Much like the weather, real estate tends to be cyclical and while we have been in a prolonged, painful drought in terms of sales and prices, there are encouraging signs that things may be turning around.
The good news is that overall sales in our area jumped nearly 27 percent when comparing January 2011 to January 2012.
While much of that activity fell within the $0 to $150,000 range, it does support another optimistic trend we are witnessing. In a quarterly, year-over-year comparison, available inventory in this price range decreased by 27 percent.
Better yet, inventory for sales across all price ranges dropped even more — by 29 percent. For fans of the law of supply and demand, this can only portend good things for real estate’s current lagging indicator — housing prices. Speaking of which, one of the driving forces behind the rise in pending and closed sales across the pricing spectrum can be attributed to the revised expectations of sellers. There is no denying prices softened dramatically over the past several years, but it has taken sellers a lot longer to adjust to this “new reality” than buyers.
Supported by historic lows on interest rates, buyers have been active in the market waiting and searching for the best value for their dollar and with a plethora of choices, they could stand to be demanding.
As inventory continues to shrink, and more houses sell, stabilization in prices is sure to follow. Another positive sign we are seeing is the re-emergence of multiple offers on properties. The reason, I believe, is the fact that houses are being “priced right” from the start.
As the managing broker of a firm with offices in Alpharetta, Buckhead and Intown, I have seen this happening more and more frequently and am encouraged by the trend. It is also why I urge our Realtors to make certain homes are properly prepared for the market. That includes ensuring they are in good condition, effectively marketed and set at a price that’s right — for the home, for the neighborhood and for the market in general.
Of course, I would be remiss not to mention that some news remains negative, including metro Atlanta’s ranking as fourth in the nation in foreclosures. Despite this undesirable distinction, ABR’s monthly statistics show that foreclosures made up 53 percent of total sales in January — a sign that these properties are moving off the market and being absorbed back into the ranks of homeownership. Based on the law of supply and demand, many view this as an indication prices will rise in the long term.
However, what encourages me most is that we are seeing such a marked increase in sales during a traditionally slower real estate selling season. If we are witnessing bumps of 27 to 29 percent in January, what then can we forecast for the market during spring when housing sales, much like the weather, usually begin to heat up?
Additionally, we are also seeing a tick upward in demand for new construction. With historically low interest rates, consumers are looking for bargains on something fresh, clean and new. Builders have begun searching for premium lots in good school districts, mostly through urban infill. One potential drag on this market is currently builders typically have to pay cash for the lots because of restricted financing. While there are some new reports indicating a slight easing in those requirements, it is difficult to portend exactly when that might happen. However, when it does, you can be sure builders will be ready to meet this growing consumer demand. As many of my fellow Realtors have recently observed, if you are currently in the market to buy a home, there may not come a better time.
See is senior vice president, managing broker and founding partner at Atlanta Fine Homes Sotheby’s International Realty and president-elect of the Atlanta Board of Realtors.