January 2011 Atlanta Real Estate Market Statistics
There are many indicators of market conditions. Perhaps the most important of these is what we call an absorption report or months of inventory report. Real estate market conditions can best be predicted and evaluated by examining the balance of supply and demand. Generally speaking, the more homes that are on the market, the lower prices will go and vice-versa. Many consider it to be a balanced market if the months of inventory is at around 3-4 months. Below that and it’s a seller’s market. Above that and it’s a buyer’s market.
You’d have to be living under a rock not to know that it’s a buyer’s market in most areas right now. However, you might be surprised to know that there are actually some submarkets in Metro Atlanta right now which have 3 months or less of inventory and are, by definition in a seller’s market.
The current market is unlike any we’ve ever seen in the past and there are certain things to consider that will raise and eyebrow or two. When the months of inventory goes up and thing shift heavily to a severe buyer’s market, it is tempting for home sellers to assume that it will take a long time to sell their home. This is not necessarily true. In fact, even in this market, statistically speaking if your home is priced at the correct price for today’s market, is properly staged and being marketed heavily, you should actually expect to sell within an average of about 24 days on the market.
Negative news sells. For this reason, many news publications want to paint a doom and gloom picture of what’s going on in the market. There are some statistics that I have seen repeatedly that in my opinion are being “abused” and distorted. The most obvious of these is when they report that the median home price has fallen. Even I might have a tendency to hear this as “home prices are falling” but this could not be further from the truth. The median home price is nothing more than the middle price of all homes that sold if they were put in a list ordered by price range. As you can see in the chart above, homes in the lower end of the price spectrum seem to be selling more readily than those in the 900K – 2M price range. This is because the pool of potential buyers that can qualify for a 200K home is much larger than that pool of potential buyers for a $2M listing. Additionally, first time buyers are some of the lucky few that can take advantage of today’s market without having to sell a home as well. Therefore, lower priced homes have been selling much better than the extreme luxury market. If a whole bunch of starter homes sell to first time home buyers and there are a few multi million dollar homes that don’t sell, it will definitely lower the median home price even though the homes that actually sold likely have sold for the same price they would have sold for in the previous months (i.e. no loss of value). When the market first began it’s shift in the downward direction, I witnessed some organizations including the National Association of Realtors reporting that the median home price was still rising to try to give people a sense that the market was still healthy and justify living in denail of what was to come. Now, we see the opposite happening with median home price; but, in reality, this figure is about as much of where the market value of an individual home is headed as the price of tea in China.
Finally, every market is different down to an extreme level of granularity. The market conditions can be very different even within a small area if it extends across county lines, school district boundary lines, etc. Therefore, any statistics that are reported on a national level or even metro-wide are not of much value. What really matters is what the market conditions are really like in the neighborhood that you are about to buy and/or sell a home in. This is why if you are considering buying or selling a home anywhere in the service are mentioned on the home page of this site, you need to get in touch with a member of the Real Estate For Atlanta Group to go over the numbers for your neighborhood(s).