The most often asked question these days is, “How’s the Market?” With all the media focus on foreclosures, the slow economy and the local buzz about the drop in home prices, sometimes it’s hard to get a good picture of exactly what’s going on.
At Red Robin Group, our objective is to give a clear picture of what’s happening right in our target area, which is often quite different than the bigger picture of Atlanta or even the rest of the country.
Since the end of the Home Buyer Tax Credit on April 30, our local market has seen a fairly significant slowdown. This is demonstrated by a couple of key indicators.
First, let's take a look at something we call "Month’s Supply Inventory", or MSI, to see how many homes are actually on the market in relation to real buyer activity. The "MSI" number is simply a snapshot in time that shows how many months it would take to deplete the current inventory of homes given the current rate that buyers are closing on them.
To put it in perspective, 6 MSI is considered a “normal” market. MSI below 6 is considered a seller’s market, meaning inventory is low and getting snapped up faster. MSI above 6 is considered a buyer’s market, meaning a surplus of inventory; not surprising, the numbers demonstrate that we are currently in a pretty strong buyer’s market in our target neighborhoods:
In general, we can see that in every category, the inventory is up significantly over last year. This means that buyers have more homes to choose from and, in times of high inventory, we typically see prices fall.
Second - and speaking of prices - let’s take a quick look at two other important factors: prices and number of homes sold.
Based on the chart above, we can see that our neighborhoods are down in both sales price and the number of homes sold.
Why?
Well, we have a couple of theories on that.
1) Neighborhoods south of I-20 have typically been considered the most affordable intown neighborhoods that are safe, revitalized, have acceptable school options and some commercial development and green space. Many neighborhoods that are north of I-20 have generally been out of reach for many first-time home buyers, who represent a vast majority of buyers these days. But now, prices in those neighborhoods have adjusted down and have become more affordable, and buyers are choosing to get a little less house in a neighborhood they couldn’t afford before.
2) Since Ormewood and East Atlanta, in particular, were very attractive to first time buyers, these neighborhoods have been hit particularly hard by the “post tax credit” phenomenon. Many buyers rushed to buy prior to the end of the tax credit and we’ve been left with a pretty sluggish market locally.
While this market update may seem daunting to our neighbors thinking of selling their home, there is a sliver lining:
1) It’s never a buyer’s market and a seller’s market at the same time. While it's difficult for sellers right at this moment, many of our clients are finding that it is worth taking a loss on the sale of their current home to be able to take advantage of the incredible deals on the buy side. These savvy sellers realize that this is the best buyer's market most of us have seen or may see again in our lifetime. While the general feeling is that a home should be a solid investment that always appreciates, we’ve seen very clearly that sometimes the market is down. However, fortunes are made when the market is down – those savvy investors who buy low typically do well financially. So, don’t be afraid to take a loss to get an even bigger gain.
2) There are buyers out there and homes are selling. You just have to be priced right and your home must be in exceptional showing condition. At Red Robin Group, we're starting to work with our sellers much earlier to get them prepared to sell their home – often 6 months or more earlier. We work with sellers to get their home ready by doing a consultation to determine what repairs or improvements need to be done and how to stage the home. And, we also work with our sellers to get them financially ready to sell (see our “Getting Right with Red” article). Because most sellers are looking at a loss if they bought their home in the last 5 years, we work closely with our clients to help them prepare for that.
If you are thinking of selling your home in the next year, don’t wait until spring to call for an appointment for your consultation. We really can help sellers understand the market, how to get their home ready and how to prepare financially. To schedule a seller consultation, call Red Robin Group at 404-254-5206 x 2.
