A Retrospective Look at the Real Estate Slump

June 1, 2008

In a newsletter update late last year, I likened the Fayette / Coweta market to a rudderless ship, drifting along with no clear indication of where it was headed. Today, I can finally report that a direction has been established and can point to some other signs of life, as well.

As of late 2006, there were already indications that our local real estate market was beginning to show some signs of weakness. After numerous years of significant growth in the sales of single family homes, we experienced our first ever decline in home sales in the 21 years that I have been tracking the market as a Realtor. The decline was alarming after seeing steady growth of 10% or more, year to year growth for almost 2 decades. This Realtor attributed much of the sales decline to uncertainties in the airline industry that were clearly impacting his market in the late-2006 time frame. Little did I suspect that we were entering the throes of a nation-wide slump.

Here's how things looked at this time last year:

As of 5/31/2007, Past 6 Months Sales Compared To Same Period of Prior Year:

• Fayette County: 740 sales vs. 894 sales,  27.2 % home sales decline
  • Fayetteville: 375 vs. 464 sales,  19.2 % home sales decline

  • Peachtree City: 242 sales vs. 263,  8.0 % home sales decline 

• Coweta County:1315 sales vs. 1384 sales,  5.0% home sales decline

  • Newnan: 850 sales vs. 876 sales,  3.0 % home sales decline

  • Summergrove: 146 sales vs. 159 sales,  8.2 % home sales decline 

• Fayette & Coweta Combined: 2055 sales vs. 2278 sales,  9.8 % home sales decline

To see now how the market continued to deteriorate through 2007, the next chart compares sales of the past 6 months to those of a year earlier:

As of 5/31/2008, Past 6 Months Sales Compared To Same Period of Prior Year:

• Fayette County: 551 sales vs. 740 sales,  25.5 % home sales decline

  • Fayetteville: 248 sales vs. 375 sales,  35.9 % home sales decline

  • Peachtree City: 206 sales vs. 242 sales,  14.9 % home sales decline 

• Coweta County:892 sales vs. 1315 sales,  32.2 % home sales decline
  • Newnan: 606 sales vs. 850 sales,  28.7 % home sales decline

  • Summergrove: 68 sales vs. 146,  53.4 % home sales decline 

• Fayette & Coweta Combined: 1443 sales vs. 2278 sales,  26.6 % home sales decline

The above chart would support the fact that Peachtree City in particular has fared best throughout this protracted slump. However, do not conclude that Summergrove has fared the worst. As almost all of the Summergrove homesites have been used to develop new homes, the supply of available new homes is far less than it had been in prior years. Summergrove is a highly desirable, highly popular, very healthy 2,500 home community on the easternmost border of Newnan.

Let us now take a look at very recent Fayette / Coweta single family home sales figures for early 2008 ...

Past 5 Months Fayette / Coweta Sales Compared To Each Previous Month:

• January 2008: 177 sales

• February 2008: 214 sales, 20.9% home sales increase over prior month

• March 2008:  245 sales, 14.5 % home sales increase over prior month

• April 2008:  261 sales, 6.5 % home sales increase over prior month

• May 2008:  299 sales, 14.6 % home sales increase over prior month

Yes, some of this improvement is seasonal. Yes, it would be premature to declare we are headed out of the slump, but it sure was nice to finally use some green arrows.  

Figures cited in the national news frequently reference the huge inventory of available homes on the market. Let's see how our inventory of available single family homes looks as of today:

• Fayette County: 1449 listings = 15.8 months inventory (buyer's market)

  • Fayetteville: 857 listings = 20.7 months inventory (buyer's market)

  • Peachtree City: 301 listings = 8.8 months inventory (buyer's market)  

•  Coweta County: 1918 listings = 12.9 months inventory (buyer's market)

  • Newnan: 1284 listings = 12.7 months inventory (buyer's market)

  • Summergrove: 154 listings = 13.6 months inventory (buyer's market)  

• Fayette & Coweta Combined: 3367 listings = 14.0 months inventory (buyer's market)

Whenever the inventory of available homes exceeds a 6-month supply, this is called a "buyer's market."  An available supply of less that 6 months is considered a "seller's market."  Our market is clearly one that favors buyers. Sellers are at a disadvantage due to the oversupply of available homes and the aggressive pricing being offered by many sellers.  

Buyers often ask me what percentage of the asking price does a seller typically get and my answer generally begins with "Well, that depends."  In days gone by, Fayette and Coweta sellers sold at approximately 98% of their asking price. Most sellers whose asking priced is based on a 2007 property value will be perceived as asking too much for their home in today's market. As such, they may be overpriced by about 10%. Only those sellers who price their home properly or who have already reduced their price a few times are the ones who will be able to get around 98% of their asking price.  

The national news frequently cites figures such as "40 month's supply of available homes, home sales off 50%, or a 15% to 30% decline in home values." As you can see from the above, the Fayette / Coweta market area is faring much, much better than the most severely impacted areas of the country. The future of real estate in Fayette / Coweta is bright and, with today's attractive prices and high home inventory, this is an especially good time to be in the market as a buyer, though Sellers are clearly at a disadvantage. 

If you are thinking about selling your home and buying another in this changing market, you need to work with a real pro. It is essential now that your home be priced attractively and be in tip-top condition to compete favorably with other homes in today's larger than normal home inventory. Given current market circumstances, more than ever, you need a highly experienced agent with a strong record of success.

Many of you are frequent visitors to my website where you will always find current and accurate MLS information that will assist you whether you are buying, selling, or just thinking it over. I can help you every step of the way. 

I would be pleased to have you as a client in the sale of your present home or the purchase of your next one. Please call me whenever I may be of assistance in any real estate matter.     

Written by Ken Parker