Alpharetta Real Estate Homes for Sale

Last week I wrote a post showing market data indicating that house prices continue to rise in Alpharetta; it is just that the volume of sales is down.  This is true overall for the market.

However, one of the insightful readers of this blog, took me a little bit to task on differentiating between new home sales and resales.  This is one of those cases where you can easier lie with statistics.  While I believe that it is valid to look at the market as a whole (both new sales and resales), maybe it just makes a point that realtors want to tell but doesn’t make the whole point.

I try to be a "glass half full" kind of guy and I truly believe that we can - and have to some extent - talked ourselves into today’s recession and slump.  When I fell a cold coming on, I tell myself I’m not going to get sick and most of the time I don’t.

Yes, there are some fundamental problems with the economy:  credit availability, price of gas, value of the greenback…even climate change.

But there are some fundamental things right with our local Atlanta, and Alpharetta in particular, real estate markets:  job creation, quality of schools, cost of living and overall quality of life.  (Heck, even our underachieving NBA team not only made the playoffs, but took Boston to seven games.)  Just yesterday, I showed homes in Johns Creek to a young couple who was relocating here from Los Angeles.  They were so happy with the type of home and the type of neighborhood they could afford to live in here.  They said that you just can’t compare.

So while I strive to be realistic in presenting the housing market data here, I also don’t want to lose focus on the big picture which is very positive in Alpharetta even while the immediate housing market is definitely a challenge.  Maybe I fudged a little in the last post by looking at the composite market and not the resale and new construction sub-markets individually.  Thank your, Mr. Robs, for point this out.  Now, let’s take a deeper look at the data for Alpharetta and see how the story changes.

Resale Housing Sales Trends in Alpharetta and North Fulton

Resale only sales for the past five quarters show a about a 3% decline in sales price and a 40% decline in number of transactions.  See Chart Below.  My opinion based on this is that the ones that are selling are doing a pretty darn good job of holding their own as far as price goes.  It’s the ones that are selling that concern me because they are a real drag on the market.  For them to sell, they need to reduce their prices, very likely much more than 3%.

New Construction Sales Trends in Alpharetta and North Fulton

Now let’s look at new construction only sales in Alpharetta and North Fulton since January 1, 2007 (the past five quarters).  Wow!  The data shows a 36% increase in sales price, while it also shows 45% fewer sales.  What gives?  For one, the luxury market, and both these homes clearly fit that criterion, is doing much better than the rest of the market, but that is material for another blog post.

 

As you’re probably guessing, there were a few very large sales in Q1 2008.  Two to be precise.  A $6.3 million dollar new home finally sold in Windward after going under contract in August 2007. 

The other large transaction was in Greystone, west of GA-400 off Hopewell Road.  Originally listed a $2.8 million dollars, it sold in only 42 days on the market for $3.9 million, presumably after some major upgrades.

Windward	Greystone
$6.3 million dollars	$3.9 million dollars

 

If you take these two sales out of the numbers, you get a more representative picture of the local housing market trends.  New construction sales prices are up about 7.5% while number of sales is still half of what it was.

North Fulton Sales Trend:  New Construction Minus two largest New Construction Sales
Quarter	Avg Sales Price	# of Sales
Q1 2007	$668,785	81
Q2 2007	$792,013	81
Q3 2007	$802,338	63
Q4 2007	$570,176	46
Q1 2008	$717,953	43
Totals	$719,657	314

If you look at the whole market and remove the two very large sales, the whole housing market is down 2.5% from Q1, 2007 to Q1, 2008.  The number of sales is, of course, still way off at 40%.

If you look at the numbers this way, which I think is more valid, instead of having a 3% increase we actually have a 2.5% decrease in home sale price in North Fulton.

North Fulton Sales Trend:  All Resale and New Construction Minus two largest New Construction Sales
Quarter	Avg Sales Price	# of Sales
Q1 2007	$413,791	784
Q2 2007	$429,863	1,069
Q3 2007	$442,331	923
Q4 2007	$400,453	576
Q1 2008	$403,688	472
Totals	$421,916	3,824

Thank you, Mr. Robs, for holding my feet to the fire and forcing me to do some sensitively analysis on the data.  I am fond of saying that "skepticism is the chastity of the intellect."  You’ve proven that here.


http://www.alpharettarealestatehomes.com/003925

I received a phone call from a local newspaper yesterday asking for some real estate market analysis.  It seems that word has gotten out that I like to crunch the numbers.

Someone had forwarded the reporter a link to an article on CNN Money that listed Atlanta (and mentioned Alpharetta) as one of the six best places to buy a home based on prices expected to rise the most - or decrease the least - in the next 12 months.

How seriously should you take a list like this when Detroit (Farmington Hills) is on the list with you?  Isn’t the housing market in Detroit a train wreck?  Maybe the wreck has already happened and now they are just cleaning up.  After all, Ford did announce today a $100M of net income in Q1, a $382M increase over Q1 last year.

The CNN Money analysis was done by looking at the Metropolitan Home Price Index published by OHFEO and the "fundamental housing value," a measure also called the price-rent ratio which is derived by taking the price of a home and dividing it by the discounted value of the future stream of rent payments you could get for that house.  This is an investment based valuation method that says anything over 1 is overpriced (as an investment) and anything under 1 is underpriced.  CNN selected metro areas with high momentum and low price.

In selecting Atlanta, CNN singled out Alpharetta as a "typical affluent suburb" and pegged the average sales price at $359,950.  I could take exception with CNN that Alpharetta is typical, but that is an entirely different post ;->  Here I want to focus on the average sales price for Alpharetta, which is what the local reporter was looking for, too.

 

Average Sales Price in Alpharetta for Q1 2008

 

The average sales price in Alpharetta for Q1 2008 was $384,612.  This includes all resale and new construction single family residences.  The average for Q1 2007 was $372,895.

 

The change represents a 3% increase in sales price, but doesn’t tell the whole story.  The real story is that in Q1 2008 only 237 homes sold in Alpharetta versus 402 in Q1 2007.  That is $63M less sales volume than a year ago.

If you look at North Fulton as a whole, which includes the four cities of Alpharetta, Roswell, Johns Creek and Milton, the numbers show the same pattern on a different scale.  [Note:  it is a little difficult to separate sales in the City of Alpharetta from North Fulton as a whole because there are homes in Milton that have an Alpharetta postal address and homes in Johns Creek that have a Duluth/Alpharetta/Rowsell postal address, but I did my best based on high school districts.]

In Q1 this year, the average sales price in North Fulton was $423,503 vs. $413,791 a year ago.  However, again, that represents far fewer transactions:  474 in Q1 2008 vs 784 in Q1 2007.  To most sellers, that is the definition of a buyer’s market regardless of average sales price.

 

So, while the exposure given Alpharetta by CNN Money is nice to get, I’m not sure that their methodology, as with most "Best of Lists", is anything but hogwash.  Yes, we have price momentum.  Yes, real estate is priced more affordably to begin with in Atlanta and Alpharetta.  But CNN’s methodology doesn’t take into account the inventory that is not selling in this market and the effect that it will eventually have on the overall market.  Maybe sellers will just withdraw and wait until price recover.  Maybe they can’t wait and will reduce their price to sell.  Only time will tell.

CNN Money’s point in the whole story is that Alpharetta is a good place to buy because it has good potential for appreciation.  While I couldn’t agree more, because there are some many fundamental growth factors in favor of Alpharetta, the short term prognosis is dicier.  Alpharetta real estate prices are increasing; that is, we have positive price momentum which is what CNN Money was measuring.  However, you can only take advantage of that momentum if you are able to sell.  There were 310 fewer sellers realizing any gains this quarter and a year ago.

Now, on a slightly different slant, if you want to live in one of the skinniest counties in America (Marin County, CA was the skinniest), CNN Money has that coverage for you, too.  They actually compared counties based on the body mass of their residents.  But what if you have a county with just a bunch of mammoth-sized but lean residents, wouldn’t that skew the rankings?  Anyway, you won’t find anywhere in Georgia on that list, that much you can bank on.

http://www.alpharettarealestatehomes.com/003921

With so much doom and gloom in the real estate market, I thought that I’d share some market news that I got from none other source than my barber.  Hey, barbers know what is going on around town.

Bowen Family Homes has sold 12 new homes in their Stonehaven subdivision in South Forsyth in the last two weeks.

The neighborhood will ultimately have about 500 homes in the $200’s and has a 10-acre recreation area.  There are currently about 300 homes built.

I suspect that a lot of these buyers are first time buyers taking advantage of low interest rates and not having to sell a home before they buy. 

Just wanted to let you know that it is not all doom and gloom in the Alpharetta (and Cumming) real estate market.

Now, if you need the best haircut in Alpharetta, go to Gino and Jacksons at Hwy 9 and Windward Parkway next to La Parrilla. 

http://www.alpharettarealestatehomes.com/003917

I was flattered with a call from the Milton Herald the other day.  They were doing some research on local housing and wanted some input for agents with feet on the street experience.  Apparently they can Google "Alpharetta Real Estate", too, and they found me!  I appreciate the call and wanted to share with my readership the input I gave the Herald.

They asked me a few questions regarding the Milton Real Estate market specifically.  (Please see my post from earlier today for a broader analysis of Atlanta and Alpharetta/Roswell Real Estate). 

It is difficult to isolate just the Milton sales data in the information available to realtors, primarily because Milton is a new city, so historical analysis based on City Name is not possible.  What I was able to do was select only sales data from Fulton County and the 30004 ZIP code.  Admittedly, that includes some of Alpharetta, but I excluded the parts of Cherokee and Forsyth Counties that are in 30004.

1.  Are homes selling like they previously were and what kind of numbers are we talking about?

Similar to Alpharetta as a whole, there have been fewer sales in Milton in the last couple of years, but the average sales price continues to increase.  In Milton, particularly, I attribute some of the price appreciate to the high end new construction.  Even though it is not selling as quickly as builders would like, every time a $900,000 house sells it definitely pulls up an average that is about half that.

30004 Residential Real Estate Sales History
	# of Sales	Avg. List Price	Avg. Sales Price	Days on Market
2004	1,427	381,149	368,541	63.82
2005	1,886	408,666	399,830	59.50
2006	1,641	441,415	415,729	59.47
2007	1,428	472,663	449,060	74.00

2.  Are prices for homes sold in Milton staying steady, growing or slipping?

Average sales price is definitely growing and will continue to grow.  Don’t let all the market slowdown talk confuse you into thinking that home prices are falling.  Sellers may not be able to get what they want and there are stories of huge price reductions, but ON AVERAGE, prices are still growing.  Now here is the caveat:  that is for homes that are selling!  There are a lot of homes that are not selling.  There were 1,347 homes that expired from the market without selling last year - and these were just the ones listed with a realtor.

Many of these homes did not sell because they were either too expensive or not in good enough condition for the price.  So even while the average sale price was $450,000, there are a lot of homes that people would like to sell that are significantly below the market…otherwise, they would have sold.  To me that is why the $450,000 average is a little misleading:  There is this unseen weight on the market of unsold homes that is below "the average market."  That also helps explain why most people think their house is worth more than it actually is. 

Anecdotally, an expired seller in Crooked Creek told me the other day that she wasn’t going to sell her house because it was already "way underpriced" and hadn’t sold.  The only logic I can apply to her situation is that all those buyers who wanted to pay her undervalued price must not have known about her home; otherwise they should have flocked to it.  The market doesn’t lie:  Her house was likely still overpriced.  And it is sales like this, when they do happen, that will have downward pressure on the average sales price.  Of course, the seller’s retort is always:  "I’m going to wait until the market improves."  As if it is the market’s fault ;->

3.  How long are houses staying on the market and what is the trend?

Homes are definitely taking longer to sell, by about two weeks compared to last year.  However, at 74 days on average, that is still a reasonable amount of time to get it sold.  Over all the trend is fewer homes selling for more money is a slightly longer period of time.

4.  What are the contributing factors to the changes in the Milton real estate market?

In one word:  Florida.  What I mean by that is that Atlanta / Alpharetta / Milton are still areas that attract a lot of relocations from other markets.  These other "feeder" markets are depressed and the people who want to move here can’t sell their home where they are.  We personally have at least 20 clients in Florida who would like to move to the Alpharetta / Milton area but can’t get their home sold in Florida.  The same is true to a lesser extent in some other markets like California and the mid-Atlantic area, but nothing like Florida.  If we could break the Florida log jam, it would do amazing things to the Alpharetta real estate market, no doubt.

Other than the general national real estate malaise, our real estate market has good fundamentals.  The cost of housing is relatively low, property taxes are also relatively low even considering the recent reassessments and the sales tax proposals in the state legislature.  Job growth continues in the GA-400 corridor and our schools remain excellent.  If you don’t already live in Alpharetta / Milton / Roswell or Johns Creek, now is a good time to buy into the market because I believe that growth will continue in this area and this momentary housing storm will pass us mostly unscathed.

http://www.alpharettarealestatehomes.com/0038F3

Hello, 2008…we’re back!  And we have the Atlanta and Alpharetta housing data with us!

We had a great year in 2007, doubling our business from 2006; and we are looking forward to an even better 2008.  Why then does everyone seem so bleak about the real estate market in Atlanta and Alpharetta?

In fact, last week, the Atlanta Journal Constitution ran an article entitled "Drop in Housing Prices Hits Metro Atlanta."  What they reported was that Atlanta had a .07% drop in home values from October 2006 to October 2007.  When housing prices are down 5%, 10%, 15% or more in some cities, is a less than one percent drop in Atlanta really news?

So, I went to the real estate sales data and crunched it seven ways to Sunday for both the Atlanta Metro Area and for Alpharetta and the surrounding cities of Roswell and Milton.  The Bottom Line for Atlanta and Alpharetta is - and this is consistent with what I’ve posted here before - that the number of sales is down, the average sales prices is up and the average days on market is longer.

But first, some historical perspective on Atlanta and Alpharetta…

Atlanta Metro Residential Real Estate Sales History
	# of Sales	Avg. Sales Price	Days on Mkt	Sales Volume
2002	47,826	225,022	98.0	$10.76B
2003	51,743	231,846	104.9	$12.00B
2004	57,726	240,312	103.6	$13.87B
2005	65,803	255,168	102.4	$16.79B
2006	68,256	260,723	100.2	$17.80B
2007	55,650	266,874	115.0	$14.85B

2006 was the BEST YEAR in Atlanta Real Estate…EVER.  Almost $18 Billion of real estate transacted in Atlanta in 2006.  Almost $15 Billion transacted in 2007.  Yes, that is down from 2006, but still the THIRD BEST year in Atlanta Real Estate history.  Is that something to get upset with if you are a buyer? 

Next, let’s look at the real estate market data for North Fulton and the Alpharetta / Roswell over the last six years.