Far too often we as Real Estate professionals succumb to the panic factor that comes along with the following words as it relates to the market: “bubble, burst, slump, slow”. We read about it in the papers, we hear it in the media and we hear it in the objections from our buyers. So how do we get past this “fear factor”?
First of all, we have to look at the facts that will help to denounce the current fears:
Fact #1: Nationwide, March 2007 was the worst sales month of existing home sales in close to 20 years. (source MSNBC.com 4.25.07) The key words here is “existing”. Atlanta builders build new homes locally, not nationwide.
Fact #2: March 2007 saw an increase in sales of new single-family houses in the south but just a modest 2.6 percent from February. (source The Washington Post 4.26.07, Realty Times.com), even though it dropped year over year from 2006 in the same month. The key word here is “new”.
Fact #3: The Atlanta Housing Market was one of the top 5 metropolitan areas to see an increase in home prices in March 2007, third behind only Seattle, Portland, and Charlotte. In February, only Atlanta, Charlotte, Chicago, Dallas, Miami, Portland and Seattle revealed a trend of improving prices ranging from 1.3 percent increase in Dallas to 10.6 percent in Seattle. (source Pegasus NewsWire.com, Realtytimes.com)
Fact #4: The Dow Jones industrial average claimed an all-time high, showing signs that the economy is still growing. (source MSNBC 4.25.07)
Fact #5: Atlanta tops the nation in growth from 2000-2006, surpassing Detroit and Boston to move to 9th on the nation’s largest city list. (source AJC. 4.5.07)
Neat Fact: “Atlanta is one of those cities that won’t be suffering the real estate foibles… I think Atlanta is in that New York Category, where it’s just going to get better” – Donald Trump 4.14.2007 on his Atlanta project.
So why are sales down?
For the most part, it’s due to “price gauging”. Too many builders/developers are driving up the price of the homes which decreases the amount of the population that can afford them. If the majority of us were making 6 figure plus incomes, then sure, we could all afford the 400-800K house. The fact of the matter is, the target demographic we are all trying to reach has become gun-shy because quite simply, they can’t afford to live where they want to be. Thus, the rental market is having an early-90’s like upswing.
So I disagree that the market is slow. The market is still strong and there are willing and able buyers out there. We just have to get back into the price points of the vast majority as a whole and stop banking on “if you build it they will come”. If we do this, we will all be patting each other on the back when “4th quarter sales in Atlanta reach an all-time high”.