Are 2-Bedroom Condos in Inman Park Undervalued?
As we have stated before, we love statistics. Statistics are facts, the real kind, which tell a story. These stories are always open to interpretation, but facts tend to offer the greatest universal starting point. (Note, all sales history from 2014 onward are published under, “Properties”)
Inman Park sales volume for the 1st Quarter 2017, was remarkably consistent with the opening quarters of the 3 previous years. Q1, 2017 saw 18 real estate transactions. Compare this with 2014’s 21, 2015’s 15, 2016’s 23. A model of consistency.
Another wonderful statistic that jumps off the page is Inman Park’s DOM. (Days on Market) Over the last 4 years, the DOM average, for any classification of property, NEVER exceeded 45 days. The condominium market in each of the last 4 opening quarters never exceeded 40 days on market.
This consistent volume tells us Inman Park’s market is very stable and potentially more predictable than other neighborhoods. The DOM statistics tell us Inman Park is popular enough that it more or less gives every homeowner a permanent “seller’s market” status in the event they want or need to sell. Inman Park homeowners will always have the luxury of patience when it comes time to sell. DOM is telling us, another buyer will soon appear.
Best property performer over the last 4 opening quarters: the 1 bedroom condo. It is hard to believe now, but 2014 saw 2, one bedroom condos go for under $100K. First quarter 2017, the average sale price of a one bedroom condo was $237K and had a DOM of 37. This segment has had growth year over year since 2014, nearly doubling since that time.
Detached homes are trickier to generalize about. Because of their age, condition factors can vary wildly. This makes price averaging, in any given year, somewhat suspect. But averages over time still tell a trending story. For example, in 2014, a detached home averaged $483K. In 2017, that price had risen to $582K. That is a great trending story.
The most interesting statistic in our sales review, was the 2+ bedroom condo. Despite leading the world in DOM, the 2 bedroom average sales price has not moved to the level one would expect. In 2014, the average 2+ bedroom condo sales price was $326K. In 2017, $343K. On the surface this makes no sense. How can a market, in so much demand, NOT grow? Sure, 2014 may have been a jump year over 2013, which would call for a leveling off. Still, it’s been 4 level years now. Is this market segment undervalued? Statistics may be telling us: yes.
The 2 bedroom issue aside, the data is telling us the market is growing, and the demand has far from abated. Inman Park remains one, if not the, most popular neighborhoods in all of Atlanta.
But, on a melancholy note, we feel we must also acknowledge the continuing loss of homeowner equity to the chain store real estate sales process.
Every one of the 18, 2017, home sellers most likely paid much more money than they needed to. And, statistics seem to back this point up. In a traditional real estate transaction, the homeowner pays the commission for the buyer’s agent. (Yes, sellers are paying for the agents who are negotiating against them) The chain store default, for this practice, is to give 3% of the seller’s money to the buyer’s sales agent for a commission.
When a neighborhood has the DOM Inman Park has, statistics tell us there is NO REASON whatsoever for home sellers to pay 3% of their equity to the buyer’s agent. Every one of the 18 sales so far this year paid the full 3% buyer’s agent cut. Every one of those properties would have sold just as easily paying a 2% commission. Or, maybe paying 1.5%. The difference between paying the buyer’s agent a 3% commission and paying them a 1% commission, on the 2017 sales so far, is a whopping $132,570. That is homeowners losing, on average, over $7,300 on every transaction.
Because of Inman Park’s consistency, we know around 70-80 additional homeowners will opt sell before the year is out. If this is in your plans, you really owe it to yourself to look into alternative methods of real estate. Our goal has always been to save the homeowner from unnecessary cost. That clearly has not been the focus of the chain stores, as evidenced by their continued insistence on homeowners paying the full 3% buyer agent payout. Inman Park home sellers don’t have to pay that!