Alpharetta’s Real Estate Market Soft at the Bottom, Mediocre in the Middle and Ripe at the Top
categories: Alpharetta Real Estate, Local Market Conditions, Luxury Homes, New Construction
It used to be that Realtors had the bulk of information necessary to be effective when buying or selling real estate. This information included tax data, recent sales data, even lists of homes available for sale. Remember the old MLS books Realtors might let you borrow over the weekend to see what was on the market?
Realtors used to keep as much of that information close to the vest because they believed that information was power, or at least a competitive advantage in earning a living, if not an outright anti-competitive tactic to preserve an industry. The Internet pried all that information loose even as certain MLS’s tried in vein to keep it out of the public eye.
Today, information about real estate is everywhere and easy to get online. In fact, there is too much real estate information for any carbon-based being to consume. I can’t consume it all and I doubt you can either. Granted, I’m a slow reader, but if real estate is my full time job and I can’t wade my way through, how is it even slightly possible for a non-real estate professional to consume it when you have a full time job doing something else?
That leads me to my premise, which is that today, a good realtor’s value is not in providing you with information, but rather in interpreting that data in a meaningful way. I get calls at least weekly from readers of this blog saying basically, "There is some much information about schools, traffic, new communities, recreation, housing prices, etc., that I don’t even know where to start. Can you please help me sort it all out."
Absolutely. THAT is my job: to sort it all out, make sense of all the data and help guide you in an important buying or selling decision.
Let’s get right to the data.
Would you believe that in this "horrible" real estate market that the average sales price for a home in Alpharetta / Roswell / Milton / Johns Creek is UP 4% over last year at this time? Amazing isn’t it.
That’s right. The average sales price through October, 2006, in Alpharetta and surrounding cities in North Fulton was $409,000. This year through October it is over $427,000.
But what about all the sellers in the market who say that there house is not selling? They do have a beef: There have been fewer homes to sell in the Alpharetta area year to date than last year. So far this year, 2,953 homes have sold versus 3,336 last year. That is an 11% drop.
Fewer sales X a higher average sales price = about the same amount of market volume, right?. That’s almost right. To date, $1.37 billion of residential real estate has transacted so far versus $1.62 billion last year. That is a drop of 8%.
The Alpharetta / Roswell real estate market is over a billion dollars. Where exactly is the 8% drop showing up?
If we dig a little deeper, the bottom end of the market is the part getting hit the hardest. Homes sold below $200k are off over 30%; fortunately, that is not that large of a part of the market. The number of sales between $200 and $500 is off by approximately 10%. The $300-$500k price range is the heart of the market and why it matches the overall numbers closely.
Above $500k, the market looks a bit different. Between $500k and $1MM, the number of homes sold is off about 6%. And get this: more Million Dollar Homes have sold in 2007 than 2006. In fact, the absorption rate (the common measure of supply and demand) for million dollar homes has decreased from 45+ in July to This 13% increase in the high end market has also likely masked some of the market pain at lower price points by making the averages sale price higher than it otherwise would have been.
The interesting thing about the new high end home sales, particularly on the west side of GA-400, is that while, yes, there have been more sales this year than last at the top of the market, there is also much more inventory in the high end as 2007 ends. Last year there were 70 $750-$999 homes on the market west of GA-400; this year there are 99, which is 3 months more inventory than last year. There are 129 homes over one million dollars versus 99 last year. That is a formula for hungry builders and great deals for buyers at this price point.
So what are the lessons?
Houses are still selling; fewer of them yes, but still at fair prices. Buyers still complain about the market, but I’d challenge them to really evaluate the condition and value of their home. Two of my favorites sayings are that "pigs get fat and hogs get slaughtered." Are you a pig or a hog in this market?
One of my other favorite saying is: "The market is always right." If you have your house on the market and it is not selling, that only means that there is a better value in the market someplace else regardless what your belief system tells you.
If you are a buyer, consider this: Atlanta, and Alpharetta in particular for reasons mentioned all over this blog, has huge upside potential for appreciation. Albert Niemi, former dean at the Terry School of Business at UGA, recently spoke at a Bank of North Georgia function and said:
- North Georgia (Greater Atlanta) is going to be one of the great growth engines in the U.S. economy.
- Atlanta is one of the cheapest places to do business in the country (and also has a relatively low cost of living and good climate - I added that part ;->).
- Atlanta is one of the four fastest growing cities in the U.S. (with Dallas, Phoenix and Las Vegas).
A blogging real estate colleague of mine in neighboring Cherokee County wrote last year that metro Atlanta is growing at about 100,000 new residents per year.
Atlanta’s and Alpharetta’s real estate market won’t be this "depressed" for long. You can buy million dollar houses for a fraction of appraised value and you can buy a $600,000 house in Alpharetta for what you’d pay hundreds of thousands more in other cities.
Regardless of whether you are a buyer or seller, though, remember: The market doesn’t lie.
The big drop in sales for the lower end has a lot to do with the lack of loans available for people without handsome credit. This too will change as lenders find new ways to get this segment of buyers back into the market.
Of course it doesn’t hurt that Metro Atlanta has the highest population growth of any major city since the year 2000. The influx of people means higher demand than other areas losing residents (the northeast) or areas not groing as quickly. With our economy, transportation hub and population growth, it’s easy to see why we never got hit as hard as many other areas around the country.
Now, if we can get that message to local buyers…
Nice post Kevin.
Come on now…..
You are using year-to-date data versus year-to-date data to draw some flawed conclusions AGAIN about the market. We all know that Jan O7- Aug 07 sales closing data was ALL pre-market meltdown. This is the same flawed approach the NAR is using. Why don’t you show us data for Sep-Nov 07 versus Sep-Nov 06. I doubt you will be able to draw the same conclusions. I bet in ‘08 you won’t use the YTD versus YTD method.
Extremely thorough explanation of the Alpharetta real estate market data. Astute observation on the shift that the real estate professionals have made- we no longer hold captive all the vital data- it’s available, as it should be, for the buyers and sellers. A Realtor is often the best resource by which to interpret and put to use that material.
[...]In a post about his Alpharetta real estate market, Kevin Warmath over at Live in Alpharetta provides this absolute gem; “……a good realtor’s value is not in providing you with information, but rather in interpreting that data in a meaningful way.” I haven’t heard a better job description of a REALTOR in a long time. Take a minute to read his entire post.[...]
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