2Q 2015 Metro Market Report - Keller Williams Realtyimages.kw.com/docs/4/0/4/404005/1438288485530_2015_2Q... · 2015-07-30 · 2Q 2015 Metro Market Report 2Q Data Only 11 Analyzing

1Single Family Detached Residences

Provided By ChartMaster Services, LLC exclusively for Keller Williams Realty

2Q 2015Metro Market Report

Single Family Detached Residences



2Q 2015 Metro Market Report

ABOUT THIS REPORT• Data

– The source of all data contained herein is FMLS listings data for real estate transactions occurring in 41 selected FMLS areas and does not necessarily represent all market activity either for those areas or for the Atlanta Metro area.

– Analysis is performed by ChartMaster Services, LLC, an independent data analysis firm which cannot and does not warrant the accuracy or completeness of the data or its publications.

– FMLS neither guarantees nor is in any way responsible for its accuracy.

– Accordingly, ChartMaster Services, LLC hereby disclaims any express or implied warranties, including those of merchantability and/or fitness for a particular purpose, and hereby notifies all readers and users that any reliance upon the data, information, analysis or opinions contained in any of our publications shall be at the reader’s own risk.

• Terms of Use– These reports provide a competitive advantage for agents in participating Keller Williams offices and should be used in a manner

to protect that advantage.

– Reports are provided by ChartMaster Services, LLC exclusively to Keller Williams and should be treated as proprietary to those offices contracting for the service, not for distribution or posting to web sites in their entirety .

– Reports, either whole or in part, may be used in consultations with clients and prospects during the normal conduct of business by real estate agents in offices contracting for the service.

– Agents in contracting offices are also encouraged to use selected charts in lead-generation activities as a way to encourage prospective clients to contact the agent for additional information.

– Acceptance and use of this report shall constitute acceptance of these terms.




Current Market Overview

• Understanding three views of the current market allows Buyers to maximize their ability to evaluate properties, receiving the highest value in their home search and Sellers to position their property to maximize money in their pocket while minimizing time on market:

• Macro View: National Market

National Media Coverage

• Metro View: Atlanta Market

Quarterly Metro Market Report

• Micro View: Your Community

Comparative Market Analysis

3




4

Metro Area FMLS Areas Included (41)

Cherokee County:111 113112 114

E. Cobb:81 82 83

W. Cobb:71 73 7572 74

DeKalb:25 42 52 12143 51 53

Douglas:91

Forsyth:224 222 223 224

Fulton OTP:17 14 131 33

Fulton ITP:36 21 13238 22 23

Gwinnett:68 62 6371 65 65

Paulding:191

111

66

113112

223

221

222

62

63

13

14

121

51

114

64

61

65

41

42

75

74

73

72

91

191

81

82

83131

71

132

52

21

24

2322

31 32

53

33

224

53




Keller Williams Realty became the NUMBER 1 real estate company in the Atlanta Metro area in unit sales during 2010 and has increased that lead every year through 2Q 2015

5




The Rawls Group of offices outperformed the rest of the FMLS in percentage increase in both units and volume YTD June 30, 2015 in each of these categories

6

Source: FMLS/BrokerMetrics Sales of Condo, Townhome and Detached residences in 41 FMLS Areas 6/30/15




YTD June 30, 2015, The Rawls Group of offices outperformed the rest of the FMLS offices combined, in all 10 of these measurements

7

Source: FMLS/BrokerMetrics Sales of Condo, Townhome and Detached residences in 41 FMLS Areas 6/30/14




YTD 2015 sales rose by +11.6% compared to the same period in 2014 and will likely increase slightly after lagged closings are processed into the system

YTD 2015 sales were also +11.7% higher compared to those of the same period in 2013

8




Going back in the market cycle and using each current-month’s active listings divided by the average of the previous 3 months of sales yields the monthly supply (black line)

The history of monthly active/sold/supply from Jan., 2008 shows the magnitude of the current drop in Active Listings, from the high of 39,614 in May, 2008 to 15,236 (-61.5%) in June, 2015 while monthly sales increased by +50.0% from 3,363 to 5,046 and the resulting supply of 11.8 months fell to 3.2 months

9




Quarterly sales changes presented a mixed picture over the last 3 years, with no clear trend developing during 2013 and early 2014

Since then a strong uptrend has developed during 2015

10

Single Family Detached ResidencesProvided By ChartMaster Services, LLC exclusively for Keller Williams Realty

2Q 2015 Metro Market Report2Q Data Only

11

Analyzing quarterly sales by sales price range shows once again that overall sales would have been even higher were it not for a drop of -23.5% for properties priced below $100K, a likely reflection of fewer bargain-priced distressed properties available this year

All price ranges above $100K increased in sales and the shift toward larger portions of purchases in higher price ranges caused the median sales price for all properties to increase again in 2Q 2015 compared to the same period last year




Short Sales and Foreclosure Sales add together to make up Distressed Sales, shown here as a percent of total sales

After 3 nearly flat quarterly periods, the percentage of 2Q 2015 distressed sale transactions fell, -7.1 percentage points lower than in 2Q 2014 at 7.1% of transactions

12



13

Distressed sales shown by price range illustrates the degree to which they are present in each price grouping

1 of every 3 sales in the <$100K price range were distressed property sales during 2Q 2015 and across all price ranges, more than half of distressed transactions were Foreclosure transactions

As distressed sale transactions decline at price ranges above $200K, they are still a significant factor in sales below $200K




The number of months of supply vary among market segments defined by price range and New vs. Resale properties

Even though historically low, overall the supply was -10.0% lower in June, 2015 than in the same month in 2014 resulting from a larger increase in sales than in Active listings

Inventory in these market segments is very low causing small unit changes to result in large percentage changes

All Resale segments in price ranges below $750K are now in a Seller’s Market condition

<$100K$100-$199K

$200K-$299K

$300K-499K

$500K-$749K

$750K-$999K $1.0M+ Total

NEW6.0

Months +60.0%

2.5 Months

-17.7%

4.0 Months

-3.5%

5.4 Months +18.0%

7.3 Months +33.8%

8.9 Months

+1.3%

14.4 Months

-1.7%

5.1 Months

+9.6%

RESALE3.2

Months +18.5%

2.4 Months -13.0%

2.5 Months

-24.7%

3.1 Months

-21.0%

4.9 Months +4.8%

6.3 Months

-2.9%

12.5 Months -2.4%

3.0 Months

-13.1%

TOTAL3.2

Months +18.7%

2.4 Months

-13.2%

2.7 Months

-21.5%

3.4 Months -15.8%

5.3 Months +10.2%

6.9 Months

-0.2%

12.9 Months

-1.3%

3.2 Months -10.0%

14

Better Same Worse

Comparison to June, 2014:

June, 2015 Months’ Supply of Listings(Using 3-mos moving average of sales)

FMLS data for single family detached residences. Data is believed to be accurate, but is not warranted. ©2015 Chartmaster Services, LLC. All rights reserved. This page may not be reproduced without the written permission of [email protected].




The importance of supply on other market measurements is shown here

One of the more dramatic displays of the effect of a Seller’s Market has been on the median sales price

As seen here, when the supply finally fell below 6 months in 1Q 2012, the median sales price rose sharply, compared to the previous 3 years

After a last-half 2014 decline, the median Sales Price rose again during the last 6 months reflecting the decrease in supply, but both changes are affected by seasonality during the development of the uptrend

15




Like 2Q 2015 sales, the median sales price also rose by +6.6% compared to 2Q 2014, to $242,000, which is a new high point

An increase in the percentage of sales in price ranges above $200K compared to last year resulted in the higher median price

16




As the inventory of listings has remained well below 6 months, sellers have been able to maintain higher sales prices and more properties are now selling in the higher price ranges

The median sales price has increased in the last 13 quarterly periods when compared to the same month in the previous year

Quarterly price change percentages are smaller in 2014 and 2015 are due to comparison with increased prices during the previous years

17




Median Sales Prices shown monthly, by year, illustrates the degree to which prices are changing now compared to other recent years

The median sales price in 2Q 2015 was higher in each month than in the same months of any of the previous years

18




The effect of lower supply on the median Percentage of Original Listing price that sellers were able to get is shown here with the % S/L increasing as supply goes lower

19


2Q 2015 Metro Market ReportPrevious Listing Period Data Included

2Q 2015 Only

20

2Q 2015 S/L percentages by price range shows that as the overall percentage rose slightly (+.3 points) in the period, only the >$100K price declined and all others rose




21

The 2Q 2015 median of DOM rose only slightly by +2.6% compared to the same period last year

Median DOM has now shown small increases in each of the last 3 quarterly periods



2Q 2015 Only

22

Five of these seven price ranges had small increases in the median of DOM during 2Q 2015 compared to last year, possibly showing increasing price resistance




23

The percentage of sales in which the Seller was required to reduce the listing price in order to attract a Buyer was up slightly to 37.2% of transactions in 2Q 2015, an increase of +1.8 percentage points

Price reductions have increased in each of the last 4 quarterly periods as median sales prices continue to increase



2Q 2015 Only

24

Four of these seven price ranges had higher percentages of price reductions during 2Q 2015 compared to 2Q 2014, with larger changes seen in the highest and lowest price ranges, these bear watching for increasing price resistance among buyers



2Q 2015 Only

25

When a price reduction was necessary, the degree to which prices had to be reduced in order to sell varied by price range

Price reductions taken by sellers to reach current market prices were smaller in 4 price and higher in 3 of these ranges during 2Q 2015 compared to the same period in 2014, again a possible signal that prices are reaching a choke point for buyers



2Q 2015 Only

26

When a price reduction was required, substantially lower S/L ratios occurred in all price ranges in 2Q 2015, but there were large differences in degree among the various price ranges

For example, the ratio for a price-reduced property dropped a very large -21.8 percentage points, below that of a non-price reduced property, in the <$100K range, while in the $300K-$499K range the difference was -5.7 percentage points



2Q 2015 Only

27

Higher-priced properties normally take longer to sell, but when a price reduction was necessary in 2Q 2015, the differences were much greater in all price ranges

Sellers across these price ranges needed +7.3 times (+3.8 months) longer to sell when a price reduction was required

Conversely, Sellers pricing their property correctly for the current market, were able to sell in a very short time period – a median of 18 days across all price ranges




28

Correctly pricing with the current market can result in multiple offers and sales prices at or above the Original Listing Price

In 2Q 2015, more than 1 out of every 4 (26.3%) sales transactions resulted in selling prices that were equal to or higher than the original listing price

In all, 3,724 properties sold at 100%, or more, of their Original Listing price during 2Q 2015




29

Overall and in most price ranges, the great majority of properties selling at or above their Original List Price during 2Q 2015 were Resale properties

However as prices increased, the portion that were new properties increased and in the $1.0M+ range, 66% were New Construction properties




30

Sellers pricing correctly for the market not only receive a high portion of their Original Listing Price, they also sell at greatly reduced time on market resulting in substantial savings in carrying costs



2Q 2015 Only

Total Closed Listings (100%)

96.7 S/L*

39 DOM*

Price Reduced (37.5% of Total)

91.7% S/L*

131 DOM*

Previously Listed (16.1% of Total)

90.1% S/L*

226 DOM*

Not Previously Listed

(21.0% of Total)

92.7% S/L*

74 DOM*

No Price Reduction (62.8% of Total)

98.8% S/L*

18 DOM*

Previously Listed (5.4% of Total)

98.4% S/L*

161 DOM*


(57.4%Of Total)

98.9% S/L*

16 DOM*

What is the REAL STORY?Many times listed properties will have expired or been withdrawn one or more times prior to the listing period in which they sold. Including the original listing prices and cumulative days on market from those previous listing periods, results in a more realistic set of measurements.

The Real Story

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* Medians: Half are above and half are below

Right Price/Right AgentRight Price/Wrong AgentRight Agent/Wrong PriceWrong Price/Wrong Agent




2Q 2015 Only

What is the REAL STORY?Many times listed properties will have expired or been withdrawn one or more times prior to the listing period in which they sold. Including the original listing prices and cumulative days on market from those previous listing periods, results in a more realistic set of measurements.

The Real Story

32

* Medians: Half are above and half are below FMLS data for single family detached residences. Data is believed to be accurate, but is not warranted. ©2015 Chartmaster Services,

LLC. All rights reserved. This page may not be reproduced without the written permission of [email protected].

(Double-click anywhere in graphic, enter price range number then double-click outside worksheet to finish)

Enter Your Price Range Number: 4 Desired Price Range Numbers:

1 <$100K

2 $100K-$199K

3 $200K-$299K

4 $300K-$499K

5 $500K-$749K

6 $750K-$999K

7 $1.0M-$1.49M

8 $1.5M+

9 All Combined

Total Closed3,420 Closings (100%)

97.1% S/L*

39 DOM*

Price Reduced1,321 Closings (38.6%)

93.1% S/L*129 DOM*

No Price Reduction2,099 Closings (61.4%)

98.8% S/L*17 DOM*

Previously Listed598 Closings (17.5%)

91.8% S/L*219 DOM*

Not PreviouslyListed

723 Closings (21.1%)

94.0% S/L*

68 DOM*

Previously Listed

209 Closings (6.1%)

98.5% S/L*160 DOM*


1,890 Closings (55.3%)

98.9% S/L*15 DOM*




Failed listings (Expired+ Withdrawn) are shown here as a percentage of total “finalized” (Expired+Withdrawn+Closed) listings

The failure rate of listings was at nearly 50% of finalized listings in January, 2012 offering clear evidence of the Buyer price resistance that was present in the market, since listings usually fail to sell due to overpricing

After reaching a low point of 21.1% in May, 2013, failed listings rose to 36% in December, possibly due to sellers trying to push for higher prices than the market would bear

Since then changes have followed a more seasonal pattern and total 2Q 2015 failed listings were lower at 26.0% of finalized listings, down by -1.8 percentage points from the same period last year

33

Still 1 of every 4 listings



We have seen that out of every 100 finalized listings in 2Q 2015, 26 failed to sell and 74 sold

Of the 74 listings which sold, 27 (37%) required a price reduction, when including original listing prices for previous listing periods, in order to sell

Therefore, if 26 failed to sell due to overpricing and another 27 required a price reduction in order to sell, more than HALF, 53 out of every 100, finalized listings were at least initially overpriced in 2Q 2015, resulting in either no sale, or a sale at a much-reduced price after a much-longer listing period

34

For every 100 Finalized listings

26 = FAILED(Likely due to Overpricing)

74 = SOLD

27 = Price Reduction before

Sold (37%)

47 = No Price Reduction (63%)CORRECTLY PRICED

26 + 27 = 53 of every 100 Listings: OVERPRICED

% S/L: 91.7%

DOM: 131 Days

% S/L: 98.8

DOM:18 Days

Putting It All Together




For the DESIRED PRICE RANGE the statistics shown on this page reflect the actual sales data for each 100 sales transactions in that price range during 2Q 2015

Reflected are the percentages that Failed to sell, required a price reduction in order to sell, Sold without a price reduction, and the total percentage that were, at least initially, overpriced

Knowledge of the risks of overpricing allows sellers to make better informed decisions on pricing their property to sell in the least amount of time at the highest price

35


(Double-click anywhere in graphic, enter price range number then double-click outside worksheet to finish)

Enter Your Price Range Number: 4 Desired Price Range Numbers:

1 <$100K

2 $100K-$199K

3 $200K-$299K

4 $300K-$499K

5 $500K-$749K

6 $750K-$999K

7 $1.0M-$1.49M

8 $1.5M+

9 All Combined

Total Number of Transactions Represented: 3,420

For every 100 Finalized listings

25 FAILED (likely due to overpricing)

75 SOLD

29 Price Reduction Before

Sold (39%)

46 No Price Reduction (61%): CORRECTLY PRICED

25 + 29 = 54 of every 100 listings: OVERPRICED

% S/L: 93.1%

DOM: 129

% S/L: 98.8%

DOM: 17



How Does A Seller’s Market Affect Me?Detached Residences

Peak Buyer’s Mkt.

(Jan., 2009)

Seller’s Market

(June, 2015)Effect

Active Listings 31,121 15,236 Fewer Choices

Supply in Months 16.1 3.2 More Competition

% Distressed Sales 40.8% 7.1% Fewer “Bargains”

# Sold 1,898 5,046 More Active Market

Median Sales Price $143K $242K Higher Prices

Median DOM 145 39 Faster Pace

Median % S/OLP Price 80.3% 96.7% Less Negotiation

% Price Reductions 75.4% 37.2% Less Seller Pressure

% Failed Listings 74.6% 26.0% Lower Price Resistance




YTD 2015 Sales: Up by +11.6% compared to 2014Monthly sales were higher in all but one of these 6 months compared to the same period last year

Distressed sales were lower at 7.1% of 2Q 2015 sales , but were 33.7% of sales in the <$100K price range

Sales Prices: Median higher by +6.6% in 2Q 2015 at a new high of $242K compared to 2Q 2014, at $227K

Percent S/L price: A median of 96.7%, +.3 percentage points higher compared to 2Q 2014

Days on Market: 39 Days, up slightly by +2.6% in 2Q 2015 compared to 2Q 2014

Price Reductions: Higher – at 37.2% of 2Q 2015 transactions, +1.8 percentage points higher than in 2Q 2014A large drop in % S/L ratio occurred when a price reduction was taken (-7.1 percentage points in 2Q 2015)

<$100K price range impact of price reductions on S/L ratio was greater (-21.8 percentage points) than for other price ranges

DOM effect – +3.8 months longer (+7.3 times) needed to sell after a price reduction in 2Q 2015

Failed Listings: 26.0% of listings in 2Q 2015, lower (-1.7points) compared to 2Q 2014

Overpriced Listings: 53% of listings were overpriced in 2Q 2015

Supply: Decreased by -10.0% to 3.2 months of supply in June, 2015, compared to June, 2014Non-distressed Properties priced below $750K are in a “Seller’s Market” condition

Distressed properties in 2 price ranges are above 6.0 months of inventory

37

Summary





Sales have moved sharply higher during 2015 posting the largest quarterly percentage increases seen since 2012. The spring market has shown renewed strength this year after mostly flat sales during 2013 and 2014.

Sales rose by +11.5% during 2Q 2015, the median S/OLP percentage rose slightly to 96.7% (+.3 points), median DOM was a little higher (+2.6%) at 39 days, the incidence of price reductions rose by 1.8 points to 37.2% of transactions, failed listings fell 1.8 percentage points at 26.0% of finalized listings, distressed property sales percentage was down -7.1 points to 7.1% of total sales, the median sales price rose by +6.6% and overall supply fell again by -.4 months to 3.2 months

Sales increased in this period in spite of a decline of 23.5% in sales of properties priced below $100K. Fewer sales in the lower price ranges has accelerated the uplift in median sales prices in several recent periods, along with increased competition resulting from a lower than normal inventory of active listings. Several factors are likely contributing to a continued low supply of listings: a large number of under-water properties, reluctance by homeowners to give up unusually low, previously secured mortgage rates for newer homes at higher prices, unemployment rates that are still historically high, more difficult financing qualification and an inability to find the right house to which to move due to low inventory.

As we moved through the winter and spring markets we saw the usual effects of seasonality on our measurements with much stronger measurements occurring during 2Q 2015. As the affect of distressed properties subsides in the Atlanta market, the affect of lower supply is driving the market. When a more normal balance of supply (Active listings) and demand (Sales) eventually occurs, we should start to see the more gradual measurements changes that happen in a balanced market.

Summary


38



39

The Case for Getting it Right The First TimeSeller Desired List Price Suggested Market Price

(Click and Enter Prices in Each Box)

X XLikely % Sale/List Price Likely % Sale/List Price

= =Likely Sales Price Likely Sales Price

Likely Days on Market Likely Days on Market

Benefits SummaryEven though List Price is Difference Lower

Likely Sales Price Difference: Net Sales Price Difference

Likely Time on Market: Fewer Days

Months of Difference: Months

Carrying Costs:Utilities

Insurance, Taxes, Maintenance

Mortgage

Total Monthly Carrying CostsCarrying Cost Savings

Total Savings LIKELY TOTAL BENEFIT

FMLS data for single family detached residences. Data is believed to be accurate, but is not warranted.

©2015 Chartmaster Services, LLC. All rights reserved. This page may not

be reproduced without the written permission of

[email protected].



2Q 2015 Only

40

When a price reduction was required, substantially lower S/L ratios occurred in all price ranges in 2Q 2015, but there were large differences in degree among the various price ranges

For example, the ratio for a price-reduced property dropped a very large -21.8 percentage points, below that of a non-price reduced property, in the <$100K range, while in the $300K-$499K range the difference was -5.7 percentage points



2Q 2015 Only

41

Higher-priced properties normally take longer to sell, but when a price reduction was necessary in 2Q 2015, the differences were much greater in all price ranges

Sellers across these price ranges needed +7.3 times (+3.8 months) longer to sell when a price reduction was required

Conversely, Sellers pricing their property correctly for the current market, were able to sell in a very short time period – a median of 18 days across all price ranges




42

FMLS data for single family detached residences. Data is believed to be accurate, but is not warranted.

©2015 Chartmaster Services, LLC. All rights reserved. This page may not

be reproduced without the written permission of

[email protected].

The Case for Getting it Right The First Time(Double-click anywhere on worksheet, enter prices in yellow boxes, double-click again outside worksheet to finish)

Seller Desired List Price Suggested Market Price$265,000 $250,000

X X92.8% Likely % Sale/List Price 99.1% Likely % Sale/List Price= =

$245,920 Likely Sales Price $247,750 Likely Sales Price

127 Likely Days on Market 18 Likely Days on Market

Benefits SummaryEven though List Price is Difference -$15,000 LowerLikely Sales Price Difference: $1,830 Net Sales Price DifferenceLikely Time on Market: -109 Fewer DaysMonths of Difference: -3.6 Months

Monthly Carrying Costs:Utilities

Insurance, Taxes, Maintenance

Mortgage

Other (Housekeeping, yard, pool, etc.)

Total Monthly Carrying CostsCarrying Cost Savings

Total Savings $1,830 LIKELY TOTAL BENEFIT



Supplemental AnalysisSingle Family Detached Residences

43




While recent sales have been generally flat, they are higher in 2015 and the number of Active listings showed seasonal gains during 2013 and 2014 after a long decline

Actives are seasonally higher again in 2015 at a level above those of 2014 in the same period

44




Processing of lagged closings may yet increase sales for the last 2 months, but we have already seen increases in those months over the same periods in 2014

While January sales were only slightly below those of last year, all other months have had sales higher than in the same months last year

45




The number of properties listed for sale compared to the number of properties which sold in each month, illustrates the relationship existing between Supply (listings) and Demand (sales)

Using a 3-month average of 2Q 2015 sales yields a 3.2 month supply, meaning that at the current sales rate, it would take a little more than 3 months to sell the current inventory of listings if no new listings came on the market

A supply of more than 6 months is considered to be a Buyer’s market

46




2Q 2015 sales were +11.5% above those of last year and +14.8% ahead of 2014

47




Monthly sales history shows the pattern of sales downturn from 2007 illustrating a bottom occurring in January of 2010

Since then the usual seasonal low points in January were higher and the seasonal high points in June reflect a strengthening uptrend

48



Sales were considerably lower in the <$100K price range for both New and Resale properties restricting the overall increase in 2Q 2015

All price ranges above $100K had increased sales compared to 2Q 2014

New properties were 10% of 2Q 2015 sales and increased sales by +20.3% compared to last year

<$100K$100-$199K

$200-$299K

$300-499K

$500-$749K

$750-$999K $1.0M+ Total

NEW4

(-33.3%)

251

(+21.3%)

448

(+16.1%)

423

(+17.8%)

156

(+15.6%)

73

(+46.0%)

54

(+92.9%)

1,409

(+20.3%)

RESALE1,100

(-23.5%)

4,065

(+7.7%)

3,124

(+15.6%)

2,973

(+25.2%)

1,010 (+20.7%)

273

(+21.9%)

209

(+15.5%)

12,754

(+10.6%)

TOTAL1,104

(-23.5%)

4,316

(+8.4%)

3,572

(+15.7%)

3,396

(+24.2%)

1,166

(+20.0%)

346

(+26.3%)

263

(+25.8%)

14,163

(+11.5%)

49

2Q 2015 Sales

Better Same Worse

Comparison to 2Q 2015:





Foreclosure sales as a percent of total sales declined again in 2Q 2015 compared to 2Q 2014, to 4.4% of closings, down by -2.8 percentage points

50



51

The overall percentage of foreclosures was -2.8 percentage points lower in 2Q 2015 compared to the same period in 2014, declining in nearly all of these 7 price ranges, while remaining at more than 1 of every 5 transactions in the <$100K price range




The 2Q 2015 short sale percentage of closings at 2.7% was -4.2 percentage points lower than in 2Q 2013, continuing the downtrend in these types of transactions

52



53

Short Sale transactions as a percentage of total sales decreased again substantially in all price ranges during 2Q 2015, even dropping to only 1 in 10 transactions in the <$100K price range, which was -10.6 percentage points lower than in 2Q 2014




An encouraging sign for sellers is that the median sales price for Non-Distressed properties has generally increased since 4Q 2011, with small seasonal variations in each year

New 4-year high median sales price for these periods for non-distressed properties occurred in 2Q 2015

Since 2Q 2010 the median sales price for non-distressed properties rose by +23.2% while distressed increased by +7.8% in 2Q 2015

54




55

Another seller benefit of declining supply has been increasing S/L ratios

In 2Q 2015, the S/L ratio increased slightly (-.3 percentage point) to 96.7%, which is the high point for these three years

S/L price ratios provide an indication of buyer price resistance and seller willingness to negotiate, with higher ratios showing a stronger seller position



56

The median sales price is derived by taking the point at which half of the transactions were at prices above and half below that price

The 61.7% of sales which occurred in 2Q 2015 at prices above $200K was a +4.4 percentage point increase from the same period last year, resulting in a higher median sales price


2Q 2015 Metro Market ReportFull Year Data

57

Historically, as the percentage of sales shifted more toward lower price ranges after 2007, the median sales prices were forced down

The median sales price is the price at which half of sales are at higher prices and half are at lower prices

As larger portions of annual sales took place at lower prices (<$200K), the median sales price dropped accordingly, now with those percentages declining, the median sales price is again rising




Monthly median sales price history shows that it reached a low point in January, 2012

The steep decline in median sales prices coincided with increases in the percentage of distressed properties sold

A strong, steady median sales price increase during 2012-15 has resulted from a much lower supply of listings, fewer distressed properties in the inventory and an increase in the portion of sales at prices above $200K

58




Resale properties posted a quarterly median sales price increase of +7.3%, while the New Construction sales price rose by 1.7%

59




Median S/L ratios shown monthly since January, 2009 reveals that the bottom for this measure came during early 2009, with an overall uptrend in process since then

The % S/L trend turned briefly downward in 2014, resuming a seasonal increase to new highs in 2015

60



2Q 2015 Only

61

Sales shown by New vs. Resale and price range shows that New properties usually sell for prices very near their original asking price, while Resale properties sell at a greater discount from their original listing price

Across all of these segments, the 2Q 2015 S/L % was up by +.3 percentage points compared to 2Q 2014, with New properties off by .3 points overall but still selling very near their original listing price

<$100K$100-$199K

$200-$299K

$300-499K

$500-$749K

$750-$999K $1.0M+ Total

NEW

88.7%

+12.8% Points

100.0% +0.1% Points

99.4% +0.2%

Points

98.5% -0.4%

Points

97.7% -0.8%

Points

98.1% -1.9%

Points

96.8% +1.7%

Points

98.8% -0.3%

Points

RESALE88.9%

-2.8% Points

96.7% +0.4% Points

97.0% +0.6% Points

97.0% +0.2% Points

96.5% +0.3% Points

95.6% +0.5% Points

91.0% +1.5% Points

96.5% +0.4% Points

TOTAL88.9%

-2.8% Points

96.9% +0.3% Points

97.3% +0.6% Points

97.1% +0.1% Points

96.6% +0.1% Points

96.2% +0.4% Points

92.1% +2.0% Points

96.7% +0.3% Points

2Q 2015 Change in Sales/Orig. List Price %

Better Same Worse





The 2Q 2015 median of DOM segmented by Sales Price and New vs. Resale, shows a nearly flat +2.6% overall increase in time on market, with most segments selling more slowly compared to 2Q 2014

<$100K$100-$199K

$200-$299K

$300-499K

$500-$749K

$750-$999K $1.0M+ Total

NEW152 Days

+406.7%

73 Days

+28.1%

91 Days +2.3%

122 Days

+38.6%

108 Days -5.3%

119 Days

+20.8%

160 Days

-16.3%

100 Days

+13.6%

RESALE50 Days +4.2%

33 Days

+17.9%

31 Days -6.1%

33 Days

+10.0%

36 Days

-16.3%

46 Days -29.8%

114 Days

+15.2%

35 Days +2.9%

TOTAL50 Days

+4.2%

34 Days

+13.3%

37 Days -5.1%

39 Days +8.3%

43 Days -23.2%

70 Days +0.7%

131 Days

+10.1%

39 Days +2.6%

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2Q 2015 Median Days on Market

Better Same Worse






As shown here, when supply finally fell consistently below 6 months during 2012, the incidence of price reductions also fell also

Price reductions were down sharply as supply neared the previous low point during June, 2015

63




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Price reductions sharply reduce the portion of the Original Listing Price that a Seller realizes in a sale

The 2Q 2015 percentage point difference of -7.1 would amount to a reduction of -$17,700 from the original list price at the $242,000 median sales price, compared to a Seller without a price reduction




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When a price reduction is required, more marketing time is needed to attract a buyer

A Seller required to take a price reduction in 2Q 2015 needed a median of 134 days to sell, compared to only 19 days for a Seller who priced correctly with the market – a difference of +3.8 months, or +7.3 times, longer to sell

The results are higher carrying costs, greater inconvenience due to keeping the house in showing condition and delays in finding and moving to a new home




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Even after taking a price reduction, Sellers realized a lesser portion of their new list price than those Sellers who were not required to reduce their price

Had these price-reduced properties been correctly priced originally, they could likely have sold in much less time at a higher price




67

Even after taking a price reduction, Sellers usually realized an equal, or lesser, portion of their new, reduced list price than those Sellers not required to reduce their price

Pricing correctly with the current market results in a better net selling price, in less time on market




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The median of price reduction percentages taken by sellers in order to sell during 2Q 2015 was -5.6% off the Original Listing Price (OLP), which was -.4 percentage points less than taken in the same period last year

The percentage price reduction needed has been declining in each quarterly period, likely due to increased competition among buyers as we moved to a Seller’s Market




Sellers contributed to buyers’ closing costs in more than 7 of every 10 transactions during 2Q 2015, which was higher than in any other quarterly period of these 3 years

Sellers should anticipate this buyer request when estimating net proceeds of sale

69




When sellers’ contributions to buyers’ closing costs are included, the true median S/L ratio dropped by -1.3 percentage points during 2Q 2015 to an overall 95.4% of Original List Price compared to the 96.7% usually shown

70




Increasing sales combined with a low inventory of listings maintained the “Seller‘s Market” condition which began during 2012

Many of our market measurements show the improvement following this market shift

71




Viewing overall supply against the industry benchmark of 6-7 months for a “balanced” market shows that current overall levels in price ranges below the $500K are in a “Seller’s Market” condition, while properties priced above $750K are either in a “Balanced” or “Buyer’s Market” condition

Very low supply in the high sales volume price ranges below $300K resulted in a continued low overall supply in June, 2015

72




A comparison of supply by price range between June, 2015 and June, 2014 shows the extent to which the Supply/Demand environment has changed

All price ranges remained in the same market condition as last year and actual months of change were very small

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Although the overall supply of properties in June, 2015 was at 3.2 months, when Distressed properties are separated out, the picture changes slightly for non-distressed properties, rising only to 3.3 months overall for non-distressed, higher, but still well within the “Seller’s Market” condition

On the other hand, the supply of distressed properties is very low and in a Seller’s market condition in all but one price range, with overall supply at 2.4 months, while Non-Distressed properties remain in a “Balanced” or “Buyer’s Market” condition in price ranges above $750K

74




Supply shown by price range illustrates that lower supply does not carry through all price ranges and a Seller’s Market occurred at different times for different price ranges

Price ranges above $750K remained in a Buyer’s Market condition throughout this time period, while the <$100K price range led the way dropping below 6 months in 2Q 2011 and remaining there at this time

The $500K-$750K price range has hovered around the “Balanced Market” condition since 2Q 2013

75



Only 47% of the 2Q 2015 Atlanta housing inventory was initially priced “in the market”

Pricevs.

CompetitionOut of

The MarketHomes that Don’t Sell

Poor

Below

Above

Great

26%

In the MarketHouses that Sell in a

median of 18 days

26%47%

27%

Condition vs. Competition

Chased The Market

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Overall Market Observations

There were two market changes during 2Q 2015 which resulted in the improvement of many of our measurements. The overall number of sales increased significantly after 2 mostly flat years and the supply fell again to near an all-time low point, at 3.2 months. Both are characteristics of an improving market. Distressed properties represented a much smaller portion of overall sales, further reducing their negative affect on the market. With those changes came improvements in the median sales price, S/L ratio, failed listings and the portion of properties that were at least initially overpriced.

The few cautionary measurement were in the form of small changes in median DOM and incidence of price reductions. Both could be a result of higher prices and the buildup of buyer price resistance. Low supply resulted from continued lower numbers of active listings, which in June were only .4% above those of the same month last year.

The few remaining distressed properties result in a very low (2.4 months) inventory and fewer active listings contributed to a low inventory of non-distressed (3.3 months) which has maintained competition among buyers, keeping prices higher, S/L ratios high and DOM relatively low. Investors may have depleted the more desirable distressed property inventory reducing overall sales of properties priced below $100K and contributing to sales growth which would otherwise be even higher. However, it is also possible that increased prices and more difficult financing are having an effect. Likely all of these and more, are contributors.

The Story of the Detached Residence Market – 2Q 2015





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Importance to Non- Distressed Property Sellers– Sellers are now tempted to take advantage of the spring market to list their property at higher prices while

the current supply/demand shift gives them an edge.– Downward pressure from Distressed properties on selling prices for all properties priced above $100K has all

but been eliminated and inventory remains historically low, making this a better time to sell than in many recent periods.

– Despite the temptation for sellers to price higher in light of an improving market, setting realistic initial listing prices that are in line with buyer expectations (“in the market”) can result in sales at or above the original listing price in very few days on market.

Importance to Buyers– The supply/demand relationship shifted even more to the seller’s advantage. As long as it continues, fast

action and realistic offers will be necessary for buyers of desirable properties.– For buyers who are interested mainly in the few remaining distressed properties, the supply has dropped to a

point where competition among buyers for that supply is very strong, making realistic offers is a must for desirable houses.

– Quick action and serious offers are required when high-value properties are found (57.4% of 2Q 2015 sales), since low median DOM and high S/L ratios usually result, often with multiple offers.

– The good news is that interest rates remain low, so the if the right property is found, this is still a good time to be in the market






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Success Strategies for Sellers– Even though there are fewer of them, do not ignore the impact of distressed properties, when available,

competing for buyers in seller’s price range and location, when setting initial listing price, since they still could affect comps.

– Maximize selling price and minimize market time by choosing an initial listing price that represents a high value compared to competing listings.

– Re-evaluate market trends continuously to re-assess pricing choice – avoid chasing the market or missing any turns that may develop.

Consequences of Wrong Seller Choices– Will likely sell only after a much longer time on market - Median DOM at least +7.3 times longer in 2Q

2015.– Likely sell at a much lower portion of original listing price – median of at least -7.1 percentage points lower.– Failure to sell – 26% of listings failed to sell in 2Q 2015, due to overpricing.– Multiple listing periods – 21.5% of sellers required multiple listing periods, most selling at a median of -7.1

percentage points lower after a median of +6.8 months longer times on market (+14.6 times longer).

Risks for Buyers– Low-ball offers on high-value properties will likely result in missing out on a desirable property.– Making offers too high on properties listed multiple times could result in paying too much.– Low inventory condition reduces buyer’s advantage in contract negotiations.






Cash purchases became the least-used method of financing during 2015

Fewer than 1 in 6 transactions involved cash purchases during this period, down by -6.6 percentage points from last year as the portion of overall sales that were distressed properties declined

80




More than 78% of cash purchases were of non-distressed properties YTD in 2014

81




The percentage of cash purchases in 2Q 2015 was down by -6.4 percentage points compared to 2Q 2014

82



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More than 6 of every 10 properties that sold for less than $100K were cash purchases and 34% of those were distressed properties, likely purchased by investors




The overall increase in sales during 2Q 2015 extended to properties priced above $1.0M

Properties selling for $1.0M-$1.49M increased by 15.1%, while those at or above $1.5M increased by +50.8%

84




2Q 2015 Median DOM for sales in the $1.0M-$1.49M price range was nearly the same as in 2Q 2014, while the median for the $1.5M+ range was slightly lower (-5.6%) than in 2Q last year

The small number of sales in these price ranges can make percentage changes more volatile

85




Price reductions also tend to be more common as property prices increase

In 2Q 2015, the incidence of price reductions was -9.7 percentage points lower in the $1.0-$1.49M range, while the $1.5M+ range fell by -4.5 percentage points compared to that of 2Q 2014

The percentage of price reductions for sales across all price ranges in 2Q 2015 was up by +1.8 percentage points

86




The Median 2Q 2015 S/L price ratio for the $1.0-$1.49M price range was +3.6 percentage points higher than in 2Q 2014 at 94.0%

The median in the $1.5M+ range was slightly lower by -1.2 points

87




The difficulty of selling luxury homes priced above $1.0M is underscored by the 34.5% and 36.8% percent of sales that required more than one listing period, compared to the percentage for all price ranges of 21.5% during 2Q 2015

The results of initial overpricing are usually longer DOM, lower S/L %, more Price reductions and multiple listing periods, resulting in much lower selling prices

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Documents

2Q 2015 Metro Market Report - Keller Williams Realtyimages.kw.com/docs/4/0/4/404005/1438288485530_2015_2Q... · 2015-07-30 · 2Q 2015 Metro Market Report 2Q Data Only 11 Analyzing