Real Estate Information

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.

On 11 May, Governor Sonny Perdue signed in to law House Bill 261 - authorizing something that went beyond the Federal version.  The Georgia credit does not require one to be a first-time homebuyer, and there are no applicable income limits.  

There are some restrictions - most notably the fact that buyers must purchase single family residences, but it is open to any resident who purchases a home between June 1st and November 30th of 2009.

Another important restriction is that the home purchased MUST have been available for sale on or prior to May 11th of 2009.  A primary intent of the bill is to reduce housing stocks, so I understand the motivation if not the execution.  There are some exceptions from what I understand - you can purchase a home that may not have been on the market providing it was in pre-foreclosure on the May 11th date.

Good news for Georgia buyers!  Another benefit?  This credit has no bearing on receipt of the Federal First Time Homebuyer Credit - so if you meet criteria for both, you get both.

I read with minor alarm and some excitement a post on Hank Bailey's Athens blog that FHA will soon allow Georgia Home Buyers to use the $8,000 tax credit as a down-payment.

This intrigues me in a couple of ways - most importantly the way it most affects my client base.

I thought of your typical VA homeowner and how they're really screwed in some markets because of financing the funding fee.  Now those same VA folks go to sell their homes in depressed markets only to find that by financing 103% of their home, they do not have the equity to sell and move on.

This FHA option seems excellent as an option for VA Buyers to convert to FHA Buyers and move in with 3.5% equity vs. -3% equity.  Three years later, they can sell the home (even if values have come down slightly - something my area has not done yet). 

This also saves them their VA entitlement down the road.

Imagine the scenario in this market where Sellers are more than happy to pay most (if not all) closing costs and our VA folks can truly reap a more measurable reward for their sacrifices?

The current VA structure, with the hefty funding fee (except for disabled vets), either needs to change, or perhaps undergo some modification to match up with what should no-doubt make a number of VA Buyers convert their applications to save what amounts to at least a 6% swing.

I'm speaking - of course - from an Augusta GA  Home Market perspective where $8,000 down-payment will buy you a very, very nice home indeed.....

The alarm I refer to in my opening statement has to do with the high volume of foreclosures that resulted from down-payment assistance programs nation-wide.  I hope this isn't just feeding the beast and waiting for more turmoil 3-4 years down the road.

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.