Hi Trendwatchers,
You haven't heard from me for a bit because there really hasn't been much to say. Inventory has stayed high, prices have dropped and the mortgage market has been a mess. As anyone who has read a paper, the internet or turned on the evening news knows, this hasn't been a period that has treated Real Estate kindly.
With that being said, here's some good news. The Oconee and Sinclair areas have still not been nearly as badly hit as the metro and outlying areas of Atlanta. Condos still continue to be a problem and they account for the bulk of foreclosure properties in the area. First time properties account for another big chunk and were the leading edge for subprime defaults. The bad combination of unsophisticated buyers with dicey credit and adjustable rates that weren't sustainable brought many older fixer-upper homes and manufactured housing to the courthouse steps and they are now being sold for far less than their original loan amounts. Fortunately, quite a few investors are seeing this as a buying opportunity and when the price drops to their target, they are snapping them up and doing some rehab and then relisting or putting them in rental. The rental market has picked up substantially with demand for affordable housing staying with or outpacing supply.
Like the less fortunate areas of the country though, we have seen a drop in prices here. Lake homes are selling but if a seller isn't motivated they are best off just taking a rest for now. Buyers are not coming in with an offer that is 10% off list they are offering 25-35% off list. The homes that are moving are currently being negotiated downward to about a 10% discount and buyers and sellers are walking away from deals that can't be reconciled. Savvy sellers are making concessions for things like boats and furniture to move lake homes and this is helping them keep a buyer.
As the trends show, in December the inventory fell below 1 billion on Oconee for the first time since February 2008. Partially this is sales but some of it is property that was just taken off the market due to failure to sell. One thing that is very noticeable to me is the fact that many homes are now selling for less than it would cost to build them. Another important piece of the puzzle is the fact that many of the smaller builders have not been able to hold out. This tells me that when we do see a turn around the resale inventory will move fairly quickly and there won't be much replacement inventory around. This should drive the prices back to a competitive price point and level the playing field for buyers and sellers.
I am really looking forward to this coming spring to see what new programs, tax credits or whatever we end up with come in to play on the housing market. One thing is certain, something must be done to establish a bottom before the current pent up demand will be unleashed.
Wishing you all the best in 2009. Till the next time
Chris
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