Warning:  Statistics lie.  Well, actually, people can lie with statistics.  If you don’t believe me, check out this book.

With that disclaimer, I’ll tell you that the real estate market in North Fulton county is flat…and I’m not lying, really.

He is my definition of flat:  In July 2006, 162 single family homes were sold in North Fulton (Roswell, Alpharetta and Milton), west of GA-400.  In July 2007, 163 single family homes were sold in the same area.

Good, we’ve now debunked with one statistic the common misconception that the real estate sky is falling.  I can see the headlines now in the Atlanta Journal Constitution:  “Atlanta bucks nation trend.  Real estate market holds firm.”

Heck, it was just last week when the national media couldn’t get enough of the announcement that for the first time the national average sales price actually declined.  Yes, that made a good story; always lead with the blood.  There is only one problem:  I don’t really care about the national average.  I mean, I do, but only because it is some sort of global indicator of the health of the economy.  But in the end of the day, I care about the national sales average about as much as I care about the temperature of the oceans.  I do care about the global environment but, damn it’s hot here and I want to know when it is going to rain next.  Real estate is local, too, and the fact that the national average is down doesn’t help me in my market.

The Laws of Real Estate Market Analysis

Law number one is that real estate is local.  Law number two is that, not only is it local, it also varies significantly by price point.  Law number three is that new construction and resale homes are different markets.

So, while I can say with perfect certainly and a statistical fact to back me up that the real estate market in North Fulton is flat, if we care to look a little deeper we will see some interesting developments in the last year in this market.

1.  If you include the other half of North Fulton (east of GA-400), sales were actually down from last year.  Four hundred and four homes were sold in July 2006.  A year later only 344 were tallied.

2.  Average days on market is up from about 54 to about 63.  Plus, the number of homes active in the market increased from 1,859 a year ago, to 2,440 this year.  Sellers, you have a lot more competition than you did.

3.  The good news is that the average sales price is up over last year, so beware bargain basement shoppers.  The west side average price increased from $481k to $488k.  On the east side, they had a whopping increase from $391k to $436k.

The Breakdown

But remember, statistics lie.  What happens when we break down the market by price range and look at absorption rates, the rate that new homes on the market are absorbed by the buyers.  Another way to look at it is the months of inventory on the market.  Six months of inventory is considered neutral between a buyer and seller market.

The two tables below show reveal some interesting points about our current market, points that are anecdotally reinforced by my personal experience in the marketplace every day. (Totals don’t add because of omitted data at lower prices.)

Overall inventory is up from 5.2 months in July 2006 to 7 months in July 2007. 

I don’t know that this is exactly earth shattering, but there are two different markets in North Fulton:  the market below $750k and the one above $750.  Actually, I think the demarcation line is a little lower, but there are definitely two distinct markets.  This seems pretty logical.  Not everyone has $750k to spend on a house but a lot of people still want to live here and have $400–$500k to spend.  That part of the market is still hot…OK, warm, particularly west of GA-400.

There is one caveat, though.  This year, there is more inventory, no doubt, so your home has to be in better condition and compare favorably to increased competition in order to sell.  However, even though it is more competitive, good homes in these price ranges still sell relatively quickly (under 60 days) for around 97% of the list price.  Operative word was “good”.  The junk sits on the market.

New Homes

When it comes to new homes, the picture is a little more bleak.  First of all, there is practically no new home inventory below $500k (only 43 homes in all of North Fulton.)  When selling your $800k resale home in a market with 17 months of resale inventory, don’t forget that there are 120 new homes in inventory, too.  This is where the market has really slowed down:  In 2006 there was a 22 month inventory of new homes between $750k and $1 million.  In 2007, there is a 45 month supply west of GA-400 and a 33 month supply east of GA-400.  Buyers, this is where you can really drive a bargain.  Builders are offering huge incentives and resellers are having to lower their prices if they truly want to sell.

Bottom Line

I’m a bottom line guy, so here goes.  Markets go up; markets go down.  That is reality.  No one was bemoaning the poor buyers a few years ago when everything was selling.  Now all I hear is woe is me from the media and from the sellers.  If you want to sell you home, North Fulton is still a desirable place to live, people are still coming here and home prices are still increasing believe it or not.  But if you want to sell, you need to be realistic about your price and the condition of your home.  Best thing about this market is that if you are a buyer it is a great time to buy.  When was the last time you heard a national media outlet say, “Great time to buy residential real estate in America.”  Well, come to North Fulton.