The Real Estate Market in Atlanta is Upward Bound

Over the past five years, the real estate market took some now obvious twists and turns. In recent months, many local markets have made a noticeable shift into seller’s market conditions.  Fear of loss is new ingredient in the buying process, especially in popular markets, and, markets under $200,000, that have seen drastic shortages of acceptable homes for sale.  No longer are buyers looking at ALL of the available inventory before deciding to make an offer. In fact, many investors are making “blind” offers on properties that they have never seen before. Most investors participate in the under $200,000 market, of which over 70% of all sales in Atlanta are below $200,000  and this activity has caused medial sales prices to fall by 9.2% in 1Q 2012 (See Chart 1).  As many federal agencies give preference to owner occupants and non-profits, many days all available inventories for investors are SOLD OUT! Most properties under $100,000 are enjoying multiple offers, and, acceptable offers are usually well above list price. 

Chart 1

While sales have increased during 2012, the number of Active Listings in Atlanta are at a 12 year low in Atlanta (See Chart 2). The shift in Atlanta of recent months is for it to become a seller’s market.  By definition, sellers are predisposed to having the upper hand in a seller’s market because there are more buyers than there are houses for sale.  Just like the frenzy for milk and bread when a snowstorm hits, a seller’s market means lots of emotional activity and rising prices for inventory. Once again, we have to worry about scared appraisers appraising property correctly with prices once again on the rise.

Chart 2

Appreciating how buyers can be attracted to distressed property purchases becomes more evident when the median sales price for all distressed properties may be nearly half (-46.9%) that of all non-distressed properties (See Chart 3). Monthly median sales prices reached another new low point in January, 2012.  The steep decline in median sales prices coincides with increases in the percentage of distressed properties sold in each period as we still see a large percentage of distressed sales, and current sellers are struggling to compete with distressed properties, are often having to reduce their property to compete (See Chart 4).

Chart 3

Chart 4

Median Sales Prices shown monthly, by year, illustrates the degree to which prices have declined compared to other recent years (Chart 5 ). Historically, as sales shifted more toward lower price ranges after 2007, the median of median sales prices were forced down.  The median sales price is the price at which half of sales are at higher prices and half are at lower prices.  Monthly median sales prices in 2012 are once again consistently lower than in all previous years since 2003.  Hopefully, the illustration depicts the bottom of the market occurred in January of 2010.  Since then, the usual seasonal low points in January have been higher in both 2011 and 2012, possibly indicating a base for continued sales growth and price increases.

Chart 5

Chart 6

Atlanta has become the capital for national and international investors. Conventional, Uninsured and Cash purchases represent more than half (60.1%) of all purchases in 2012, nearly equal to that of 2011 except that the mix in 2012 shifted more to Cash purchases and continues to rise.  Ridiculously tough bank loan requirements even in a weaker market, has caused many buyers to pay only with cash.

In summary, there will most likely never be a better time to buy investment properties.  Those looking to acquire great deals for rental or flipping must plan on paying more than list price on any properties under $100,000, especially if the property is owned by a government agency.  Although cap rates on most rentals are above 10% for properties under $200K, cap rates are declining with the competitive nature of multiple offers causing median prices to increase. As a matter of fact, over 20% of sales are over list price last quarter and that number is rising weekly.  Quick action and serious offers are required when high-value properties are found.  There is so much cash chasing such a tiny inventory of listings, most investor properties are experiencing multiple offer situations.  In conclusion, a tiny inventory of listed properties, available cash from investors, and high cap rates make this the most opportune time in our history to be buying real estate. Don’t miss out on the greatest time to be building great wealth in Real Estate.

(This statistical market data and charts are provided exclusively to Keller William Realty-Rawls Group by Chuck Carr of Chartmaster Services, LLC. which cannot and does not warrant the accuracy or completeness of the data. The source of all data contained herein is FMLS listings data for real estate transactions occurring in 41 FMLS areas including Fulton, Dekalb, Cobb, Gwinnett, Forsyth, Cherokee Douglas, and Paulding counties, and does not necessarily represent all market activity either for those areas or for the Atlanta Metro area).