John Heath & Your Results Team’s Local Housing Market Update – 3rd Quarter 2009
The first thing to understand is that real estate and housing trends must be looked at on a local level. The value of real estate in general and for the purposes of this article, single family detached housing specifically, is driven by the very basic economic principals of supply and demand. In this report we will look at values and trends in the Forsyth, Dawson and North Fulton real estate markets and examine factors affecting near term trends in this area. The following analysis is provided based on data reported by FirstMLS, the primary listing service used by Realtors and Brokers in our market along with additional data and analysis provided from the National Association of Realtors and the Office of Federal Housing Enterprise Oversight. If you want to learn more about what is going on in and around your neighborhood, please visit www.NorthGaHomeSales.com to view more specific data online and/or to register to receive FREE email updates on homes selling in your area via our FREE HOMES SALES ALERT. Locally: North Georgia is still experiencing a Strong Buyer’s Market. During the period January 1, 2009 – September 30, 2009 FMLS reports 3,310 homes sold in the combined market area of Forsyth County, Dawson County and North Fulton, a decline in sales volume of nearly 20% from the same 9 month period in 2008 and over 40% from 2007’s numbers. However, much of this decline is due to very week sales numbers this past spring. Sales during the four months June-September have been much stronger and are off only 12% from the same period last year. Also on a more positive note as it pertains to a recovery in home values, current inventory levels of homes for sale in our area are down nearly 20% to the lowest levels we have seen since the summer of 2006. However, as we look at the overall picture we must keep in mind that a good bit of this decline in inventory is due to a combination of very few new home starts and some frustrated sellers removing their listings from the market until things improve. Given the average sales volume over the last 9 months, current inventory levels represent approximately an 11 month supply of homes (MOI) for the area overall with “6 MOI” typically considered an indicator of a stable market between Buyers and Sellers. Please see chart below for break down by area. County | # Homes Sold Jan - Sept 2008 | # Homes Sold Jan - Sept 2009 | Active Listings October 2009 | Monts of Inventory (MOI) | Forsyth | 1,951 (-28.72%) | 1,498 (-23.22%) | 2,059 (-19.57%) | 10.88 | North Fulton | 1,960 (-29.34%) | 1,642 (-16.22%) | 2,017 (-17.94%) | 9.21 | Dawson | 204 (-22.14%) | 170 (-16.67%) | 433 (-11.63%) | 21.47 | Combined | 4,115 (-28.72%) | 3,310 (-19.56%) | 4,509 (-18.14%) | 10.53 |
The majority of home sales in our area continue to come from homes priced under $300,000 (52%). Homes priced under $500,000 comprise over 82% of overall home sales but only 69% of overall listings in our area. Please see the chart below for a more detailed breakdown of listings and sales by price range for the combined North Fulton, Forsyth and Dawson market area. Price Range | Number (%) Homes Listed | % Overall Sales 9mos. Jan.-Sept. '09 | Current MOI | $0 - $300,000 | 1,824 (40%) | 51.84% | 9.45 | $300,001 - $500,000 | 1,298 (29%) | 30.77% | 11.33 | $500,001 - $750,000 | 751 (17%) | 11.97% | 16.86 | $750,001 - $1,000,000 | 314 (7%) | 3.82% | 22.08 | $1,000,000+ | 322 (7%) | 1.61% | 53.67 |
Nationally:
The National Association of Realtors recently reported, “Existing home sales (single-family plus condos and coops) nation wide increased 9.4% in September to a seasonally adjusted annual rate of 5.57 million units from a 5.09 million unit pace in August (revised down from 5.10 reported earlier. Compared to the same month one year ago, existing home sales were higher by 9.2 percent.
Inventories at the end of September decreased by 7.5 percent and there were 3.63 million home available for sale. Based on the current sales pace it would take 7.8 months to exhaust the inventory. The months' supply of inventory at the current sales pace fell to 7.8 months - the lowest level in two and a half years (or more precisely since March 2007). I would say a consistent months' supply of less than 7 months would be needed for consistent price stabilization. We're almost there, but not quite.
The dent in inventory is helping lessen the severity of price declines. The national median existing home price in September was $174,900, which is a decline of 8.5 percent from one year ago. Though a decline from one year ago, it is the lowest percentage magnitude in over a year.
The National Association of Realtors recently reported, “Existing home sales (single-family plus condos and coops) nation wide increased 9.4% in September to a seasonally adjusted annual rate of 5.57 million units from a 5.09 million unit pace in August (revised down from 5.10 reported earlier. Compared to the same month one year ago, existing home sales were higher by 9.2 percent.Inventories at the end of September decreased by 7.5 percent and there were 3.63 million home available for sale. Based on the current sales pace it would take 7.8 months to exhaust the inventory. The months' supply of inventory at the current sales pace fell to 7.8 months - the lowest level in two and a half years (or more precisely since March 2007). I would say a consistent months' supply of less than 7 months would be needed for consistent price stabilization. We're almost there, but not quite.The dent in inventory is helping lessen the severity of price declines. The national median existing home price in September was $174,900, which is a decline of 8.5 percent from one year ago. Though a decline from one year ago, it is the lowest percentage magnitude in over a year.
Regionally, home sales rose in all four major regions. From August to September seasonally adjusted sales changes were as follow:
• In the Northeast, existing home sales increased 4.4 percent
• In the Midwest, sales increased 9.6 percent
• In the South, sales increased 9.0 percent
• In the West, sales increased 13.0 percent
For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors®.
Sales continue to be dominated in the lower priced homes. Sales of homes priced under $100,000 increased 22.5 percent. For homes priced at $100,000 to $250,000, sales rose 6.0%. Sales are down from one year ago for those homes priced above $750,000. In September, 70% of transacted homes were priced under $250,000.
By metro level, sales were strong in Miami, Houston, and New Orleans - with the latter two seeing a large year-over-year change because of depressed sales one year ago when a major Hurricane hit the region. Among the large metropolitan regions, sales were down from one-year ago in Atlanta, Indianapolis, Pittsburg, and San Antonio.
The annual survey of home buyers (not REALTORS®), suggests that the first-time buyer accounts for 45 percent of all buyers. The number of distressed sales, those that are short sales or foreclosed sales, made up 29 percent of all sales in September. It accounted for 45 to 50 percent of all sales late last year and in the early months of this year.”
Going Forward:
Lawrence Yun ,NAR Chief Economist, reports “the home buyer tax credit stimulus measure is having its intended impact of lifting sales, lowering inventory, and lessening the price decline pressures. Sales in the past 3 months are at a 5.3 million unit pace versus the 4.6 million unit pace in the 3 months prior to the stimulus package. The jump in sales of roughly 15 percent from pre-to-post stimulus is occurring despite 4 million job losses over the same time period. And there are still a sizable number of people who are in a position to respond to tax incentives.
Are there financially qualified renters who are ready to enter the market? NAR estimates that roughly 5 million additional renters exist today versus in 2000 (before the housing market went through a boom) who have the necessary income today to buy a median-priced home. So there is plenty of pent-up demand that could be released into the market.
The housing market is very close to reaching the point of a self-sustaining recovery. When home values show consistent stabilization or even a slight increase, then the buyer fear-factor will no longer be at play. We are ever so close to reaching that self-propelling housing market recovery. But without an extension in the home buyer tax credit the housing market could face a double-dip recession.
We have to be mindful that the tax credit is not only about people in the market. Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet. We're getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.
If home values do not stabilize, expect re-default rates to soar on recently modified mortgages and the first-time foreclosures to ramp up again. Getting trapped in the vicious cycle of lower prices fueling foreclosures and further pressuring lower prices and all the accompanying economic damage is a possibility as well. Why then take the chance when the home buyer tax credit extension and expansion will help firm up the foundation for a sustainable recovery.”
Georgia & Atlanta:
The following perspective on both Georgia and Atlanta’s economic outlook is summarized from the report “Georgia Economic Outlook: October 2009” provided by WELLS FARGO SECURITIES, LLC’s Economics Group. “Georgia’s economy has struggled mightily with the recession and continues to deal with a rising tide of layoffs, foreclosures and bank failures. Weakness is evident throughout the state with the bulk of the problems related to the housing collapse, cutbacks in consumer spending and a slowdown in international trade. Nonfarm employment has tumbled 7.3 percent since peaking in September 2007, and the unemployment rate has surged and more than doubled to 10.2 percent.”
“Atlanta has been severely humbled by the national recession, which hit its key residential and commercial real estate markets unusually hard. Job losses have been the heaviest and most broad-based since the severe 1973/75 recession, which had been the worst in Atlanta’s history. Twenty-four banks have failed in Georgia since the financial crisis began, and most of the failures can be traced to problems in Atlanta’s residential development market.”
“Domestic and international traffic through the Hartsfield-Jackson airport is off considerably from recent years as is the state’s important convention trade. The city has also been suffering from declines in the commercial real estate market with high vacancy rates in the office market, declining office employment and falling property values.”
“Homebuilding appears to be bottoming, but starts remain depressed as inventories of unsold homes and vacant lots remain exceptionally high. Single-family permits are down more than 90 percent from their 2005 peak. Georgia has the sixth-highest foreclosure rate in the nation through the first half of this year and also had the sixth-highest absolute level of foreclosures.” “Georgia and Atlanta are beginning to emerge from the deep recession that has plagued the nation and region for the past two years. Corporate relocations and expansions are notable bright spots. Most important of all, the state’s core competitive advantages remain intact. Georgia and Atlanta offer a compelling value for businesses looking to operate in the heart of the nation’s fastest growing region, with good schools and an unparalleled transportation network. Georgia remains a relatively inexpensive place to do business and Atlanta continues to be the key gateway for firms wishing to set up operations in the United States and the Southeast, in particular. Recent notable arrivals include NCR Corporation, which is relocating its corporate headquarters from Dayton, Ohio, to Duluth and First Data Corporation, which is relocating from Denver to the Sandy Springs area. These announcements along with many others help reinforce our confidence in Georgia’s longer-term prospects, and we expect the state and Atlanta to reassert their leadership positions as the recovery gains traction over the next few years.”
Georgia remains a very desirable place to live and with the strong current buyers market in our area, this is a great time to buy a home in Forsyth County, North Fulton, Dawson County, Cherokee County, Cumming, Alpharetta, Duluth, Dawsonville, Lake Lanier or anywhere in beautiful North Georgia. If you hire a professional Realtor to assist you with your search and the negotiation process, you should be able to start out with positive equity on your purchase. If you need to both sell and buy right now, homes priced correctly and marketed properly especially in the lower price ranges are still selling in an average of 90-120 days and typically at @ 95% of list price. So by pricing correctly on the sale and negotiating properly on the buy you should experience a net gain in wealth on the combined deal and still make your move within a reasonable time period.
This report has been provided courtesy of John Heath & “Your Results Team”, your North Georgia real estate experts. John and his team are widely recognized as one of the top selling teams in Georgia and the preeminent experts on the residential housing market in Forsyth, Dawson and North Fulton counties. Learn more online @ www.NorthGaHomeFinder.com.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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