Real Estate Area - Gwinnett Market Reports

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As usual, the February numbers are likely to change.  The numbers that are put up by the dominant MLS are preliminary through the month.  The January numbers appear to have stabilized.  Read on for the unvarnished news...

 

I'm somewhat pleased by the January numbers, if not all of the trends they represent.  There are a couple of ways that I track the sales for Gwinnett County, GA. 

 

The raw number of listings for January 2008 was down 4% from January 2007.  Average price was also down, 5.5% versus the previous year.  Last month, reviewing the preliminary numbers, I felt that the average price would end up lower by $15,000 for January, and true to form it dropped from $242,099 to $223,839.  February is once again showing a number slightly above $240k... I'm looking for it to drop as well.   

New listings were below last year.  After being up 10% in December, the January number came in 4% below last year.  February is showing as down 7%, but I expect that to shrink a bit.  As long as it stays below last year, it will be a good sign.  The last of the good things was the continued drop in the days on market for the closed sales.  From December through February, the indications are that DoM has dropped from 104, to 101 and finally, 100.  

The real market stats...

But they aren't looking good.  

The biggie, and the one that sellers need to keep in mind is the new listings v. sold listings.  December always shows a high percentage, and 2007 was no exception.  39% as many properties closed as came on the market.  But, where I had hope dashed was January.  17%...  That means that for every 5 homes that come onto the market, less than one sold.  The preliminary number for February was 10%... I expect that to rise, but it will not be pretty.  

So, this is where this all leaves us...

Absorption Rate.  That is the number of months it would take at the current sales rate to sell all of the properties on the market, if no more came on.  The rate averaged over the last 12 months is 11.9.  A balanced market generally has about six months of inventory.  When the rate is averaged over the last six months of sales, it rises to 17.5 months of inventory.  This shows sales decelerating.   Finally, the absorption rate averaged over the last three months of sales is 22.9 months of inventory. 

What it means is that the inventory is increasing in relation to sales.  Coupled with the low percentage of sales relative to new listings, if one needs to sell their property, one needs to price aggressively.   This will push average prices down, but it will also clear inventory and shake out the sellers that are just testing the market. 

As much as I want to say that we are on track for the June recovery I had been predicting, I am pretty sure it won't be for more than six months.  Unfortunately, for the Atlanta area market, that means that it is unlikely we will see a meaningful recovery until next spring.  We may have a statistical recovery in the fall, but the sales in the spring are generally almost double those of the fall, so many won't realize.  

But, it is a good time for investors to scour for good deals.  After the recovery is visible, the deals will be gone.