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.