My hope is that through providing this Oconee real estate trends report that it keeps you informed about the latest trends and issues in the real estate market. If you know someone else who might be interested in receiving this report or who may benefit from our expertise, please let me know. Better information helps our clients make better real estate decisions!
The real estate market for Oconee County has changed dramatically in 2012. We predicted a few years ago that the pace of foreclosures would slow and new homes would not be able to restart fast enough. The result would be an undersupply of desirable properties for sale – and we were right! If you look at the change in “for sale” inventory for Oconee down roughly 16% year over year in the month of October and almost 30% from a year ago. Real estate markets are driven by supply and demand plus a few outside factors like mortgage rates and the mix of unusual properties like short sales & foreclosures. It is clear that supply is considerably low relative to previous periods. Right now there is a 6.5 month supply of inventory at the current rate of closed sales – which is really close to the 6 months that would be considered a "Seller's Market."
But what about the trends for demand? Georgia MLS reports that year-to-date closings for Oconee County are up 22% from the same period last year.
The increased demand and lower supply are reflecting in a faster pace of sales. The “Average Days On Market” has dropped an average of 89 days from the run-rate at the beginning of the year. That represents a 31% improvement in the number of days to sell a property.
So what about those outside factors like mortgage rates and the pace of short sales and foreclosures? Mortgage rates remain at all-time lows. On September 13th, the Fed announced a new program to purchase $40 billion dollars per month of mortgage-backed securities. The effect will certainly keep mortgage rates artificially low in the short term. This is different from the decision last year to fix interest rates at effectively zero for banks to borrow money. The mortgage market is impacted by a range of factors other than the interest rate. So this new program of purchasing mortgage securities will keep mortgage rates artificially low for an extended period. Note that we used the phrase “artificially low” since we do not expect these conditions to last and we will have to pay substantially higher rates at some point in the future.
But what about the shadow inventory? Shadow inventory is the foreclosed inventory being held by the banks but not currently listed for sale. Some estimate that these are significant numbers and will be released into the market early next year. We do not expect to see a flood of new inventory hitting the streets. Banks are not likely to flood the market and harm their own property values. We see them pursuing bulk purchases to large investors. We also see them being more aggressive in streamlining short sales so they can more efficiently move properties.
Home values are stabilizing and even rising in some areas. This is due to the patterns of supply and demand. But there are still a few wildcards to keep watching. “Short sales” which means that the lender(s) are willing to accept a price that is less than the outstanding mortgage amount. Short sales are typically sold below the market rate. These types of sales are holding values lower than they might in a more normal market. When you look at Oconee as a whole, we do see values improving at 4% so far in 2012. There is a little more to this story since the mix of what is selling has changed substantially as well. Last year, almost 50% of the sold properties were under $230,000. That should normally be 10-15% of the market. In 2012, we are seeing a more normal mix of price points which will make the “$ per square feet” higher. If you factor out the changing mix, we still see a positive trend.
The housing bubble artificially inflated our home values but we believe they have over-corrected to the downside. As conditions normalize over time, so will our home values. The pace of recovery will vary depending upon your local market conditions. We have access to proprietary market reports and trends that are not available to the public. If you would like to know the trends in your specific area or the value of your property, please contact us.
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For more information on these or any other listings for sale in our market please feel free to call Hank Bailey at (706) 621-1895, email to firstname.lastname@example.org or follow @PrudentialGARE on twitter. Hank is a resident of Oconee since 1984 and is the #1 Realtor in Oconee representing Prudential Georgia Realty! Hank's reviews on Zillow.
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