The Definition of Flat: Home Sales Remain Flat in North Fulton County, Georgia
categories: Alpharetta Real Estate, Buyers, Local Market Conditions, Roswell Real Estate, Sellers
Warning: Statistics lie. Well, actually, people can lie with statistics. If you don’t believe me, check out this book.
With that disclaimer, I’ll tell you that the real estate market in North Fulton county is flat…and I’m not lying, really.
He is my definition of flat: In July 2006, 162 single family homes were sold in North Fulton (Roswell, Alpharetta and Milton), west of GA-400. In July 2007, 163 single family homes were sold in the same area.
Good, we’ve now debunked with one statistic the common misconception that the real estate sky is falling. I can see the headlines now in the Atlanta Journal Constitution: “Atlanta bucks nation trend. Real estate market holds firm.”
Heck, it was just last week when the national media couldn’t get enough of the announcement that for the first time the national average sales price actually declined. Yes, that made a good story; always lead with the blood. There is only one problem: I don’t really care about the national average. I mean, I do, but only because it is some sort of global indicator of the health of the economy. But in the end of the day, I care about the national sales average about as much as I care about the temperature of the oceans. I do care about the global environment but, damn it’s hot here and I want to know when it is going to rain next. Real estate is local, too, and the fact that the national average is down doesn’t help me in my market.
The Laws of Real Estate Market Analysis
Law number one is that real estate is local. Law number two is that, not only is it local, it also varies significantly by price point. Law number three is that new construction and resale homes are different markets.
So, while I can say with perfect certainly and a statistical fact to back me up that the real estate market in North Fulton is flat, if we care to look a little deeper we will see some interesting developments in the last year in this market.
1. If you include the other half of North Fulton (east of GA-400), sales were actually down from last year. Four hundred and four homes were sold in July 2006. A year later only 344 were tallied.
2. Average days on market is up from about 54 to about 63. Plus, the number of homes active in the market increased from 1,859 a year ago, to 2,440 this year. Sellers, you have a lot more competition than you did.
3. The good news is that the average sales price is up over last year, so beware bargain basement shoppers. The west side average price increased from $481k to $488k. On the east side, they had a whopping increase from $391k to $436k.
The Breakdown
But remember, statistics lie. What happens when we break down the market by price range and look at absorption rates, the rate that new homes on the market are absorbed by the buyers. Another way to look at it is the months of inventory on the market. Six months of inventory is considered neutral between a buyer and seller market.
The two tables below show reveal some interesting points about our current market, points that are anecdotally reinforced by my personal experience in the marketplace every day. (Totals don’t add because of omitted data at lower prices.)
Overall inventory is up from 5.2 months in July 2006 to 7 months in July 2007.
| 2006 | $200k to $250k |
$250k to $300k |
$300k to $500k |
$500k to $750k |
$750k to $1M |
$1M to $2M |
$2M | Total |
| Sold in July | 666 | 556 | 1348 | 536 | 127 | 58 | 9 | 3858 |
| Current Inventory | 155 | 183 | 522 | 308 | 148 | 126 | 47 | 1669 |
| Months of Inventory | 2.8 | 3.9 | 4.6 | 6.9 | 14.0 | 26.1 | 62.7 | 5.2 |
| Days on Market | 47 | 45 | 45 | 46 | 56 | 75 | 112 | 154 |
I don’t know that this is exactly earth shattering, but there are two different markets in North Fulton: the market below $750k and the one above $750. Actually, I think the demarcation line is a little lower, but there are definitely two distinct markets. This seems pretty logical. Not everyone has $750k to spend on a house but a lot of people still want to live here and have $400–$500k to spend. That part of the market is still hot…OK, warm, particularly west of GA-400.
| 2007 | $200k to $250k |
$250k to $300k |
$300k to $500k |
$500k to $750k |
$750k to $1M |
$1M to $2M |
$2M | Total |
| Sold in July | 602 | 509 | 1228 | 573 | 125 | 65 | 9 | 3442 |
| Current Inventory | 172 | 207 | 715 | 440 | 181 | 142 | 56 | 2014 |
| Months of Inventory | 3.4 | 4.9 | 7.0 | 9.2 | 17.4 | 26.2 | 74.7 | 7.0 |
| Days on Market | 48 | 52 | 55 | 54 | 66 | 90 | 103 | 131 |
There is one caveat, though. This year, there is more inventory, no doubt, so your home has to be in better condition and compare favorably to increased competition in order to sell. However, even though it is more competitive, good homes in these price ranges still sell relatively quickly (under 60 days) for around 97% of the list price. Operative word was “good”. The junk sits on the market.
New Homes
When it comes to new homes, the picture is a little more bleak. First of all, there is practically no new home inventory below $500k (only 43 homes in all of North Fulton.) When selling your $800k resale home in a market with 17 months of resale inventory, don’t forget that there are 120 new homes in inventory, too. This is where the market has really slowed down: In 2006 there was a 22 month inventory of new homes between $750k and $1 million. In 2007, there is a 45 month supply west of GA-400 and a 33 month supply east of GA-400. Buyers, this is where you can really drive a bargain. Builders are offering huge incentives and resellers are having to lower their prices if they truly want to sell.
Bottom Line
I’m a bottom line guy, so here goes. Markets go up; markets go down. That is reality. No one was bemoaning the poor buyers a few years ago when everything was selling. Now all I hear is woe is me from the media and from the sellers. If you want to sell you home, North Fulton is still a desirable place to live, people are still coming here and home prices are still increasing believe it or not. But if you want to sell, you need to be realistic about your price and the condition of your home. Best thing about this market is that if you are a buyer it is a great time to buy. When was the last time you heard a national media outlet say, “Great time to buy residential real estate in America.” Well, come to North Fulton.
I know you say that real estate is local. However, lately I’ve noticed some evidence that real estate is NOT always local. Let me know if you agree with me.
Obviously, we have not had a big price run-up in metro Atlanta the last 5 years. So everyone is saying prices here don’t have much room to fall. However, this does not account for the presence of national homebuilders in metro Atlanta. These homebuilders are being hit hard in multiple markets, and therefore need to discount homes to bring in cash flow (even in Atlanta). When builders are offering huge incentives and discounts, sellers of used homes will have to match them in order to compete.
I’ll use Beazer Homes’ Woodlands Preserve as an example (located next to the future Prospect Park). When I first checked out the property, they had a luxury 2721 sq foot 3/3.5 townhome for $339k. This is about the same price you’d pay for a similar used townhome. However, just recently, they have lowered the price to $303k! You could probably get it even cheaper. It is going to be very difficult for a private seller to match this size of a price drop.
I’ve visited other new communities by Providence Group, Pulte, Centex, etc, and all are offering $15-$25k off the sales price. Why would a buyer consider a similar home that is used AND more expensive? It just doesn’t make sense for many buyers.
This is why I think real estate is not always local- the national homebuilders are performing even worse, and the discounts could get even bigger. Do you agree?
Laurence: Thanks for stopping by and leaving this thoughtful comment.
What I’d say in response is that like everything, “Real Estate is Local” is a bit of an oversimplification. By and large, I believe it is true. Even within Atlanta, there are different markets.
However, I do agree that the new home builders are impacting the resale market, particularly in the townhome sector as you point out. I don’t think so much in the new home sector.
If someone wants to live in Alpharetta/North Fulton, and spend, say $450k, there aren’t many (if any) new home (single family) options. You either have to buy a townhome or go to South Forsyth (Cumming), which some people elect to do. Most everything is built out in Alpharetta, particularly east of GA400.
On the west side of 400, say in the Milton High School district, you can’t find new construction under around $700k. That is actually benefiting the resales who are actually able to INCREASE price…the new construction is pulling up the resale (my hypothesis.)
I do think that there are some national trends that are starting to affect Atlanta more and more: our feeder markets for relocations are significantly down, particularly Florida. If some people could sell in FL, we could sell a bunch more houses in North Fulton. I have people contact me every week from FL about getting out (taxes, insurance, lifestyle changes).
Unfortunately the market down there is not in their favor. As I heard someone say the other week: “It is not that there aren’t buyers out there, it is that they are stuck in overpriced houses.” Getting sellers, whether here or in FL or other markets to realize this and dealing with the reprecussions of it on their ability to make the next purchase, well, that is the challenge.
“You can find a statistic to prove anything you want to prove.”
Just think back to any political election debate, both debating parties use statistics to support their claims.
I really like how you dug deep into the statistics of North Fulton County, this blog is great in helping people understand the current market and make sense out of the media coverage and statistics that are out there!