A very wealthy man asked me if there is anything good about the real estate market right now – he owns and operates over 2000 restaurants, so he has a wise perspective.
I told him that the good news is that CASH is helping to stabilize the market for properties priced under $200,000, and particularly under $100,000.
The “funny money” that fueled the real estate speculation bubble from 1999-2007 is gone and real cash collateral is the NEW basis for the value of real properties.
I wrote about this house that I sold back in 2000 for $39,000 in Lakewood in a post written earlier this year, and included a video of the nasty recent condition of the property – when Lakewood values fall by 75%, the “butterfly effect” that I discussed, is evident.
The good news is that cash buyers are stabilizing our lowest priced submarkets with cold, hard cash and that’s a great thing.
I wrote about the relentless, gravitational pull of foreclosures in this article in May, and that “pull” is shrinking in the lower price ranges…lets look at the recent second quarter statistics to see this point.
Segmenting sales by price range shows that sales decreased in all price ranges except the lowest range (<$200K), which increased slightly (+12.2%)
Sales of foreclosed properties were strongest in the lower price ranges – that’s a pure function of inventory. There are a lot of foreclosures because there are a lot of people and corporations who lost their residential properties in the lower price ranges in recent years.
Be on the lookout for the next foreclosure wave, which will be seen prominently with houses in the $300’s and up – that wave just started and will continue for about 3 more years…the good news is that by 2012, we can expect the Intown Atlanta submarkets to slowly gain some counterbalance.
By 2023, things will start to get much, much better – easy for me to say, right?
So, back to present reality – sales are down overall -15.7% from 2Q 2008, but with the under $200k price range up +12.2% in 2Q 2009, I contend that prices are stabilizing … but only in the lower price ranges. That will help to slow the “relentless gravitational pull” downward on the rest of the market.
Foreclosures as a percentage of total sales is still high at 27.3% of 2Q sales, down from 35.2% in 1Q 2009, but foreclosures make up 47.7% of sales in the <$200K price range. That’s compelling.
The good news is in the lower price ranges – that’s what’s good in Intown Atlanta right now.
Stay tuned in September, and I’ll show you some details on what’s bad and what you can do to as the owner of a primary residence in Intown Atlanta to mitigate your risk in the next decade or two.