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How Things Have Changed

Thursday, October 13, 2011   /   by Ira Miskin

How Things Have Changed

In the Atlanta Metro Market, the high water pricing mark for all residential real estate was reached in 2007. The Peak month was June 2007 when the average sale price climbed to just under $270,000. By August 2007 the price had decreased seasonally to around $265,000. At the end of August 2011, the average sale price for all residential properties in Metro Atlanta was a seasonally adjusted $173,000. That's 63.37% of the August 2007 sale price or, a decrease in value of 36.63%.

Other markets like Las Vegas, for example have seen much worse declines. But in Atlanta, those numbers are pretty stunning - especially for Sellers not selling distressed properties such as short sales and foreclosures. The good news in all this is that sales have accelerated from an Atlanta Metro Market monthly low of 3,500 sold/closed properties in November 2010, and just over 4,000 sold/closed properties at the end of August 2010, to about 5,300 sold/closed properties in August 2011. Lower prices fostered higher numbers of sales. Tough news for many Sellers. Good news for many Buyers.

But here are some less evident statistics that add additional perspective to just how different the residential real estate market is in Atlanta... how much it has changed since the heady days of 2007.

In 2007 the number of sold/closed single family residential transactions with no "special circumstances" in Metro Atlanta, completed between January 2007 and December 2007 was just over 37,000 or 85.2% of the total sales. The number of sold/closed single family residential transactions with "special circumstances" like foreclosures and the rare short sale was just over 6,400 or 14.8% of the total sales. In 2011 between January and October the number of sold/closed single family residential transactions with no "special circumstances" in Metro Atlanta was 13,360 or 45.1% of the total sales year to date. The number of sold/closed single family transactions with "special circumstances" like foreclosures and the now prevalent short sale was 16,250 or 54.9% of the total sales year to date. It is a complete market reversal where in the residential single family market segment, distressed properties have become the dominant sale outstripping non-distressed single family residential home sales. That's a 60.6% rise is the number of distressed sales and a decline of 63.9% in non-distressed sales. Those kinds of swings are dizzying.

In Cherokee County where our Realtors and Team assist many Buyers and Sellers the numbers are rougher still. From January 2007 through December 2007 for single family residential properties with no special circumstances there were 2,418 closed transactions or 92.9% of the total sales in Cherokee County. Distressed single family residential properties - foreclosures and a few short sales - totaled 185 properties or 7.1% of the sales that year. In 2011 from January to date non-distressed single family residential properties accounted for 701 sold/closed transactions or 47.6% of total sales while distressed single family residential properties - foreclosures and short sales - climbed to 772 completed transactions or 52.4% of the total sales to date. That's a more than 400% increase in distressed property sales and a 71% decline in the sale of non-distressed properties if sales continue along the same trend lines through the end of 2011.

Wading through these numbers can be mind-numbing. But they are critically important when trying to both understand what has happened to our local residential market, and even more important to understand when faced with the potential for millions more short sale and foreclosed properties still waiting to enter the market across the USA over the next several years. How we as real estate professionals parse these numbers, apply these vast market swings to our home pricing, and to our short to medium term market evaluations, can mean a great deal to our Buyers and Sellers.

Knowing how much the market has changed can mean all the difference between a Buyer choosing to take advantage of a glut of distressed inventory and low interest rates now, or waiting it out thinking the market may still drift even lower. For non-distressed sale Sellers knowing the weight of the competition in distressed sale properties will help them to realistically price their homes for sale and not get slammed by the neighborhood price damaging short sale and foreclosed home sales that will certainly hit the market in 2012 and beyond.

These are challenging and interesting times. Knowing how things have changed in our local markets can only help our Clients.

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