Real Estate Information Archive

Augusta Real Estate Year in Review - 2009

There were a total of 4,902 residential sales in the CSRA in 2009,* down 4.65% on 2008's total (5,141).   This marks another consecutive drop in sales since a high of 7,014 properties sold in 2006.  In short, roughly 2,000 fewer homes sold in 2009 than in 2006 (30% fewer). 

On a positive note, Augusta ended 2009 with five straight months of sales equal to or better than 2008.   This can primarily be attributed to the $8,000 tax credit program and attendant increase in 1st Time Home buyers (some estimates place 1st timers as over 50% of the market).

Resale properties actually suffered more of a downturn than the 4.65% above indicates.  Resale properties only accounted for 3,250 of last year's sales - down over 10% on 2008's total of 3,625. 

New construction rebounded - showing an INCREASE of almost 9% over 2008.  Last year, 1,652 new homes were purchased in the Augusta area - up from a low of 1,516 in 2008.   This marks the first increase in new home sales since 2005.

Those of you familiar with our local industries know that in the beginning of 2009 a game-changer came to town in the form of Crown Builders.  Crown, I believe an Atlanta-based builder - began selling McMansions at Happy Meal prices in the Augusta area in 2009 in several subdivisions - among them Willhaven, Iris Glen, Berkley Hills, and Ivy Landing.   Buyers in Columbia & Richmond Counties, and now Aiken-area residents in South Carolina -are gobbling up these properties and their surprising size.  With a lower price point than anyone in Augusta was used to, their impact cannot be overstated.  As the rest of the country's builders continue to see stagnant sales, our area actually INCREASED volume in new construction sales. 

What does it all mean?

First and foremost - if you planning on selling a resale property this year - GET BUSY DOING IT.  It takes much, much longer than you probably expect to get a buyer in this market, pricing must be agressive, and the condition must be tip-top to expect any kind of interest whatsoever. 

The tax credit injected some much-needed relief in our local area.  November's sales where 60% higher than November of 2008.  Considering most November sales originated in October or September, it seems obvious the anticipated expiration of the $8,000 credit got many buyers off the fence.  As you probably know, the credit was extended and expanded, and now expires 30 April 2010 (you can write a contract that closes as late as June, but the contract MUST be binding as of 30 April).

The expiration of the tax credit, along with some serious revisions in lending practices - particularly for FHA - mean we may endure yet one more year of stagnant sales before a true rebound in the housing market in Augusta takes place.  FHA Buyers will only be allowed 3% in Seller Contributions (vs. 6%), thereby increasing the amount of money a buyer will need to purchase a home.  

FHA is also raising the Mortgage Insurance Premium from 1.75% to 2.25%.

Conversely, FHA is considering amending lending rules to allow 580-credit score purchasers to get a mortgage with a higher downpayment.

In summary, we endured another down year in real estate, but new construction experienced some much-needed relief, and government incentives did inject some late-year energy into the housing market.

I expect 2010 to remain flat, with robust - if not increased - sales in the first quarter and a half, but a quiet summer with sales comparable to 2009's numbers.  Fall and winter of 2010 will be flat, perhaps below 2002 numbers - unless other economic efforts yield results (jobs, jobs, jobs).   This is not necessarily a bad thing - we have to hit bottom, this may be it.  The future is bright, as long as you interpret that to mean 2011 and beyond....

* - data is from the Greater Augusta Association of Realtors Multiple Listing Service and does not include unlisted properties.

OK, SO WHY AM I LATE?

I'd planned on a more comprehensive update on the 1st Time Homebuyer Tax Credit by now - so I apologize to those of you who have no doubt been hanging on the edge of your seats, waiting on the next great missive from yours truly.

The Credit expires on 30 November, and unfortunately, as of this writing, we still have no comprehensive decision by the Administration.  By my count, there are at least nine Senate or House Resolutions to extend, modify, increase, or otherwise edit the benefit.  These proposals range from increasing the credit to $15,000 (and increasing the income requirement), removing the “1^st Time” label and making it available to any purchaser buying a primary residence – to simply keeping the current credit in it’s 2009 form and extending it until June of 2010.  More to come, I’m sure. 

WHAT DOES THAT MEAN TO ME?

Depends.  From a purely business perspective – I want the credit extended, increased, and modified (not just for 1^st timers).   It has increased our business – and that’s how I feed my family.  As a voting American – I do not.  Using the US Treasury as an ATM only increases the deficit.  Someone’s going to have to pay for it in the long run, and the Wall Street Journal predicts extending the credit until June of 2010 (with no modifications) will cost an additional $16.7 billion.  How do you get rid of a deficit?  Tax more.  I don’t want that. 

SO, WHAT’S UP IN AUGUSTA?

Some stability has been injected into the market – and Columbia and Richmond Counties continue to see numbers that compare favorably to 2008’s figures.  Keep in mind that year pretty much stunk – down almost 48% on our best year ever – 2006 – so we’re still in a slow sales mode – it just hasn’t gotten worse.

For the first time since 2006, overall residential figures increased for September over the previous year.   Sales for 2008 totaled 414 properties, while September of this year tallied 417.  A relatively insignificant increase – but significant in the fact that it is the first increase in sales since the housing crunch began.

Columbia County posted higher numbers for September over last year, with 170 sales (2008 – 162), while Richmond County posted it’s third straight increase over the previous year – 172 properties (2008 Sep – 163). 

New Construction for this year seems on track to have a slightly slower year than 2008.  Considering 2008 (1,516 sales) marked the worst year for new homes since 2002 (1,483 sales), this is NOT good news. 

With three months to go, New Construction sales have tallied 1,182 homes sold as of 30 September 2009.   Although that works out to an average of 131.33 homes per month – the October-December sales period is always slower than the summer months.  I anticipate another down year, approaching the 2002 number.

PLEASE TELL ME WHAT THIS MEANS!

According to the National Association of Realtors – 1^st Time Homebuyers now account for 48% of all home purchases – up from 38% pre-2006.

If the tax credit is extended – this should continue.  If it’s modified - it should increase sales.  If it is allowed to expire - sales will slump through early spring.

Not a big deal if you’re in the trade and you’re proactive in your business planning – a very big deal if you’re not.  Sales are always slower in the winter months, and typically start picking up in late February and March.  Should happen again – with or without the credit.   

If the only reason you’re buying a home is to get a tax credit, you probably need some more extensive financial counseling than I can offer you here – to include a urinalysis.  On the other hand, if you DO buy a home, and take advantage of a program designed to stimulate the housing market – more power to you!  Spend wisely!

THE PROMISED “NOTHING TO DO WITH REAL ESTATE VIDEO:”

Our men & women in uniform never cease to amaze me.  I’ve seen this video many, many times.  I’m including it here simply because I cannot help but admire the ingenuity, creativity, humor, and dedication of these Sailors.  It is “make-me-giggle-good,” and you’ll surely want to get up and dance before it’s over!  Enjoy!

Thanks for reading, thanks for watching - leave a comment!  Have a fine Navy Day!

While reading a most awesome post by Matt Stigliano on Agent Genius, I made a decision to digress from my usual blogging fare and write about life.  It's about my life, but I think it may be about yours too.

Of the last six weeks, we've had out of town company staying with us for four (in two-week stints).   School started today (think of shopping, open houses, sales tax holidays, etc...).  It's been hectic.  If you've read my past entries, you know Housing numbers haven't exactly been kicking butt here in Augusta.  Work has been tough - and my wife and I have had to find other sources of referrals and leads to accommodate the shift in the market - all while entertaining various relatives and getting the kids ready for school.

Last Wednesday, I joined three of my Keller Wiliams buddies on the golf course for some R&R.  If you know Shea, Ricky, and Rod - you know the "R&R" really stands for "Ridicule and Ribbing."  We're a moderately competitive bunch - intent on holding our own while ensuring no missed shot goes unpunished (at least in the verbal jousting category).   Rod hit a tee shot a whopping fifteen feet, which I promptly followed with "A lot of guys wouldn't have played it like that."  You get the gist...

By the time I got home (it had been about 96-degrees with high humidity), I was soaked, tired, hungry, and HAPPY.  The five hours-plus I'd spent with these friends - full of good-natured ribbing and genuine camaraderie - sweating, swinging, and putting in the hot Georgia sun - was an absolute BLAST.  I'd put my phone on "silent" and forgot to turn the ringer back on.  Got home, joined my wife and kids by the pool, and grilled up some good dinner.  I had one of those nights' sleep you remember - woke up rested and refreshed - and ANXIOUS to get back to work.  Noticed my phone ringer was still off - and I'd missed several calls.  None of them life-threatening or urgent.

At the office later that morning, I realized that it was the first time in a couple of weeks that I was fully focused, energized, and confident.  The bottom line is I had not taken the time to replenish my batteries.  The stresses of entertaining, working, shopping, minor car troubles, LIFE - had gotten me down, snuck up on my usually-positive demeanor and changed me briefly to someone else. 

Take the time - EVEN IF YOU HAVE TO MAKE IT A SET APPOINTMENT ON YOUR CALENDAR.  Take the time to hug your kids, kiss your spouse, play golf, play whatever you want, dance in the rain, skinny-dip, whatever.  Turn OFF your phone, get away from the computer.  TAKE THE TIME.   Ever hear of Nicklback?   Listen to the words to  "If today was your last day."  Go forth and DEGAUZE yourself!

By the way - I birdied 18 to secure a six-stroke victory.  Talk about a GREAT DAY!

For the next four days, through midnight on 2 August 2009, Georgia will be having a "Sales Tax Holiday."

Per the Georgia Department of Revenue, the following items will be exempt from all local and state sales taxes:

Articles of Clothing. The exemption applies to articles of clothing and footwear with a sales price at time of purchase of $100 or less per item. There is no monetary limit on a purchase as long as the price of a single item does not exceed $100. Clothing accessories such as handbags, umbrellas, etc. are not exempt.

Personal Computers. A single $1,500 or less purchase of a personal computer (PC) and/or related accessories is exempt. The exemption does not require the purchase of a “personal computer base unit” (tower, desktop, laptop) and is extended to peripheral devices such as modems, printers, speakers, non-recreational software, etc. If a single purchase exceeds the $1,500 maximum the entire purchase is taxable. A single purchase is considered the total of all sales made to a customer in one visit to a store.

General School Supplies. The exemption applies to the purchase of general school supplies with a sales price at the time of purchase of $20 or less per item. There is no monetary limit on the purchase as long as the price of a single item does not exceed $20.

The list of tax exempt computer supplies from the Department of Revenue's site can be found by clicking here.

The list of exempt school supplies can be found by clicking here.

Finally, exempt clothing articles can be found by clicking here.

Hope this helps!

Since 1999, Georgia property owners who applied for a "homestead exemption" on their primary residence received about a $200 reduction on their annual property taxes for their primary residence.   The vehicle for this tax break came in the form of the Homeowners Tax Relief Grant (HTRG).  

Due to the economic recession, the 2009 Georgia Assembly failed to appropriate funds for the HTRG.  The Grant will only be made available in the future if the state revenues grow at least 3%, plus the rate of inflation.

What this means to all Georgia homeowners who have filed for the homestead exemption is that you can expect at least a $200 hike in your property taxes for 2009.

One additional step you may want to take is to ensure you have your 2008 valuation handy when you receive your 2009 tax bill.  Compare the two - and if you have any concerns, contact the Tax Assessor for the county your home is in.  Keep in mind that any increase in your tax burden can be appealed. 

The Columbia County Tax Assessor's office actually posts what areas they intend to visit within the next 90 days to assess 2009 tax values.  you can find this list by clicking here.

If you are registered for the homestead exemption and pay your taxes via your mortgage lender's escrow account, remember to budget for the $200 shortfall when your lender pays your tax bill.

For the first time since 1999, May sales figures dropped below April's totals.

May total sales of Residential, Manufactured Homes, Condos, and Residential Attached (Townhomes) decreased over April figures for the first time since 1999.  May's total of 401 sales - although only a slight drop from April's final tally of 405 sales - is still a significant indicator that Augusta's economy is not the rosy picture often referenced by local media reports.

The 401 sales also mark the lowest May sales figure since 1999 (387 sales).

Current market conditions are off 17% on 2008's numbers. 

There are some bright points in the data - we started the first three months of 2009 down 20%, so the summer market is contributing to a slight decrease in the differential - so it sucks less than in March.

Townhome sales also rebounded with the typical spring coming and going of Medical students.  A market sector that had been down 43% over 2008 posted a meager 15% decrease over that year's figures.

Another good sign is an increase of average sales price of over $11,000.   May's average totalled $163,919, compared to April's $152,465.

The percentage of list-to-sale remains above 97%, indicating Buyers are still willing to pay near-list price for properties in our area.

The absorption rate - an indicator of how long it would take to sell all current inventory - rose slightly, to 10.6 months, but still represents a 5.5 month reduction on January's 16.1 month rate.

May sales have an average of 129 Days on the Market (DOM), an increase of 15 DOMs over April.

The bottom line is if you are a Buyer - there are homes to be had at great prices and great terms. 

If you are a Seller - hunker down, price the home right, and ensure IMMACULATE condition.  Offer closing costs up front and a home warranty.  Fix everything that's broken or an eyesore.  Good homes sell in any market, it just may take longer in the current conditions.

I believe the new HUD rules governing the use of the $8,000 Tax Creditwill evolve through June and into the late Summer as a means for First-Time Homebuyers to secure their downpayment.  This is especially important for VA Buyers who may wish to switch to FHA products to avoid a negative equity result from financing the VA funding fee.

HUD Secretary Shaun Donovan - in a much anticipated move, announced on 29 May the approval of the use of the 1st Time Home-buyer $8,000 tax credit as down-payment (or closing costs, etc) for FHA buyers.

Mortgagee letter 2009-15's Qualification guidelines are posted on HUD's website. 

I have mixed feelings about this - on the one hand it can be a great vessel for my VA buyer-clients to use another option and move in with more equity, but on the other it amounts to another down-payment assistance program - which have been proven to result in a higher percentage of foreclosures.

Unlike previous programs like Nehemiah - the use of the tax credit is not intended to be a vehicle for lower-income families to purchase homes.  Instead, it's purpose is primarily to free up frozen FHA credit lines by helping first-time home-buyers come up with the money for their 3.5% down-payment.

My mixed feelings come in whenever I see the government figuring out ways to give us a little money in order to borrow a lot of money.  The guidlines seem stricter, though, so I'm hoping the predators don't come back out of their holes to feast on the uneducated and uninformed. 

I would like to know your thoughts about this - I have a feeling the discussions on some of the great real estate forums will center on this issue for quite some time to come.

Seems like it might be time to eat a little humble pie and pull back on my projections for April's numbers.  Things are actually looking better!

Pending and Contingency properties as of this writing also appear to point to a robust May, with 719 properties revealed in a quick-sort of Pending sales.  A good number of these will either not close until June or July, and some may just be clerical errors, but I would still suspect we'll get close to - if not exceed - 500 sales for the month of May.

Late postings and other adjustments continue to drive the April sales figures beyond my expectations.  As of this afternoon, there were 400 closed residential (all types) listings in the MLS for April - a number that is sure to go up slightly before the reports are generated on about the 10th.   This exceeds the March sales figure of 389 properties - a good sign since the Masters Golf Tournament (always the first full week of April) usually puts the kebosh on a full week's worth of Buyer traffic in the area. 

The $8,000 Tax Credit, low mortgage rates, and extensive Seller offered-incentives will hopefully help us begin a moderate summer selling season, as we head in to a projected recovery in early 2010.

1^st Quarter August GA Home Sales Summary

Well, it’s time to take a good hard look at how the 1^st quarter numbers of 2009 stack up, so here goes:

- Overall sales are down 17% on 2008 figures for the first three months of the year.  March sales rebounded to 11% down on March 2008, much better than January (down 24%) and February (16%) – so that 17% figure may go lower as we enter the better home sales months.

-  Expect April figures to decline slightly.  A full week of out-of-town guests for the Masters Golf tournament always puts a damper on the April sales figures – and I expect that trend to continue.  Since 2003, only one year saw an increase in residential says in April over March – 2006.  Every other year in that period has shown decreased sales activity for April over March.

- The average sales price for March of 2009 was $157,959 – almost $4,500 higher than the same period last year.

- Richmond and Columbia County continue to pace sales in the CSRA – with the west Augusta and south Augusta regions posting slightly higher totals than the Martinez/Evans/Grovetown (North of I-20) corridor of Columbia County.  Harlem and Appling continue to post weak sales figures – reflecting the smaller population of those areas of the county.

- As of this writing, 30 year conventional mortgage rates in the Augusta area are hovering close to the 4.65% mark, with VA and FHA rates also well below 5% - continuing the historical lows we’ve seen for the last several months.  There will probably never be a time period in my lifetime when homes are this affordable.  

THE BOTTOM LINE:  If you are selling – get your home on the market sooner than you planned.  We continue to weather the mortgage crisis storm and inventory is still high.  This is hand-in-hand with Gary Keller’s Vision Speech from the Keller Williams Family Reunion.  I’m paraphrasing, but he said in February that “the next six months will probably be the worst economic times you will ever see in your lifetime.”   With over 400,000 ARMs adjusting in 2009, there will continue to be foreclosures at record levels.  Expect things to bottom out by August, with the housing market posting a mild turnaround by the early 2010 months.   

If you’re buying, you probably won’t see this level of choice again for quite some time, and the concessions offered by Sellers in this market are phenomenal.   Interest rates are still historically low – how long that will last is anyone’s guess.   I certainly see rates continuing below 6% through at least November if not longer.

At the end of the day, good homes sell in any market.  If you are a First Time Homebuyer or have not purchased or a primary residence in the last three years, this is a perfect time for you - the $8,000 Tax Credit is an outstanding incentive.

Well, Sherri and I have wrapped up our first year at Keller Williams Realty Augusta Partners, and at the beginning of this month - I took some time to look over the market statistics for the year and see if I could get a feel for what 2009 may be like.

The 2008 residential sales figures were down 22% over 2007's sales, but 2007 was the second best year ever in the Central Savannah River Area (CSRA).   All in all, 5,011 homes sold in the Augusta area last year.

Townhome sales where a bright spot in a down year.   With 529 townhome sales in 2008 - it became the second best year ever for "residential attached" sales.   For comparison 2007 was the best year ever, with 532 total sales, while the third best year fell way short of both - 2006, with 393 sales.  Proof positive that what we're really going through is an affordability crisis rather than a mortgage crisis.

The "sweet spot" of the housing market was between $100,000 and $179,999.  That sector accounted for fully 46% of all sales.  

The luxury market suffered the most.  Homes with a list price over $350,000 accounted for 6% of all sales.

The best news of the year comes from inventory reduction.  The number of available homes dropped every month since June of 2008 at a high of 4,713.  The end of December number of 3,955 represented a drop of 758 properties or 17% - the steepest drop in available inventory in MLS history.  Since real estate is a supply and demand industry - this is a good sign we may be near the bottom of the trough of this Buyers Market cycle.

Despite all the gloom and doom, CSRA sellers still received - on average - 97% of the list price of their homes when they sold.  This edifies recent media reports of Augusta continuing to see mild appreciation in a nationwide trend of negative appreciation.  When you consider all the foreclosures that get lumped in with those statistics, it's probably more like 98-99% on a regular Seller-Occupant to Buyer-Occupant transaction.

I'll keep more market news in here as things evolve - please feel free to let me know what you think.  I can also send you the reports that back up my data - just drop me a line and I'll get them to you.

All in all Augusta numbers were down, it is tougher to sell your home, and you need to have agressive pricing and excellent terms to offer Buyers if you intend to sell.