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55 days in Intown Atlanta Real Estate – Leaning Into “The Dip”

I just got Steve Palm’s Smart Numbers letter for January, and he reports some telling statistics when he surveyed the 14 metropolitan Atlanta counties. Read on…

A nearly 40% year over year decline from last January. A Nearly 50% decline for condo sales.

When demand declines, prices soon follow. Condo prices are down nearly 10% and are expected to go down even further – there is nearly 12 months supply for resale condos and a very high 16 months of supply for new condos. Thanks Ivanka Trump (the so-called “next generation of Trump style” – I hope that doesn’t mean she has a comb-over hairdo in her future).

Until then, lets digress from the bad news and let a photo of Ivanka take our breath away…

Atlanta’s next generation of Trump style

Lets keep talking about what Ivanka hath wrought: the 16 months supply is only the supply that is listed! The actual floor plans available that are not up and ready for sale is – GULP – 4 years worth of inventory. Lets keep an eye on luxury condos – we need Buyers, sexy, wealthy, international buyers!

The average single family house price is down by about 20% from the all time high of June 2007 – the all time high was about $285,000 – the average sale in January was $240,844.00. 20% is a “correction.”

Oh, by the way, did you read that part about when demand declines, prices soon follow? Take heed, another correction is coming for many unhealthy Atlanta submarkets.

Mark my word, the neighborhoods with good fundamentals – cohesive curb appeal, good public schools, attractive locations – those neighborhoods, will thrive in a limited demand market.

Remember June 2007? Homebanc was still in business as one of Atlanta’s, and God’s, favorite employers. About 10,000 real estate agents who are no longer in business, were in business. Countrywide didn’t need cash from Bank of America. Foreign investors actually believed in the credibilty of the credit salesboys on Wall Street. Morgan Stanley didn’t need China Investment Corporation’s (AKA – Red China’s) $5 Billion in order to stay afloat.

By the way – NONE OF THIS IS NEGATIVE NEWS for Intown Atlantans! A “recession” is great news for Buyers who are not NINJAS (no income, no job, no assets). A “recession” helps Sellers understand the true value of their real estate – the value that a current buyer, with current financing from a reputable asset-rich bank is willing to pay.

Intown Atlanta and Decatur consumers should count their blessings, and re-establish their strengths. As Seth Godin calls it – we are in a “dip.” A “dip” is good because it forces us to quit what we are not good at. Quit the weak stuff (that may mean – live in and enjoy the neighborhood that you bought in just 2 or 3 years ago, and stop fighting for a sales price that you will not get) and focus on the strong stuff (refinance your mortgage, get to know your neighbors, enjoy vibrant Intown living).

Here’s a fine example…I’ve met many “absentee owner” suburbanites who came into the Intown Atlanta and Decatur neighborhoods that I have served since 2004. These are the people with 678 and 770 phone numbers who place tacky handwritten signs on our street corners claiming instant equity purchases in what they have to sell. Many of them overpaid for their real estate purchases and many of them are in our foreclosure fall out. However, many of them are learning how to become landlords, instead of flippers.

Those who “get it” have a focus on their strengths – long term equity establishment and regular cash flow are the hallmarks of real estate investing – flipping is not. Those who get it are “leaning into the dip” as Seth prescribes, and moving on with their long term business plans.

The Rootdown Group has 6 attractively priced listings. We’ve had some terrific meetings with other realistic Sellers who must sell in 2008. We have an active client list of about 15 buyers who will buy in the next 180 days. The Rootdown Group is “leaning into the dip.”

Are you?

Steve Palm’s January 2008 Letter

Seth Godin’s “The Dip”

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