A Look Back
Recently I pulled some numbers on Lake Lanier Home Sales, comparing 2010 to 2009. I also looked at Home Sales in North Fultonfor the past two years. Forsyth County has some unique factors that are worth looking into as we consider what has happened over the past two years.
First, let’s look at the numbers. Exactly like the Home Sales data for Lake Lanier, there are a couple of definitions to be aware of:
Avg. Sales Price / Orig. List Price - A home might be originally listed at $525k, then reduced several times but goes under contract while at $475k, then ultimately sells at $450k. $525k is the original list price. That is the number I used in my Sales Price to List Price ratio.
Avg. Total Days on Market - If a home is listed, expires, then goes back on the market and finally sells I use the total days on market, not the number of days it was listed the second time.
These two factors paint a very true picture of price reductions and market time.
Like most areas of North Atlanta, the number of homes sold has gone up and the total days on market for those homes have gone down, on average. Good news on both accounts. For Homes Sold in Forsyth County, the Sales Price to List Price Ration has remained flat.
Average Sales Price, as I’m sure you’ve noticed, has dropped by 5%. This is better than Metro Atlanta as a whole and better than North Fulton West of 400 too. However, I don’t think it comes as a shock to anyone.
A Look Ahead
The challenge for Forsyth County in the next 12 to 24 months is three-fold, foreclosures, excess inventory (in a particular price range) and developed lots.
What the chart above doesn’t show is the breakdown in price range for sold homes. For the past two years more than one third of all homes sold have been under $200,000. Two thirds of all homes sold have been under $300,000. But it’s been increasingly more difficult for buyers in those price ranges to qualify for loans. Certainly, we don’t need to get back to the days of a body fogging a mirror and being bestowed with unlimited funds - that was a significant factor in why we are here today. But, as we pull out of the recession we will continue to find people with good income and low debt but “challenged” credit. Allowing those people an opportunity to enter, or re-enter, the ranks of home ownership will help enormously with reducing excess inventory. Only 8% of all homes sold last year in Forsyth County were above $500,000.
Foreclosures are another issue and that is something we just have to work through. 24% of all sales in Forsyth County last year were bank owned or distressed. Right now, 7% of all active listings are distressed, but we know that will grow through the year. 2011 is the year experts predict we will peak with foreclosures.
Finally, Forsyth County has a tremendous number of developed lots. 251 developed lots are listing in the MLS and that is just a fraction of what is out there. All indications are that new construction starts will increase next year (nationwide) according to the National Association of Home Builders. That will happen in Forsyth County as well. The positive news with New Construction is job creation, from concrete and carpenters to flooring contractors, landscapers and new appliances. But it will create more competition for resales. I see this as inevitable and not necessarily a bad thing. Once new foreclosures begin to wane, late next year and in early 2012, we will begin to get back to a natural balance between new construction and existing inventory. At that point, new construction pricing will begin to rise leaving most existing inventory as an affordable alternative.
The Good News
What Forsyth County has going for it is a great schools system, with adequate funding and control of programs. South Forsyth High School ranked in the top 200 Nationally, above most North Atlanta High Schools, due in part to the IB program that South Forsyth HS offers. Additionally, the County Government has great control over attracting new business to the area and has continued to do so through the recession.
The bottom line is Forsyth County is faring better than most of Metro Atlanta, but the recovery remains slow and challenging as you would expect.
We want to hear what you think, let us know.
