Red Robin Group Market Report Jan 2012

East Atlanta Report

Summary

As 2011 came to a close, East Atlanta continued to see a challenging market for sellers and a strong buyer’s market. There are many factors affecting the change in prices and market activity. Let’s take a closer look, because there really are strong dynamics affecting the area.

A Look At The Numbers

The significant price drop seen in East Atlanta late in 2010 (after the tax credit) seems to have stabilized somewhat in 2011. While this chart shows another significant drop in the median home price in 2011, there are certain factors that may be contributing to this trend:

The total number of homes sold in the last quarter of 2011 was up significantly over the last quarter of 2010. This makes perfect sense as we saw very slow buyer activity the last half of 2010, after the tax credit. Buyer activity appears to have picked up, which is very good news. We see that the total sales overall for the year were up slightly as well.

However, if we look at the prices, they are actually down fairly significantly in 2011 over 2010. One reason for this is that there were 3 home sales that were very high for the neighborhood early in 2010 (two homes sold at $387K and one at $425K). Looking at 2011, the highest sale was $320K and after that, prices dropped down under $300K. So, when we’re looking at a fairly small number of home sales, a few strong sales can skew the numbers.

Another factor that can affect the median price figure is on the lower end of the price range. I think it’s important to look at the number of sales under $100K. This isn’t a scientific number, but I think it’s a good indicator of how much “investor” activity is happening in our market. We can see that in 2011, the number of home sales under $100K was up 40%. That’s a pretty staggering statistic. Most of these sales are to investors – buyers who are either purchasing them to hold as rental properties, or are renovating them for resale.

While it’s difficult to demonstrate with factual numbers, it makes sense that the general price change in the neighborhood has a trickledown effect. If the retail prices of homes are down, the investors must get a lower price on the purchase of the investment property to be able to make a profit. So, the prices of the lower priced properties would naturally decrease.

A Look at the Numbers Continued…

Let’s take a closer look at the sales of homes in the last quarter to get an idea of what is selling:

Not surprising, there are more sales of 3BR/2BA homes than 2BR/1BA. In fact, it is becoming very difficult to sell a 2BR/1BA home at all if you’re a homeowner that bought in the last 7-10 years. This is because the prices of 3BR/2BA homes have dropped enough that they are certainly affordable for first time buyers. The primary market for 2BR/1BA homes is investors – again, they are either going to hold them as rental properties or renovate them. And, the price has to be very low for an investor to do a larger renovation to turn a 2BR/1BA into a large enough home that it will easily resell. One note here: even though this chart shows that 4 of the 5 sales were “Traditional/Homeowner”, only 2 of those are what I would consider retail sales to an owner occupant. The others, even though they weren’t a foreclosure, were indeed “fixer upper” homes. Hence, the incredibly low median price of $35,000.

When we look closer at 3BR/2BA homes, this is where we see most of the activity for sales to owner occupants. Of the 16 sales, half were either investor/renovations or new construction. And, nearly half the sales were short sales or foreclosures. There is quite a price range here, indicating that there are still quite a few sales of the lower priced homes. Anecdotally, I can say that the investors I work with are typically looking for homes that already have big square footage and are 3BR/2BA. So, while more of these home sales are “retail”, many of them are also going to be fixer-upper properties. That does bring the median price down a bit.

Conclusion

It looks like we’ll have another challenging year in 2012, but I do feel very optimistic that we are in a much better position to help our sellers with more options. At Red Robin, we know what the competition is and how to get a house sold. And, we work closely with a fantastic attorney who specializes in short sales. Additionally, we are now offering full service rental property management to meet the needs of our clients. While many other realtors have gotten out of the market because of its challenges, Red Robin Group is committed to the neighborhood and to helping homeowners as well as guiding homebuyers.

We’re all in this crazy market together and we’ll continue to keep you updated!

posted: Feb 7, 2012 | No Responses

Posted by:  Wakamo & Associates

Melissa Wakamo and her dynamic team of agents and support staff provide buyer and seller clients with exceptional service and proven results. Since the start of her real estate career in 2004, Melissa has proven to be a true advocate for her clients and has consistently performed in the top 1% of agents

“When I started my real estate career, I wanted to work in my local community and get to know my neighbors. Now, I realize how important that local expertise is to our clients. At Red Robin REALTORS®, all of our agents are specialists in working with buyers and sellers in Atlanta’s intown neighborhoods.”

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