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.

Is It Really Recovery Time?

October's figures are out for the Augusta-area, and lemme tell you - it's looking pretty darn good!  The 1st Time Homebuyer Tax Credit has been extended and expanded, and it seems to be having an effect on our local market.   Consider these sales totals:

Although the Greater Augusta Association of Realtors (GAAR) Multiple Listing Service (MLS) does not provide data on how many of these sales involved 1st Time Homebuyers, it seems improbable for our numbers to have done better than last year WITHOUT some incentive stimulating sales.

C'mon Joe, Are We Really Coming Out of The Slump?

Here's the rub:  according to application data from the Mortgage Bankers Association, actual purchase applications where down nationally 3.1% in October - even though interest rates decreased on average to 5.04% from 5.07%.

Another fact - despite good numbers for September and October, we remain down -6% on 2008's numbers (which where down 28% on 2007).   Yes,  we've gained ground, we started 2009 with a horrible January, down 24% on 2008 (in other words, down 52% on 2007), so being down six percent by October is an improvement. 

Here's what I think:  The tax credit was not extended (and expanded) until 5 November.  Until that date, there where buyers scrambling to take advantage of the benefit before it expired on 30 November.  Given how long it takes to close on a home when financed - we should expect November numbers to take a nice jump over last year as well.  The reason being - most contracts for November closings where written in October (or earlier) - so those buyers believed when they wrote the contract - that the credit would expire.

Can I Get The Credit? 

The credit was extended until 30 April 2009, and expanded to add "move up" buyers who have lived in their current home at least five years (yes, you have to sell that home and buy a more expensive one to get the credit).

If you're thinking of buying a home before the NEXT expiration date of 31 March 2010, see if you qualify by clicking this link:

Cheat Sheet for Tax Credit Qualification

Military, Intelligence and Foreign Service Benefits

One thing I do like about the changes, they add provisions that help our military men and women out.  These benefits are also open to intelligence and foreign service personnel.

For example, someone who deploys for over 90 days (must be outside the U.S.) in 2010 will get an additional year (until 1 May 2011) to purchase a home and claim the tax credit.

There are additional benefits for these folks - including not having to pay back the credit if you have to move before the three-year occupancy deadline.  You can read about them here:

Homebuyer Tax Credit - Armed Services Members, Others

 What's Next?

The extension of the credit should inject some sales into the winter market.  Remember - October-March are the slowest sales months of the year for real estate - people like to move while school's out and the weather's good.

The bottom line is that nationally, 1st Time Homebuyers accounted for only 36% of sales in 2006, and by some accounts they now account for almost 50% of all sales.  It has provided a good "bump" for sales, but it is far from the cure. 

The housing crisis has its roots in the mortgage industry and predatory lending.  One required nothing more than a pulse to obtain a mortgage, and astounding products where rolled out to enable people to afford five times the home they should actually purchase.  Adjustable Rate Mortgages, Alt-A products, and sub-prime loans all caused what we're now going through - not the lack of a "credit" for buying a home.  There is a natural order to things - we over-built, over-bought, over-spent, and over-borrowed.  Now we're spending less, borrowing less, and only buying essentials.  Deplete the existing inventory through qualified buyers, and the market adjusts - back to another "Sellers Market."

Artificially inflating the market with a gallon of tax credit may help in the short run, but it is not the natural order of things.  My milk has an expiration date, I'm glad the tax credit does too. 

Tax Credit To Be Extended!  Or Not, Or Modified, Or What?!?!

Ok, several websites later, I still don't know myself!  However, it does seem likely that the credit will be extended and modified to phase it out over the next year. 

In  a rider to the Unemployment Bill currently before the Senate, there seem to be several options on the table, and none of the news sites or blog destinations seem to agree on much.  Here's what I've seen:

1 - Credit will be extended through October of 2010, but will reduced by $2,000 every quarter, starting with a reduction to $6,000 on 1 January 2010 ($4,000 on April 1, $2,000 on July 1).

2 - Credit will be modified to 10 percent of the sales price, capped at $7,290.  In this modification, step-up buyers will also be able to use the credit - not just first timers.  These moving-on-up folks must have been in their previous home a minimum of five years.

3 - Credit extended as-is through March of 2010, then reduced $2,000 every three months - phased out by December of 2010 (similar to the 1st option).

4 - Raising the salary cap of the credit to $300,000 per family, $150,000 per individual (currently it's half that).  Also, remove the 1st time home buyer requirement and open the credit to all primary residence purchases.

As you can see, there are several options on the table, and this does not cover all of them.  Per Inman, Bloomberg, The Washington Post, and Jay Thompson (probably the best of the bunch - the Phoenix Real Estate Guy), a deal was reached among Senate Democrats last night to re-write the rider to the Unemployment Bill with the #3 option above. 

It seems likely the credit will be extended, but keep in mind this was only an agreement among Senate DEMOCRATS - it must still pass the Senate itself, the House, and the President.  More to come as I find out.

KW "This Month In Real Estate" -  With Great Tips On Purchasing Foreclosure Properties

Here's the October edition of "This Month in Real Estate" with Jay Papasan.  In addition to some national-level statistics and conditions, there's a short segment on purchasing foreclosure properties - with great tips on what to look out for:

I hope you enjoyed today's post - I'll be back to let you know how the whole tax credit deal works out once it's finalized.

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!

There's some good numbers out there from August sales, which continue to indicate the Greater Augusta area may be at or near the bottom of the housing crunch.  I'll add a word of caution at the end of this post, but for now, enjoy....

Residential Single Family Homes Post Gains

For a market that began 2009 down 24% on 2008's horrible numbers, things have perked up nicely.  Three months of this year have posted 1% single family home gains on last year.  April, July, and August of this year all saw increases year-over-year in home sales.  These numbers are limited to single family homes, and exclude townhomes, condos, and mobile (manufactured) homes.

Richmond County led the charge, posting 175 sales for July, and 169 sales for August (vs. 2008's numbers of 140 and 138, respectively).

Columbia County sales continued to mirror 2008's number quite closely, with 196 July sales, and 171 August closings this year.  This compares favorably to '08's numbers for July (198) and August (175).

The Identity of Today's CSRA Home-buyer

* - numbers include ALL residential sales, including townhomes, condos, and manufactured homes.

The Promised Party-Pooper Punchline!

OK, things seem to be sucking less, and the numbers tend to indicate we may be at the bottom of this downward spiral we began in mid-2006.  Here's a great big reason why all of this may not mean doodley-squat come November:

The $8,000 First Time Home-buyer Tax Credit expires on 30 November. 

Although statistics on 1st Timers in our market are hard to come by, I do believe they have helped lead the way out of this market - in part because national statistics indicate anywhere from a 7%-10% increase - with First Time Home-buyers accounting for 48% of all sales in some sectors of the country.

Regardless of whether or not you support the tax credit, it is undeniable that it has led to an increase in sales.  Some critics claim the credit actually costs taxpayers over $40,000 per home - others that the economic benefit (nationwide)  far outweighs the cost.

If you want to weigh in with your government representatives about extending this credit, you can find your Congressmen and Senator's contact information by clicking here.

I hope you've enjoyed this blog - and relish your comments - please feel free to leave a note with  your opinions.  Thanks again for visiting.

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!

On 30 July, changes to the Truth In Lending Act regulations came into effect.   These changes can significantly alter the amount of time it takes to finance a home purchase.

This video - from ThinkBigWorkSmall.com, explains the parts of the Housing and Economic Recovery Act (HERA) that established new requirements for lenders and mortgage brokers for Good Faith Estimates (GFE) and Truth In Lending (TIL)disclosures.  The video is geared to mortgage brokers and Realtors, so a lot of the content will be gobbledegook to most of you - but the salient points come through clearly.

Click here for the Video: HERA Is Not Your Hero in RE

In Georgia, these changes may not have the extensive effect the video implies - mainly the additional 14 days it may now take to get a mortgage - because our contracts already have built-in due diligence periods and financing contingencies that should accommodate these changes with little impact.

The regulations can affect YOUR closing - whether as a Buyer or a Seller - if the Buyer decides to change loan products or the rates change and the Buyer wants a lower rate.  The margin of error is small - if there's a difference of more than .8% in the GFE/TIL from the initial application and the FINAL costs to the Buyer - then the three day disclosure period comes in to effect, which WILL mean you cannot close until three days after the Buyer physically gets the new GFE/TIL.

Anyway - hope this is of use to some of you!  Let me know if you need any more info - and as always - I relish your comments!

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!

The June housing numbers - taken from the Greater Augusta Association of Realtors MLS reports - show the Augusta area is truly a "Tale of Two Cities."  Perhaps a more accurate title would be a "Tale of Two Counties."

Columbia County - on the one hand - showed a flat sales month when compared to June of 2008.  Residential sales (single family, townhomes, condos, manufactured homes) for June '09 in Columbia County came in at 235 closed transactions - compared to 237 for the same month in 2008.

Richmond County numbers plummeted over 2008 - a strong sign that the Augusta Housing market - as a whole - is far from recovery.  June 2009 sales in Richmond County totalled 156 properties.  A stark dropoff from an already-horrible 2008 figure of 205.

When taken in context - it seems Columbia County's flat sales number is actually an improvement.   It marked the first time monthly sales did not reflect at least a double-digit drop over the same month of the previous year since 2006.  A trend?  Too early to tell.  If July and August numbers show continuing stability, it may mean the Columbia County macro-level of the CSRA market has hit bottom.  I do not sense this to be the case in the rest of the area.

Richmond County - home to the vast majority of foreclosures, distressed, and lower-income properties in the CSRA - is still suffering the recession impact and it may get worse.  There are still close to two million Adjustable Rate Mortgage and other toxic mortgage products scheduled to recast over the next few years across the country.   This means an almost certain increase in foreclosed homes in the Augusta area.  This will not be limited to the Richmond County macro - but it is in that sector of our market that many believe the predatory lenders took the most advantage of home buyers over the last several years.

The bottom line is all Augustans are still weathering the Housing Crisis storm, and it will probably be well into 2010 before any hint of a housing recovery truly affects the ENTIRE area.

If you feel you are in peril of losing your home to foreclosure - you need to click here to watch a video from the FTC about Foreclosure Rescue Scams.

I look forward to any comments about this post.

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.