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!

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 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.

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.