Source: Atlanta Business Chronicle
Atlanta Fine Homes Sotheby’s International Realty’s President and Founder, David Boehmig, was featured in the Atlanta Business Chronicle today sharing his opinion on the current housing market in Atlanta.
Home sales, along with job growth and improving consumer confidence, are three of the most important keys in our economy’s ability to show a steady, sustained recovery. This past week, it was reported that the Atlanta residential housing market was dealt another blow and that home values continue to plummet. In terms of average sales price at the lower price point of the housing market, this is true. However, there are plenty of nuggets of encouraging news that don’t seem to be making it to the light of day. In reality, I believe we are forming the foundation of a steady period of recovery that we may look back on and realize was the bottom of the Atlanta housing market.
Here are some facts: Across all price points in the six-county metropolitan area (defined as Fulton, Cobb, DeKalb, Gwinnett, Cherokee and Forsyth counties) through the first 10 months of this year, as compared to the first 10 months of 2010, the inventory of available homes (single-family residences and condominiums) for sale in the city’s largest MLS, First MLS, is down by 23.7 percent. Falling inventory is one of the components that make up a value environment of increasing prices as less housing inventory on the market means there is more competition for homes. Over the past year, the number of months of inventory of available homes for sale, determined by the number of homes that sell during the period, has dropped from an 11- to 12-month supply, to seven or eight months. In other words, based on the current level of sales activity, it would take seven to eight months to absorb all of the homes currently on the market. As the month’s supply of homes on the market approaches six months, we will then begin to shift from the buyer’s market that we are currently in to more of a balanced market between buyers and sellers. Another component indicative of recovery is the number of homes being sold. So far this year, over 4,400 more homes have sold and closed than in the same period last year. If these trends continue, basic economics teaches that the laws of supply and demand will kick in, and prices will begin to rise.
What is more interesting, however, is what is happening in our market below the surface of these “overall” statistics. When I drill down and examine the market by price ranges, a pattern begins to emerge. The pattern is that, in general, across the metro Atlanta area, the higher the price range of house, the stronger the signal of recovery emerges. For example, as compared to the recent overall value reports, when you look at only those homes priced over $250,000, instead of values dropping by the overall 9 percent, the average prices actually rose over the last 10 months by 2.5 percent. That’s quite a swing. In reality, for many homes in our market area, the average sales prices are steadily increasing. Just as it is difficult to base local housing values on national statistics, it is not accurate to use overall market statistics for Atlanta to determine what is happening with values in a particular community.
So, what does all this mean? One, if you cull out the lower-priced houses in our Atlanta housing market, you come up with not only lower inventory levels and higher numbers of homes sold, but also modest increases in average sales prices. Secondly, and most importantly, a few months from now when buyers feel that sinking feeling in the pit of their stomach and look in the rearview mirror, they just might realize they missed one of the best opportunities to buy residential real estate they may ever have.