Hi Trendwatchers,
Time for an update. As I'm sure you know, it continues to be a slow market here on Oconee and things have dropped on Sinclair as well. So far by the end of April, there were a total of 13 lake homes sold in the Oconee area mls compared to 31 by that time last year. Despite this fact, the number of active buyers looking is encouraging but they continue to make unreasonably low offers and more contracts have blown up than ever. Many of the contracts being written simply aren't worth the paper and ink it takes to print them and frequently buyers don't seem to understand the fact that a seller who is not a bank or corporate entity is not going to come to the closing table and bring thousands of dollars to in effect, pay someone to buy their home. The fact that these lowball offers are not accepted is actually a good thing for the area property values. Better no comps than ridiculously low comps and with most appraisals, fair market value can trump foreclosure properties provided it is not considered a distressed area and the percentage of REO remains low. Thankfully, this is still the case on Oconee.
The big news here is the fact that there is now some movement in the stagnant condo & townhome market. The bad news is the fact that the ones that have sold have gone to auction and foreclosure and the comps for this type of property will take a hit. One building of Condos in the Arbors area of Cuscowilla just sold for $250k per unit (3) which includes a 10% buyers premium. A building at Blue Heron Cove (7 units) sold for a total of $965k with a 10% buyers premium on top of that. Considering the fact that Arbors was initially listed at $599k and came out of foreclosure to list in the $380's and Blue Heron was listed at $585k, these are not just low, they are catastrophic prices. They may well end up being used as comps due to the lack of any activity in this market segment. At Blue Heron there is another building of units that has gone through foreclosure but has not been repriced or listed yet. The redeeming quality of these sales is the fact that it is an incomplete development and so was not worth the higher price without the additional infrastructure and completion but this is still a disturbing signal. Compounding the problems with this type of property are the increasingly tight lending standards for purchase. 20-25% down and with condos there is usually a minimum owner occupancy requirement. Cash buyers/investors are loving it.
Two other segments of our market are not too pretty either. There are currently 354 golf community lots (no private waterfront) listed for sale in the local mls. Thirteen have sold in the last year according to the same database. With new construction somewhere between slim and none, it's going to take a good long while to reduce this inventory. Commercial is also a segment that is lagging. Rentals are down and rents are being reduced to fill some properties. Others that have not reduced have too much empty space. Properties previously for sale are offered for rental and there are some real sweetheart deals out there. There are currently 141 commercial properties for sale in our mls (Oconee area only) and in the last year 13 have sold per the same database. Admittedly, both these types of properties may not be advertised and there may be quite a number of sales that were not recorded here but it is still an extremely poor ratio and is indicative of a stagnant market.
There are signs nationally that indicate we may be nearing a bottom for the housing market. It feels right to me too, at least as far as single family residential goes. A couple of things to remember; there hasn't been any real construction activity in close to two years and many of the small & medium builders who were active in 2006 will never come back after this downturn. A second relevant fact is that many reduced/distressed sales are going for lower than it would cost to build them. Lake Oconee's mls has shown about 1 billion in active listings since late 2007 & early 2008. There has been very little change since then. It is high for the area but it is not going up dramatically. Rather than the old real estate adage of location, location, location, we should be thinking inventory, inventory, inventory. When this inventory starts to drop we will be well on our way to market recovery.
Best regards until next time, Chris
If you would like to be removed from this e-mail or if you know someone who would like to be added, just send me a note chriso@plantationcable.net
Chris Oliver
Lake Country Investment Team
"Bringing the Best Home to You"
Century21/Minchey Properties, Inc.
994 Lake Oconee Parkway
Eatonton, Ga. 31024
706-485-1056 Office
404-731-7025 Cell
706-485-1057 Fax
e-mail: chriso@lakeoconeehomes.org
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