So much to talk about...

It's been a few months since I wrote about what's happening in the Atlanta market.  Since April, things have continued to change in ways that make sellers very happy campers while frustrating buyers and investors.   Here's a run down of what's been happening since the first of the year.

INVENTORY AT AN ALL TIME LOW

The biggest talking point city-wide is the current state of housing inventory.  Since the beginning of the year Atlanta has seen the absolute lowest number of properties on the market listed with Realtors.  According to FMLS, one of Atlanta's MLS services:

"Active inventory level for Residential Single Family Detached continues to drop with 16,532 active listings as of the end of May 2013 vs. 22,142 active Residential Single Family Detached listings as of the end of May 2012.  This represents drop in active inventory for Residential Single Family Detached of 25%.  Active inventory level for Residential Single Family Attached continues to drop with 2,410 active listings as of the end of May 2013 vs. 3,883 active Residential Single Family Attached listings as of the end of May 2012. This represents drop in active inventory for Residential Single Family Attached of 38%".  

This is making buyers and especially investors, anxious and very competitive in terms of their approach to how they make offers on houses nowadays.  Most investors still have certain yield requirements but are going back to the drawing board as prices continue to climb.  Yield compression is pushing small-time investors out of the market while the larger fund-type investors push forward in their quest to build up their residential portfolio.  And then with multiple offers (sometimes into the teens) you can imagine what's happening.  Listing agents are having a tough time keeping up. 

That might change soon.  Word on the street is that foreclosures are on their way back and that we'll see a new wave of properties coming onto the market.  Ok, it might be more of a splash than a wave but still it appears that there might be a bump in inventory numbers coming soon.

RISE OF THE MORTGAGE RATES

Another reason for the low inventory numbers has been attributed to the historically low mortgage rates.  Buyers sitting on the fence soon jumped into the game to get themselves a new home at a good price.  But it quickly became a seller's market and prices started to climb.

And we're now seeing the start of a climb in mortgage rates - jumping the most since 1987 to almost a two-year high according to a report recently released, in part, by the National Association of Realtors and the Mortgage Bankers Association.   Traditional buyers (not the all-cash investor-types) are out in droves trying to lock in and get something - anything - under contract before rates push dream homes out of their reach.   As this continues, however, those greatest hit will be people trying to refinance and folks looking for recreational properties.  Will this affect prices?

PRICING HAS A MIND OF ITS OWN

I've touched on this above but here it is again.  Prices are climbing throughout metro Atlanta.  Actually, it's a phenomenon being seen in most metro areas across the country.   According to FMLS statistics, there's been an almost 23% increase in the single family average prices since this time last year.  Ok, that's considering all price points, city-wide.  Certainly there are pockets that are seeing less increase but still...you get the idea.  The low inventory numbers and low mortgage rates fueled most of this but now what?


Where's it all going and how does affect buyers and sellers?  Well, at the moment, it's still a seller's market.  Lenders are benefiting as they are recouping more on their REO asset values.  Private owners are benefiting as well - especially those attempting a short sale.  The down side there is that the lenders on those short sales might back off approving such sales as they continue to monitor the market.   X today might be X+ tomorrow and they want to be sure they're not writing down more than they have to.

Buyers and investors are not doing so well as they feel the heat of the competitiionbut when you sit back and consider the big picture, prices are still below historic highs and still offers a good bang for your buck.  

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I think that's enough for now.  I know people like to get information in small doses sometimes so I'll close and come back with updates as things change.  If you have questions on the market, please let me know.  I'm happy to help.

John Breaux, CDPE, CIPS

Investment Broker

+1 678-230-9613

Information contained herein is for informational purposes only and should not take the place of professional due diligence and/or market research.  Always speak with your tax or legal adviser before making any investment decision.

The Winds of Change

Finally, after so many years of stress and seemingly endless hand-wringing, it looks like the markets are changing.  Yes, we've begun to see a move away from the deluge of REO-bank owned real estate to a slow up-tick of families looking to either get into their first home or move up into something new and improved.  

No, it's not perfect yet but we're seeing those little green sprouts.  Mortgage rates have stayed relatively low - although that might be changing in the next few months - so people are taking advantage of this and the fact that we have a historically low inventory of houses on the market.  That means it's a sellers market.  Yes, it doesn't make it easy on buyers to "negotiate" but with prices still at the lowest prices in the last decade you can get more house today then ever! 

Ellen Shows Funny Real Estate Listings

Why should I use a real estate agent?  This is a question we hear regularly from people trying to sell their home.  Many try to sell on their own using a For Sale By Owner sign in front and a listing on Craigslist.  More often than not, they end up working with a listing agent because they realize they don't have the time to do two jobs.  Their normal 8 to 5 job AND playing real estate agent trying to accommodate buyers who want to see the home at all hours. 

They also realize that they just don't have the resources an agent has - especially an agent who's been in the market through thick and thin.  

Who knows how to navigate through mortgage qualifying, showing the house in its best light and schmoozing buyers and their agents.  Good agents make themselves available anytime a buyer needs to talk about the listing or see the house.

If you're thinking of selling your home, interview a few local agents.  You can ask friends and family who they might recommend and check on line sources like Zillow or Trulia to find recommended agents.  

For more information on the Atlanta market feel free to drop me a line.  Visit my personal page at http://johnbreaux.gmediaagent.com/  I'll be happy to answer any questions you might have. 

John Breaux, CIPS, CDPE

Investment Broker

Working on EasyStreet

EasyStreet Realty, that is.

    I made a move recently to a more traditional real estate firm.  EasyStreet is more retail oriented and not so much on the REO/bank owned property listings and sales.  That said, I'm still very active with my investor clients and look forward to continuing our work together.

   The market has definitely swung right into a retail setting.  That is, more and more buyers are locals looking to change their current housing situation and finding that now's probably the best time to do that.  Mortgage rates are still at all time lows but inventory is low too so sellers are pretty firm on their pricing.  In some pockets of the metro area, we're seeing a 15% year on year increase in pricing!  As a result, there's been yield compression on properties being bought for investment purposes and some investors are getting frustrated because of the move of large institutional investors like Blackstone into the market.

Since about mid summer 2012 we've seen the inventory level decrease month by month.  Most seems to be attributable to banks moving to allowing more short sales - letting owners work out the sale of their home for themselves - and also the "robo signing" fiasco we witnessed being resolved over the last 12-18 months.  Of course, with short sales the bank still has to approve the sale and it still seems to be taking an exorbitantly long time to get to that approval.  

So 2013 is starting off strong.  I've been very busy since right after Christmas.  How long will it last?  Who knows?  Investors are losing the yields they've been aiming for since entering the market 6, 12, 18 months ago.  Some are accepting it and are still active while others are sitting back and regrouping.  More traditional buyers are waking up after five years of forced sleep to start shopping around for a new home for their growing families.  They're moving from the burbs to city locations because they can now afford to live closer to work.  They can now afford an older home they can fix up.  They can now afford a larger home.

Welcome to 2013 and the "new world order" of residential real estate.  If you have any questions, please feel free to contact me.  I'm here to help.

John Breaux

+1 678-230-9613

jsbreaux@gmail.com

Information contained herein is the opinion of the author.  Any statistics relating to the Atlanta market or individual properties should be verified independently.  Please order an inspection whenever considering a property purchase.