Thread: Augusta, GA Housing Market (Evans)

This market is at a crossroad; one road is a continued semi controlled price decline; the other is a steep uncontrolled price decline. (once these prices bottom, it will be years before the price trend moves upward). We will most likely experience a little of both and fall somewhere in the middle for the market average.

Although this market has declined, prices are still too high when compared to the historic norm (40% appreciation, over the last 6 years, with only one year of a 5-10% decline.) and the risk associated with a bad economy and the pending commercial real estate collapse.

Remember, if an agent is involved with your transaction, your 10% off deal is really only a 2% off the real price of the home deal.

Facts:

- It will be very difficult to get a historic norm deal (unless we have a short sell or foreclosure situation).

- New home prices on average have roughly 20-25% profit in each deal (yes, even with the agent costs) By working directly with a builder you may have more room for price negotiations.

- If you are buying a house for the short-term, RENT!

- If you are buying for the long-haul (7-10 years), then you will need to work very hard to reduce your risk.

- Before doing anything, conduct a detailed analysis of the total costs of home ownership, once I did this, my perspective with regards to this issue completely changed. Educate yourself!


Prices vs Financial Risk

Current Prices = Extremely High

5-10% Reduction = Very High

10-15% Reduction = High

15-20% Reduction = Moderate

20-25% Reduction = Low/Moderate

25-30% Reduction = Low

Return to Historic Norm = Very Low

You can see the current price of some of the real estate in this area if you look at neighborcity.

More of the same:

Increasing Inventory, More Price Declines, Very few Closings over $250K, Big Increase in Back on the Market Home (Re listings).


There are a number of interesting commentaries concerning the next phase of the housing market decline and US economic forecast on patricknet and other sources. All point to a longer term problem in housing. Some claim the new rescue plan may just prolong the problem.

We will have to wait and see.

The best way to protect yourself is to educate yourself!

Augusta, GA Real Estate:

More of the same, big increase in new listings, nearly 1/2 of the listing is $250K and up. This is a big change from last week (marking the start of the Spring selling season).

The price reduction list continues to grow.

Slight increase in closed and pending sales and there is an increase in homes above $250K.

Pay attention to historic home price norms!

Bid very low!

I am seeing a lot of FSBO and For Rent By Owner signs.

Despite the Crash in Prices, Affordable Housing Still Lacking


New article in Time.

Prices are still too high in this area.

The smart money is a rental (unless you have 7-10 years).

Notice all the uncompleted housing developments in the area, this should tell you something.

Get Smart on housing before buying a home!

Good Luck!

Why should you buy a home!!!

Peter Schiff, president of Euro Pacific Capital, an investment firm specializing in overseas investments and a noted bear on housing market issues, thinks there's a good chance home prices will continue their steep decline.
"Real estate has to be priced like any other goods," he said. "Home prices have to reflect the economic reality. You buy for shelter, not to make money. You don't need to own a house. I'm a perfect example."
He has rented for years and reports that the owners of his current home, after subtracting for property taxes and insurance, are receiving a cash-flow return on their investment of less than 1%.
"Real estate is overpriced if owners get just a 1% return," he said.

When you do your homework, many will find that owning a home is not such a great deal.

If you must buy, then buy at or near the historic norm. If not, be prepared to pay!

Buying a house is not always the best course of action:

Educate yourself, understand the real costs, and make an informed decision. Below is from a reshaping of America article.

Stop fixating on owning a home. The burst housing bubble should send a message that home ownership is no longer on the "A list" of the American dream. People wanting to be elsewhere are now stuck in homes they are trying to sell, often at a substantial loss. People are working in jobs they do not like or are beneath them because they are tethered to housing. His message? Don't underestimate the upside of renting. If the feds converted more homes destined for foreclosure to rentals, it could even help the housing crisis and those people about to lose their housing.

New Listings - Continue to Grow

Price Changes - Also Continue to Grow (most price reductions are in the $5-10K range as Sellers are betting on the Spring selling season. Traditionally, a pretty good time for the Augusta Housing Market).

Closed and Pending Sells - Has slowed a little, but the interesting part is that there are very few homes sold over $250K (Most of this is local economics (earning power), but also new lending practices are a key factor in this slow part of the market). Buyers need to be very aggressive in this part of the market!

Key Things to Remember:

Run the numbers and fully understand the true cost of owning a home versus renting a home!

Educate yourself on the market by understanding the market's historic price norm (It you do not, you are at risk). Use tax records to assist you with understanding prices. Go back and read this thread!

Bid aggressively: Price Reduction, Seller Paid Closing Costs, and other Concessions or upgrades (if you are dealing with a builder), remember new homes have 22-25% profit margin, watch out for agent fees: a 10% price discount is really only a 2% discount when an agent is involved.

If someone tells you, this market is not like the rest of the country, etc...
Walk away, they are not looking out for your best interest!!!

Good Luck!

WOW!

This morning's Columbia County Newspaper has 6 full pages of Foreclosure notices!

Buyers Beware!