Residential Report
by By Wendy Bowman-Littler | Men’s Book Atlanta magazine | March 16, 2011
While Atlanta’s high-end housing market remains sluggish, buyers can still benefit from low interest rates and snag attractive deals on current inventory before prices climb. The overall consensus? Opportunities abound for consumers hoping to buy property in neighborhoods that previously would have been considered out of reach.
What is the state of the luxury home and condo market in Atlanta?
David BOEHMIG We have growing sales and decreasing inventory—both good signs of a market moving back in balance. In the metro area, there are 26 percent fewer $750,000-plus homes on the market compared to last year at this time.
Kevin GRIECO We still have some good inventory available in the $500,000-and-up market. Qualified buyers aren’t having as difficult of a time finding financing options, and that is helping some of the upper-end product finally move.
Pauline MILLER Inventory is up, keeping home values down. However, due to low interest rates and a strong relocation market, demand is strong. We expect to see an improvement in home values in 2012, as more and more consumers take advantage of the buyer’s market.
Wade HUNDLEY The market bottom has happened, and things are starting to look up. There’s still a fair amount of product in the market, but the properties that are high-quality and have owners that can support them are going to do the best.
What can consumers expect to see happen in Atlanta’s luxury home and condo market in 2011?
Boehmig Increasing sales, as measured by the number of homes sold and closed, but not much of an appreciation in prices. In fact, home prices may soften just a bit more before they begin heading back up, depending on how fast foreclosed homes reenter the market.
Grieco Given the fact we have no new product currently being built, we have no place left to go except a strong seller’s market. Granted, we are still three to five years away from that. Many of the newer buildings, such as Viewpoint, Gallery and Terminus, are nearly sold out. This leaves the very high-end buildings like Sovereign, The Ritz-Carlton Residences and The St. Regis. I suspect we will see some slight downward price movement in the very upper end throughout the year.
Steve Palm We hit a new bottom last quarter, and it’s still tough right now. I think we’re going to be up in 2011. The economy improved slightly. Spring 2012 is when you’re going to start seeing some serious improvements.
What types of luxury homes/condos have sold recently in Atlanta?
Grieco The St. Regis sold one condo for $4.5 million in September and another for $2.9 million in November. The Ritz-Carlton Residences sold two condos for $1.1 million each in November. Sovereign closed two units at $1.3 million in early winter. There are buyers out there paying huge dollars to be in these buildings.
Palm One home listed for $4.5 million recently sold at $2.8 million, while another $2.8 million property went for $1.4 million.
What types of homes/condos will continue to be a popular choice for homeowners?
Boehmig More manageable homes, in terms of size, and homes that offer proximity to the arts, restaurants, entertainment and places of interest, especially ones with high walkability scores.
Grieco Condos with access to shops, restaurants and night life. Service-rich buildings are also hugely popular. Buyers who are spending their hard-earned dollars also are more focused on the construction and quality of finishes than ever before.
Will it continue to be a challenging time for sellers?
Grieco It’s really up to them. In fourth quarter 2010, 66 out of every 100 listings failed to sell—most likely due to overpricing. And of the 34 that did sell, 22 required a price reduction. That means 88 out of every 100 listings were overpriced. Sellers who are priced correctly are getting multiple offers.
Miller Until the supply is reduced, values cannot improve. However, as long as pricing is in line with current market value, the property will sell, typically within 60 days of the initial offering.
Can buyers expect to get good prices?
Miller Yes, brand-new homes with all the bells and whistles are now available at 60 percent of their original price.
Wight M. Mixon One of the best opportunities that this market presents is for the person who is looking to upgrade. If they are willing to take a hit on selling their current home, they will more than make up for it when they go to buy a more expensive one.
Palm Buyers will continue to get really good prices. We went back to 1998 prices in 2010. With interest rates almost at historic lows, first-time buyers are able to get these high-priced homes like never before. Investors are buying up a lot of foreclosures.
What will the challenges be in 2011?
Boehmig Managing buyer and seller expectations in what will seem like a return to good market conditions. In reality, there will be more homes sold, but there will still be more supply than demand. Also, rising interest rates will catch some by surprise. This will actually be good for sales, as it will get some folks off the sidelines and into a contract.
Miller Financing, especially for non-warrantable condominiums. Prices will continue to be held down to remain within the limits of FHA financing. For buyers
MEET THE EXPERTS
David Boehmig, president and founder of Atlanta Fine Homes Sotheby’s International Realty
Kevin Grieco, realtor with Keller Williams Realty Peachtree Road/atlantaSKYrise
Pauline Miller, Brightstar Realty Services
Steve Palm, SmartNumbers
Wight M. Mixon, 2011 president Atlanta Board of Realtors, and sales associate at Beacham and Company Realtors
Wade Hundley, CEO of ST Residential