clayton County with the school system staying in the news.
Fayette County saw a significant increase in March, but this was probably due to one or a few very high priced homes selling. We have not researched this, but should the increase hold in April we will go back and take a closer look. It may even be due to a typo by a real estate agent entering the wrong sales price in MLS. So, we are not excited at this point.
More Foreclosures Expected
Two Million. That is the number of home foreclosures expected nationally this year that we heard being tossed around the other day. So, the resell of foreclosures by lenders will continue to have a detrimental effect on the marketplace for some time to come.
Got people? We need them.
We were informed this week by a reliable source that there are in excess of 145,000 developed lots sitting vacant in metro Atlanta. According to U.S. Census information, in 2006 there were 2.57 persons per household. So, using this number there are now enough vacant developed lots available to house 372,650 new residents in metro Atlanta. This does not include all of the new homes sitting and waiting on new owners. If you have ever considered moving to the Atlanta area, come now. We need you! (And you will probably find your best deal right now.)
Retail appears to be slipping.
Vacancies in retail strip centers, particularly in secondary locations continue to appear to be on the increase. Should this trend continue we should begin to see some drop in the sale prices of these buildings. We are watching this fairly closely.
The News is not all bad....
Among all the gloom and doom there is some good news.
A month of so ago most of the news analysts were asking when we would hit bottom. Over the past week or so, I have noticed more and more asking if we were now at bottom. It seems attitudes are beginning to shift. While slow, it is a shift all the same. Once at bottom, there is nowhere to go but up!
Local building supply employee is optimistic.
I was also talking with an employee of a major building materials retailer this week. I have known him about 30 years. He has been with the company over a decade, working in the same department. Prior to joining that company he was in a similar line of work for many years
He reports that sales for remodeling is up because people are fixing problems rather than moving and that business with those who invest in distressed properties has increased significantly. All of that makes perfect sense.
He also reports that the attitudes of many of the contractors and sub-contractors he deals with are beginning to change, but he couldn't give a specific reason other than he felt they were beginning to sense the market bottoming out.
Like many, he feels that if everyone would quit talking about the slowdown things would improve.
Distressed developments are beginning to move.. or at least wiggle.
It seems that the development crash in south metro Atlanta occurred in the third quarter of 2007. Residential land and developed lot sales after about June of 2007 were primarily the consummation of contracts entered into earlier, so those prices remained pretty much at pre-crash prices.
We are just now beginning to see the resell of foreclosed developed and partially developed lots. Details remain sketchy at this point, but we expect prices to be well below what a comparable property would have sold for at this same time a year earlier. We will likely provide more analysis on this in our next update.
The good news is that such properties are starting to trade hands. Developers do not buy these properties unless they feel they can complete the development and sell-out for a profit. While some developers will begin to snatch up bargains early in the game, many more will wait so long that the bargains will be missed.
Lenders and government agencies continue action.
Adding to the positive side are actions being taken on the national level by both governmental and non-governmental entities. Adjustments in interest rates and loan terms coupled with lower housing prices have made residential mortgage payments more affordable.
Steps are also being taken to try and reduce the number of foreclosures entering the marketplace. Although the effectiveness of these actions are being questioned by many the attempts are being noted in the marketplace.
Apartment land sales still solid.
Care has to be taken when comparing single family and multi-family residential land sales. It is the lot/unit yield that often dictates the sales price, not the number of acres. So, don't take per acre sales prices at face value. They often do not tell the complete story.
Foreclosures Overlooked
It has been reported to us that in order to lure new tenants into their properties, some apartment managers are ignoring strikes against a potential tenant's credit report due to having a recent foreclosure. Former homeowners who allowed all their other bills to get behind trying to save their home my still find it difficult to rent in many apartment communities.
In Summary....
Attitudes appear to be improving cautiously in both the national and local sectors and a change in attitude is the first step to recovery. But attitude does not change the hard cold facts: local sale prices have thus far continued their decline.
Are we at the bottom yet? We don't know for sure, but we feel we are very near it as far as single family residential goes. For the past few months we have been preaching "Buy! Buy! Buy!" and some have been listening. We continue to expect a stabilization of the marketplace in late spring or summer, and more and more of the experts are beginning to agree with us. (Which actually scares us a little.)
We feel the commercial market is probably still well above bottom. It seems to be following the residential market for the moment, but on about a six-month delay. Should a recovery of the residential market begin it may lessen the decline expected in the commercial market.
How all of this affects you depends on your specific circumstances. But, in general, if you are interested in buying a house, buy now. If you are interested in selling your commercial property, sell now.
For more information concerning buying or selling real estate in south metro Atlanta, contact BrandeBradford today.
