My New Blog

I must admit, there is even a little part of me that is hesitant to tell my buyer clients "go ahead, buy this home, its a great deal."  This tiny voice in the back of my head is saying "yeah, but what if....???"   Well no more!  I'm so excited to have found this blog and realized how interest rates are really the ONLY thing we need to worry about rising or falling right now.

In a recent Forbes blog post, multimillionaire hedge fund manager John Paulson declared that today’s record-low interest rates made this the best time to buy homes in fifty years. “If you don’t own a home, buy one,” Paulson said. “If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.”  Why should we care what Paulson thinks? Well, he was among the few to accurately predict the subprime collapse and, while no one has a crystal ball, a closer look at the numbers supports his call to action.

Historically low interest rates are the key…and they aren’t likely to hang around for long.

As KW wrote in SHIFT, buyers who “choose to wait until prices come down more” are gambling that interest rates will hold steady or drop. The truth is even a 10 percent drop in home prices is nullified by a 1 percent increase in interest rates. The figure below illustrates how this works for a $250,000 home purchase and the relative likelihood of each scenario.

To figure out which was a smarter bet–counting on home prices to fall further or interest rates to rise–our research department took the last ten years of monthly home price and mortgage interest rate data and ran the numbers to see which was more likely: an increase in mortgage rates or a further drop in home prices. Here’s what we found:

1. A one percent increase in mortgage rates is ten times more likely to happen than a ten percent drop in home prices.
2. A one percent rate increase more than offsets a ten percent reduction in home prices.
3. When interest rates fall by one percent, the total interest paid is almost three times more than the interest savings from a ten percent drop in home prices.
4. The probability of both happening at the same time is ridiculously small, and homeowners would still pay 15 percent more in interest over the life of the loan.

Interest rates have dominated the news in recent months as we’ve shattered record low after record low. Potential home buyers need to understand the positive financial impact low interest rates have on the cost of home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan. For those who can afford to buy, trade up, or invest, our current market presents a lifetime opportunity.

Having new statistics to present to you is just about my favorite thing!  I love seeing what the end of each quarter brings, if for no other reason than getting an edge on my competition.  Yes, it’s true! The numbers might not be all “rosy”, but having the numbers before my fellow agents, allows me to position my clients in the best possible way.

Lets look first at what the numbers REALLY say.  Like I mentioned last quarter, you hear so many conflicting stories, its hard to know what is the whole truth versus a smidgen of the truth.

Example #1

Sales were down 19.3% in 3Q2010 compared to 3Q2009 – not so great news, huh?

Well a little perspective for you, the tax credit was just catching on 3Q of 2009 and buyers were starting to buy.  Without the added incentive of $8,000 of course sales are down, but probably more realistic.

Example #2

Foreclosures are down 6.7% from 3Q2009! – great news, huh?

Well a little more perspective… there may not be as many foreclosures but there is a significant rise in short sales.  In fact, total distressed sales (foreclosures + short sales) is on the rise.  That obviously is not great news for a seller – but buyers take note – there are still some great deals out there!

Example #3

Homes are selling on average 86.6% less than their original list price. That’s is outrageous, huh?!

Well here is the best AND worst perspective yet… if you’re home is priced right it sold for 96.9% of list price in 3Q2010…if it was priced wrong it sold for 78.5% of list price!  Which means if your home was listed at $350k and it was in line with the market then it sold for $339,159 last quarter.  However, if your home was over priced at $350k then it ended up finally selling at $274,500 last quarter!  Which side do you want to be on?  

Is Fall a better time to sell than Spring?

An interesting question is floating around right now -- a lot of my clients are wondering if they missed the "selling season".  Lots of my listing appointments are actually considering waiting till spring 2011 to list again and the buyers are kicking themselves for missing out on the $8k tax credit.

Did you in fact miss out?

The one thing I know 100%, without a doubt, no questions asked is this market is anything but typical.  Our August, for which we will finalize our books tomorrow afternoon, is much much bigger than the past two Augusts have been.  And our office has indeed seen a big upswing in listings inventory in the recent weeks, and a steady flow of contracts, all of which enforce our feeling that seasonality is being overridden, at least this year, by other factors.

I agree that historically, the notion of the strong spring (when the “For Sale” signs begin to bloom!) and a decent early fall secondary bump, were absolutely in play.  However, we are starting to see a different trend this year and perhaps even the next couple of years.

Perhaps the biggest “pattern buster” is the impact that the Tax Credit had on sales.  Of course sales went down in July! How could they not -- residential homes just had THE BIGGEST sale ever and buyers received $8,000 in return!  What did we think would happen?  But the cool thing is we are already starting to see sales creep back up, mostly due to low interest rates.

I liken low interest rates to our second BIGGEST sale ever!  A 15 year mortgage at 3.875%!!! Buyers are realizing that the interest rates being low is actually better than a measly $8k tax credit.  And the timing of this will likely lead to a 4^th quarter boom, unlike typical 4^th quarters have been historically.

So it’s a NEW normal out there – if you are considering selling do NOT wait till spring, do NOT wait till summer, just DON'T wait.  

A few more thoughts here . . . .

Buyers looking to time the market, or who didn’t find the right house yet, or are just waiting for the right time to buy, YOU are in that time right now.  And according to the activity we are seeing as our office, the market is beginning to respond accordingly.

The big take-away is this – 4^th quarter 2010 has incredible potential. Potential to be a 4^th quarter unlike those we are normally used to based on the old norm of seasonality.  Call me today to discuss selling your home or buying a new home.....don't let another great opportunity pass you by.

Best Regards,

There seems to be so much contradictory information out there right now - one minute you hear home sales are up then the next you hear that the market is worse than ever.  How can this be true?  I've come to realize that real numbers can be portrayed in many different ways.   For example, the #1 agent sounds pretty good...but what if you found out that agent was the only agent in their office...hmm....not so good.

I'm here to give it to you straight.  The good, the bad, and the ugly.  No interpretations here - I'm just going to tell it how it is and let you come to your own conclusions.

First - well we really are the #1 team in an office of 300+ agents AND Keller Williams is the #1 real estate company in the Atlanta Metro area for 2Q2010...(just the facts :) )

Other than that, lets look at the Median Sales Price right...

Median Sales Price

YES - the median sales price has gone up (2.6% in 2Q2010) since 2Q2009.  However, the sales price is still down 12.7% since 2008.  This is why you can't figure out why it feels like prices are still down in your neighborhood even though the media says prices are up.  They are up, but they still have a ways to go to catch up to 2008 prices.

Days on Market (how long homes are listed before they go under contract)

YES - on average homes are selling faster - 109 days is the average which is 26.8% less than 2Q2009.

• Doesn't feel like homes are selling fast in your neighborhood?

• Well let's look at days on market by price point:

• If you're in the $750k - $999k price point then its actually taking more like 331 days to sell your home (3 times longer!).

• If you're in the $500k-$749k its taking close to 200 days!  But if you're in the under $200k price point then its taking more like 90 days (very good news!)

Taking the mystery of days on market one step further, we must look at new homes versus resale homes.

• A new construction home in the $500-$750k price range is taking an average of 745 days to sell (up 40%)!
• Total average days on market for new homes - 353 days!
• Total days on market for resale homes...just 94 days!

Number Sold

YES - homes sales are up in 2Q2010, too! Actually 4.5% higher compared to 2Q2009.   Seem a little off to you?  Well its still down from 2008 by -5.7% (not that bad!).  Again, the ability to drill down to price point sheds a lot of light.

• If you're living in an under $200k home then homes are selling all around you....57.7% of ALL sales occurred in the under $200k price point for a WHOPPING 5,703 total homes!
• If you're living in a McMansion then you think time is standing still- the $1M plus had only 110 homes sell
• The $300k - $499k did pick up 17% from 2Q2009, but still only accounted for 1,571 homes

Looking at these numbers is completely enlightening to me and I love having the opportunity to share it with you.  Understanding what is really going on in our neighborhood right down to Three Branches or the 30188 zip code is imperative.

I welcome your questions - maybe you would like to see this data portrayed differently.  Feel free to follow us at www.Faceboook.com/CastlesByChrissy.  We share lots of great information on a daily basis. Please let me know and I'll do my best to provide it for you!

First and best news that continues to hold true quarter over quarter – a home priced right will sell within 23 days on market and more than 97% of list price!  Homes NOT priced right sell in 236 days (10 TIMES longer!!!) and 79% of list price.  Let me put this in practical terms:

Seller wants to list at $375,000
Market dictates $350,000

At $375,00 homes sells 236 days later for $296,250
At $350,00 homes sells 23 days later for $340,550

Seller saves $44,300 and 213 days of keeping your house clean!

I love that statistic because in the end it benefits everybody.  It keeps inventory moving, buyers moving in, and buyers moving up.

More positive news:

-         Sales are up 2.6% compared to 2Q2009
-         Foreclosures are down at 24.4%
-         Sales price median is slightly higher – +6% compared to 2Q2009
-         Although still high, the percentage of homes that needed a price reduction in order to sell continues to lower (9 percentage points)

More “Interesting” news:

-         51.5% of listings in 2Q 2010 failed (never sold)
-         82% of ALL listings are overpriced and will need a price reduction to sell!
-         1 and 3 properties are distressed (short sale or foreclosure) 33% of our market!
-         More than a 9 month supply of listings exists ( 6-7 months creates a balanced market)

I hope you find this information beneficial.  Please do know that the information above is the average of all of Metro Atlanta.  Its possible for me to provide this information just for your zip code.  Just send me a quick note with the area you want me to look up.

Have a great day!