Atlanta Real Estate | Atlanta Housing News for Real Estate

It is my opinion that if the 30 year mortgage rates hit 6%, all bets on a recovery are off.  If the market is anemic at best at the historic low martgage rates of 4.75% it is not going to move at all at 6%.  We will go backwards, and real estate prices will fall more quickly, sales will drop and we are back to square 1!  If there is any chance of recovery in this economy it will come from housing. Until the housing bubble exploded and the bubble burst... over 60% of GDP was driven by housing.  That is no longer the case, and as a nation we are in pretty dire straights.  

In my market I have seen a modest increase in some activity and sales are occurring again.  The reason why the activity has only increased slightly is the fear that is in the market.  Layoffs, rising unemployment, and rising gasoline prices are not a reason to rush out and take on new debt.  The only reasoon there is any activitywhatsoever is that sellers are now willing to negotiate is because of lower mortgage rates.  

With low mortgage rates all things are possible, even if the recovery is slow, it is possible.  Builders that can unload their bloated inventory can more forward, homeowners that are over-leveraged will be allowed to rightsize, and buyers can afford to buy the home of their dream with a 30 year fixed payment!  With lower lending costs...companies and corporations can refinance their finance terms and hiring could begin with an increase in cash flow.  But that is all conditioned on rates staying low.  However in the last week, movement has started pressuring the price of bonds...and they effect our rates.  The rise in bond yeilds are a natural reaction to the government creating money that does not exist.  So it pretty much inevitable....rates are about to start rising due to pressures in the free market, and the government will not be in a position to lower them.  The rate rise is a direct result of free market pressures trying to correct an imbalance. The government interference in free markets has caused this dilemma. 

Here are the most recent Atlanta Metro area MLS figures for Atlanta homes and Atlanta real estate.  As of today Thursday here are the MLS May 28, 2009 MLS Single Family Detached Listings At a Glance:

• Active - 44582 Detached Single Family Atlanta homes Found 
• Contingency w/Kickout - 66 Detached Single Family Atlanta homes Found
• Contingency - Due Diligence - 452 Detached Single Family Atlanta homes Found
• Contingency - Other - 297 Detached Single Family Atlanta homes Found
• Pending - 7212 Properties Detached Single Family Atlanta homes Found

Yes is a market when sometimes you stumble across a listing that seems familiar, and yet you cannot believe the home has never sold since the last time you've shown it.  It is kind of scary when you think about it.  You have no psychic abilities, yet something seems to be warning you subtly that something is amiss.  The familiar home may be a new listing, and it may just be an updated entry in the MLS to notify you there is a change in the listing.  Perhaps the listing expired or was withdrawn many times ...over and over again, and still no sale!

The problem with homes like this they are losers.  There is either something wrong with the home, or the seller will not budge on price and terms.  It is marketed as ‘New,' it should be known to all that you cannot market a home that was built in 2006 or 2007 as "New construction!"  It was not built in 2009.  It was built under different standards a few years ago and has yet to be occupied.  What bothers me most is that this has become a common occurrence in many markets.  New homes that were overpriced at 699K 3 years ago are not a better value today at 899K!  The reason the home did not sell 3 years ago is that it was overpriced in value then, and most certainly is today.

Sellers need to become more realistic in their approach to selling a home in today's market.  They must realize that buyers and their agents are not fools.  The word is out,and the only person that is uninformed is th e seller.  You have a listing that is not worth what buyers thinks its worth.    You are in need of an intervention!  Your agent needs to break it to you gently, that if your home has expired many times, and has been withdrawn from the market...there is a problem that needs to be addressed.  It's called "Denial!"  I personally know of homes in the Atlanta market that are now on the market in their 4^th year.  That is just ridiculous!

When you consider the industry of real estate sales in Atlanta, the Spring kicks off our selling season. This year it is a non event.  It hasn't happened.  Normally, April leads that pack with new listings, and much higher monthly home sales numbers leading the pack.  The market normally would stay pretty strong until mid summer just around the time that school is approaching its next session.  If you look at the entire set of statistics for the Atlanta area it is most sobering to see that not only have sales on single family homes sold fallen, but so has the average sales price fallen precipitously since last year, and previous years.  Going deeper into the statistics you will also find that the majority of sales are foreclosures or some type of distressed sales. Sellers contributions towards closing have also increased, and are not reflected in an even lower net number for the home seller. That is not a very healthy scenario.

Everyone quotes the Case Schiller Index as Gospel about declining home prices.  It isn't.  First of all, the Case Schiller index is quoting March's average sales price numbers as opposed to the most recent data in April!  It really isn't worth mentioning it.  Can you spell "O-L-D----D-A-T-A?"  A month is a major lag time in this economy.  The most recent case Schiller Index for Atlanta (5/26/2009) quotes the average sales price for Atlanta homes sold in Atlanta as an average of metro prices have fallen-15.7% percent year-to-year.  However, these are an average of all housing types.  There are major differences in sales between classes of homes...single family and detached.  Detached single family homes represent the largest segment of homes sold. 

Our FMLS statistics were just released for April 2009 home sales, and they paint a slightly different picture.  Even though the average price has jumped 10K higher than March 2009 sales..the trend is unmistakeably down in price over 20% from last year.  Where most persons look at is price, but the number of homes sold in referenced to previous periods, the number of homes sold in way off, and I will address in a future post.

Where Case Schiller focuses on an average decline in prices of all housing and quotes a 15.7% drop in value for month old data the reality is worse at 20% drop in value. 

Many listing agents falsely make the claim their new fabulous listing is "Upgraded, and Updated!"  To compound this misleading information they only have the front picture of the home, and maybe the yard photos.  There are no interior pictures.  The Agent remarks sound fantastic "Fabulous New Listing in sought after "Give Me A Break Subdivision!"  First time on market! (1) There is no need to preview this home! (2) Upgrades galore!  New kitchen with granite counter-tops and stainless sink! (3) Hardwood floors and new paint throughout! (4) Professionally decorated by owner! (5) Fantastic Master bath with whirlpool tub is newly tiled! (6) Upgraded carpet and pad! (7) Hurry will not last! (8)

1. First time on the market this year!
2. When in doubt, check it out!  There is always a reason to research when you do not have enough information!
3. The kitchen has been painted with personalized colors, thre is a cheap install of granite counter-tops.  The granite counter-tops have seams every 3 feet, and the stainless sink is the original sink mounted on top of the new granite!  All the appliances are original, and the cabinet drawers are sticking!
4. The hardwood floors must have been finished by the owner that though he was a 'Mr. Fixit Guy!'  He isn't!  The floors were done in place with out moving any furniture out of the room.  They were not even sanded first!  The new paint is highly personalized colors that were probably painted 4 years ago!  What was not painted, has dated wall paper, and wall paper borders.
5. It depend upon someone else's interpretation of the term 'Decorated!'
6. If you consider replacing tile with a close out tile with "Blue Dolphins!"  It isn't.  It is an insult to the intelligence of any adult!  Keep in mind, that when you brag about a mildew stained master bath tub, with mildew stains in a plastic shower with a sap etched door that has not been cleaned in the last 19 years.
7. If a seller considers the original carpet taht has been cleaned so many times and looks like a "Shar-Pei dog!"  Give me a break!  The center of the carpet going up the stirs is beaten down and looks like you old thread "Bare teddy bear!"
8. "Will not last?"  You are right!  I am glad I previewed a home, and save the embarrassment for myself, and have removed the home from my list! 

In my own opinion, the remarks are totally misleading.  At best, others will resent your misrepresentations, and resent the fact.  You have tried to mislead fellow professionals, and potential buyers.  In the real world, any fool would know that there are no updates, or upgrades in this home.  The seller and listing agents are dreaming! The home is listed way over priced and outdated!  Painting around old appliances, doing a half-ass job on flooring, and not updating fixtures is a sure way in this market to ensure your home will not sell! 

There is an ad on TV that is about saying "Yes" to everyone!  It may sound like a great way to do business but in real estate it's maybe not such a smart idea. The definition of the word 'qualify' is "to prove capable or fit; meet requirements."  If a person is not fit to buy, or even rebuild their credit, wish them well.  You've done your job!  If a seller is in denial about the financial position they are in, do not enable them! Tell them the truth, that they may need to speak to an attorney to best advise them. Do not play lawyer! Wish them well and move on!

The greatest threat to our time as a real estate professional is our time.  If we waste it, we cannot help others that are better prospects.  In the last several years everyone was allowed to get in our cars without too much hassle!  "Not pre-qualified? No problem just get in!"  There will be some program that the buyer will qualify and I can sell them something.  The same was true of sellers.  Over priced?  Let's just try your price and see what happens.  You don't want to pay my commission?  Not to worry!  I have loads of alternatives!  The problem for all of us is that times have changed tremendously in the last few years.  Over 50% of buyers probably no longer qualify to buy a home since there are no DPA programs, and 100% financing.  Sellers have to realize that it does not matter what they paid for the home, or what they owe.  If they bought high with no money down, or rolled tons of extras into the property on credit, or if they used their home like an ATM...most likely they are upside down for the next ten years!  If they want to sell their home, they may have to bring cash to closing, of face foreclosure or a short sale.  We cannot help the fact they made a costly personal mistake.  There are no other creative solutions that are really legal or will produce real results other than bare the burden of thier actions.  We are not social workers, we are sales persons.

Traditionally in real estate before the boom times we qualified buyers and sellers to see what their motivation level was, and determine if they were "Hot or Not!"  Qualifying buyers and sellers is not intrusive. It is smart business sense.  You do not have to feel guilty to now waste your time with a buyer that cannot buy, or a seller that will not sell.   Qualifying potential clients is merely a grading system so that the agent does not waste their time on a road to nowhere!  If you already know you have no options with your potential clients, why would you waste your time beating the square peg in around hole?  Yet many new agents are routinely working with unqualified buyers, or listing homes that are upside down by just adding the commission to the price!  That does not change the facts.  The buyer cannot afford to buy, and the seller is dreaming!

So when buyers or sellers ask the following, you can just say no!

1. I want to look at homes, but I do not want to sign a buyer agency agreement!
2. I do not want to talk to your loan officer; I know what I can afford!
3. I am not talking to you about my personal finances.
4. I will not give you my personal information, just meet me at the vacant home!
5. I do not want an agent, I just want you to open the doors!
6. I just want the addresses so I can drive by the homes.
7. I do not have any money to put down, and I should get a job shortly.
8. I want to list my home at a much higher price than you advised.
9. I will not paint the home, paint or clean before I list it!
10. I will offer a credit for carpet and paint.
11. The price on the listing is firm!
12. I want to list my home as appointment only, no lockbox and no sign!
13. I want a 30 day listing.  (market time is 145 days)
14. I cannot pay your commission!
15. I am not going to leave the home while it is being shown.

It is no surprise to anyone that Google has been hard hit is stock value in this market.  They are facing many new changes to make up some incredible loss of wealth.  There are layoffs and downsizing and announcement of new Algorithms that are smarter than humans.  I don't think so, and now I have a major disappointment with Google!  One of my favorite reasons for visiting Google several times during the day is to look at the business news.  I follow stocks, and trends of the DJIA and the markets in general.  I have worked on Wall Street, I worked for Treasury Dept. in DC, and I still have some investments and monies in the market.  So I really like to know what is going on! 

Every day, I always check out the moving stock index charts on the upper right hand side of the Google's Business News page.  Guess what?  They are no longer there!  Google has announce this week that it was changing the page and the page would be updated in the following fashion with this disclaimer on the bottom of the page:

"The selection and placement of stories on this page were determined automatically by a computer program. The time or date displayed reflects when an article was added to or updated in Google News."

What I dislike most is the ability to view the market conditions at a moment in time!  Now I have to go to MSN, or Yahoo to find the information I can no longer find on Google!

Most buyers in this market are still on the sidelines waiting for prices to really hit bottom before they leap in and buy 'right!' They are sadly mistaken.  They'll miss the boat totally.  The bottom is marked by many different signs, and only one of which are home prices.  In my own way of thinking, a bottom is marked by ample inventory, a plethora of opportunities, the ability to negotiate strongly on your own behalf in negotiations and extremely affordable terms in credit.  A bottom is also market historically as a time when everyone is too fear struck to make a move.  That is sort of where we are right now in many of our markets.  There is a lot of fear, paralisis and apprehension.  The only problem is that many buyers cannot see this.  They cannot separate their emotions from the facts.  They are looking at price solely as an indicator, and not the cost to acquire that property or the monthly carrying costs. 

In the early 80's you could buy a home cheaply, but the monthly carrying costs were exorbitant.  A low mortgage rate in the early 1980's was 15.5%  A $70,000 loan would cost you $1500 a month in mortgage payment.  When things hit a bottom in their way of thinking, rates are normally so much higher and then they cannot afford the lower prices.  So it is never a good time for them to buy! There is always an excuse why they cannot pull the trigger. Their one blind side is that prices will be low and so will rates.  Chances are that will not happen especially with all the government intervention into the financial markets.  Sooner or later the government will have to increase the amount of personal savings.  The only way to do that is raise interest rates. 

"Life happens too fast for you ever to think about it.  If you could just persuade people of this, but they insist on amassing information."  ~Kurt Vonnegut, Jr.

I was reading a lot of MLS entries and wondering to myself ...does the agent even think before they enter these comments in the MLS?   If over 85 of home sales begin on the Internet, and are a direct result of how thye are entered in our MLS...then we have a problem for the viewer.  They may not want to see your listing.  Are some of the comments counterproductive? The one I read recently accompanied a picture of a raging creek in the back yard.  We must all be aware that words or photos evoke other images.  Some of those may be negative, and adversely impact the market ability of the listed property.  The agent's comment read "Enjoy the privacy of your own creek!"  I could just imagine myself white water rafting at the back of my yard after a summer deluge.  Gee, "Just What I Always Wanted!  My own creek!"  I also thought to myself, if flood insurance is needed.  Does the home flood?  Will the water running in the creek keep me up nights?  Will the creek be an attractive nuisance...attracting children?  Will the constant source of water contribute to mold issues, mosquitoes, frogs etc? 

There are other comments that invoke other visions.  "Please call 4 hours in advance so seller can remove the dogs, and pets!"   Excuse me!  Pet's? Is the seller's name "Noah?"  How many pets do they have there that I need 4 hours advance notice?  Are the pets destructive? What about my clients allergies?  Other comments that makes us stop and think are: 

• "A Must see home!" And yet there are no mls pictures.
• "Do not speak to dog in cage!"  Does the dog have an attitude or being punished?
• "Now it is priced to sell!"  So you were just pulling our leg last 6 months?
• Courtesy call a must! "Large dog that bites needs to be crated!"  How big is this dog?
• "Motivated sellers!"  Appointment Only! 48 hours notice for seller to put out lock box.  How serious are they?
• "Squatter in property please do not try to view inside of property, drive by only.."
• "Friendly dog will not bite, but if it does...call us so we can remove him!"