Well, you could argue that what happened to East Point residential sales prices is what happened to the rest of the close in metropolitan Atlanta neighborhoods – sales prices peaked in June 2006 and have been in decline almost ever since – 25 out of the past 26 months through August 2008. But, that would not tell the whole story…
East Point is loaded with cute brick houses in good condition that are available for competitive prices.
For years, East Point didn’t have the bars, restaurants and community nightlife that made the neighborhood as special as East Atlanta Village or Decatur or Kirkwood, but in the past 7-8 years that has all changed.
The edges of East Point now have easy access to lots of retail, a movie theatre and tons of restaurants. All this and you are only 10 minutes from downtown Atlanta. All this and some of the best maintained 20th century houses in the entire city. Good streets and good neighbors. East Pointers are value buyers who love sturdy houses, BIG lots and cool neighbors.
When I moved to Atlanta in 1988, fresh out of Furman University, this “good old boy” East Point native who happened to be in the mortgage business told me – “buy a house in East Point now!” He stated that East Point is close to Atlanta and the airport, and that lots of young hipsters were buying sturdy old houses down there for way less than $100,000.00. That was the late eighties. I knew he was on to something, but I never bought a house in East Point.
I’m writing this article because I helped a really cool client buy a sturdy 1924 built brick house on Linwood in East Point back in 2005, and now she wants to sell it. The house has preserved period architecture, a decorative fireplace, a roomy eat-in kitchen with a butler’s pantry and oak floors, an added family room, a master bedroom with private bath, 2 other sizeable bedrooms and another full bathroom with a marble floor, a sweet rocking chair front porch, crown moulding, glass door knobs and one of the most beautiful and plush gardens across the deep backyard – featuring 3 ponds, gorgeous plants and statuaries. She bought the house in 2005 for $197,500.00.
Now she wants to sell it in the declining market of fourth quarter 2008, and based on what I just reviewed – prices are down 15% FROM LAST YEAR on average in her particular submarket of east Point – 3/2 brick houses built before 1970.
So, I commissioned Greg, The Pricemaster to work up a “clustering analysis” for our client – his ability to look at broader trends and to digest tedious real estate data is exceptional, and here is what he found…
Overview and Expectations
All data to develop this “Clustering Analysis” for your particular property listing is based on recent submarket sales since January 1, 2008, consumer purchasing trends, market constraints, school districts, specific neighborhoods and their amenities, age of properties, and lessons learned from failed or failing pricing strategies.
The Rootdown Group has a combined 23 years of Intown Real Estate Expertise and we believe in the fact that $1.00 spends the exact same way in one neighborhood as $1.00 spends in all of the neighborhoods of Metro Atlanta.
The primary issue that stops a “win /win” agreement in real estate is based on how each party counter-balances the other’s perception of this statement:
“The Buyer always thinks that they paid too much, and the Seller always thinks that they are giving it away”.
So, in listing the house on Linwood Avenue – what price will attract the highest, best and quickest offer for you and what price will activate a qualified, “ready to go” buyer almost immediately?
A Look Back…
At the end of May 2005, you and I started your property search with a list of 161 properties – you narrowed that list to 23, chose 2 favorites and we started looking at properties. Then we went and looked at even more! By July 7th, we found the one – your house on Linwood. The Seller offered the house at $209,900.00.
Prior to this decision, we tried to find properties closer to Atlanta, we tried to find properties for much less. You even competed for a foreclosed property on the Dodson Connector in East Point , and lost on a $173,500 offer.
You offered $196,500.00 for the house on Linwood and asked the Seller to pay $3000 in closing costs – you settled at $197,500.00. By the time you finished inspection, the Seller agreed to buy you a warranty and to pay almost $700 more in closing costs. You bought a sturdy house on a nice lot in a safe and neighborly section of East Point on July 25, 2005.
Going back to December 2004, there were 4 comparable 3 bedroom / 2 bath sales nearby – all around the corner on Kimmeridge – they all sold for an average of over $205,000, and the lowest priced sale was $188,600.
Now, you want to sell the house, but the market is not as favorable to sellers as the market of 2005.
You bought it as sales began to peak in metropolitan Atlanta – sales prices peaked in June 2006 and have been in decline almost ever since – 25 out of the past 26 months through August.
With all of this in mind, Lets Price Your Property.
After looking at data in FMLS (the First Multiple Listing Service) for areas 52(Greater Decatur), 32(Ormewood Park/ Grant Park), and 24(Kirkwood, Candler Park, Lake Claire, East Atlanta, East Lake) as well as the subject area 31(East Point, College Park) we filtered the data based on the following:
* Price Range(140-250K)
* # of Listings Regardless of Age
* Older Than 1970 Builds and Newer Than 1970 Builds
* Bedrooms / Bathrooms
* Active Inventory ready to buy
* Reduced List Prices
* Final Sales Prices
Basic Criteria – Between $140K and $250K, 1970 or older vs 1971 or Newer Builds
1. In 2007, in East Point, 12 brick houses built before 1970 with 3 bedrooms and 2 bathrooms sold at an average sales price of $191,075.00. This year, 2008 – there have only been 6 similar sales at an average price of $163,028.00. That’s a decline of over 15%.
2. We found that after culling the numbers of all of the combined Total Sales of 52 – Greater Decatur, 24 – Eastside Atlanta and 32 – Southside Atlanta there is a very apparent trend over the subject, Area 31.
3. Area 52, Area 32, Area 24 had a combined Total Sales of 353(1970 Builds or Older, 230). Area 31 had a combined Total Sales of 146(1970 Builds or Older, 57).
4. Areas 24, 52 and 32 Total Sales of 1970 or Older Build Homes , outsells Area 31 Total Sales of 1970 Built Homes or Older by almost 4 to 1.
Here are the raw “SOLD” numbers for each of the submarkets…
Areas 24, 52 and 32 – Average List Price of $215,230 – Average Sales Price of $195,832 – Average Age was a 1944 Build with an average size of 3BR/2.5BAs.
1971 or Newer Builds had an Average List Price of $218,061- Average Sales Price of $186,486 – Average Age was a 2001 Build with 3BR/2.5BAs.
Area 31 (East Point and College Park) – Average List Price of $190,544 —Average Sales Price of $166,546.
1971 or Newer Builds had an Average List Price of $203,963—Average Sales Price of $180,782—Average Age was a 2004 Build with 4BR/2.5BAs.
SOLD DATA is important – appraisers will value your buyer’s “loan to value” based on recent sales BUT what is more important to attracting a buyer is Active Sales data – what today and tomorrow’s buyer can readily buy today or tomorrow, and whether you have priced your property for either negotiation, or for serious competition in a high inventory, low demand marketplace.
RECOMMENDED PRICING FOR the house on Linwood Avenue
The Price Range that we recommend is between $180,000.00 and $190,000.00.
Here is why…
When we compared all of the other homes that have either sold or are listed currently to your house on Linwood Avenue, a few facts are quite concerning:
1. There has been a significant decline in prices in All Areas.
2. Buyers, when buying an older home, are purchasing homes in the other areas at a rate of 4 to 1 over the subject area.
3. Currently the trend in Area 31 – East Point and College Park – is that Buyers are 1 ½ times more likely to purchase a newer home and that pending sales show that buyers are now twice as likely to purchase a new home in the later half of 2008
4. Currently the trend in your area reveals a 50% drop in activity from last year and a 15% price decline on average
$185,000 is our RECOMMENDED PRICE FOR the house on Linwood Avenue.
Remember the goal of this pricing model is to make a Buyer feel like the house on Linwood Avenue is just an awesome value regardless of any of the concerns listed above.
Many appraisers are afraid of their own shadow nowadays, and the old adage that “inspectors are potential deal killers” has been replaced by the new adage that “appraisers are potential deal killers.”
We are ready to take the next steps, and we appreciate the opportunity to earn your business. We have a listing agreement and a disclosure statement to ratify, and from there, we will have your permission to notify the world that you are ready for rigors of the price war and delicacies of the beauty contest.
So…that ends the “Clustering Analysis.” We can tell where people have been buying, and the trend is not favoring East Point. Here are 3 parting thoughts:
1. a 3/2 brick house property in East Point with gorgeous gardens, that needs a kitchen update will not sell in this market for more than our recommended price
2. a 3/2 brick house property in East Point with gorgeous gardens, that needs a kitchen update if priced wrong, will help to sell other available, comparable inventory in neighborhoods across the city
3. a 3/2 brick house property in East Point with gorgeous gardens, that needs a kitchen update will need to be priced right from the start, or else it will languish in the low demand market
Our client has a tough decision to consider, and a long term rental may make more sense in lieu of facing a compounded loss of money over a 3 year period between mid-2005 and early-2009. Regardless, if she is ready to sell, then we will have the most competitive new listing for under $190,000 in East Point. Rest assured, she will be priced for competition, not for negotiation.