At the end of May, there was 3.2 months' worth of inventory available for purchase-down significantly from the seven months that is considered normal.
John Hunt, senior analyst with Smart Numbers, a Marietta-based residential real estate analysis and forecasting company, said the lack of inventory is driving new construction in Cobb, "That is unheard of. ... There is an extreme and acute lack on inventory, which is why new construction is way up."
Cobb County and its cities reported 383 permits for new construction were issued in the first quarter of 2013, a 51 percent rise from the 253 permits issued first quarter of 2012.
In May, in unincorporated Cobb and its six cities, 125 permits were issued, an increase of 42 percent from May, 2012.
In unincorporated Cobb, 84 permits were issued; with Smyrna leading the cities with 24. Marietta issued seven permits; Kennesaw, five; Acworth, four and Austell, one. Powder Springs reported zero for the month.
and its six cities, 125 permits were issued, an increase of 42 percent from May, 2012.
In unincorporated Cobb, 84 permits were issued; with Smyrna leading the cities with 24. Marietta issued seven permits; Kennesaw, five; Acworth, four; and Austell, one. Powder Springs reported zero for the month.
A Sellers’ Market
According to Georgia MLS numbers, as of May, there were 2,047 active listings for sale in Cobb County at an average list price of $333,902.
In May of 2013, 1,043 homes went under contract at an average sales price of $257,399. The number sold rose 75 percent from May 2012, when 596 homes sold at an average price of $198,253.
Wendy Bunch, broker and owner of RE/MAX PURE on the Marietta Square, said, “If a home is priced according to the market, has been maintained, and shows well, the average time to sell is less than 60 days.”
Sellers are also getting higher prices. In 2012, the average sale price was $8,100 less than the average list price. In May of 2013, the average home sold for $6,700 less than its original list price.
Hunt says in analyzing Cobb’s top selling neighborhoods from April 2012 to March 2013, the top four represent a mix of single-family homes, townhomes and condominiums.
Vinings Main, a condominium development off of Paces Ferry Road came in No. 1 with 40 closings. Single-family neighborhoods ranked second and third —Woodbridge Crossing in Vinings, followed by Rockford Township, off of Whitlock Road. Battery on Paces, a townhome development off of Paces Ferry in Vinings, came in fourth.
According to Carey Cox, senior loan officer for Marietta's Mortgage South Lenders, his company’s year-to-date purchase loan closings have increased 47.8 percent over 2012.
“The trend on resale homes is once a home hits the market, it has multiple offers as long as it is reasonably priced and is in good condition.”
Bunch says her agency doubled sales and inventory from this time last year. “And last year was my best year in 16 years,” she said. “The market has shifted, we are seeing less foreclosures and short sales and more fair market value home resales.”
Cox added, “The combination of reasonable lending guidelines with the economic recovery has had a very positive impact that should remain constant throughout the year,” he said. “We have pre approved borrowers looking for homes but a shortage on inventory.”
Location, Location, Location
According to Eugene James, regional director for Metrostudy, a national housing intelligence and consulting firm that maintains a primary database on residential construction in the U.S. housing market, construction starts are up by 31 percent, year over year in Cobb.
National home builder Lennar has opened and closed seven Cobb communities since opening an Atlanta office in 2010, and currently has five subdivisions on the market.
Todd Jones, president of the Atlanta division of Lennar, said, “We’ve really focused in Cobb County on building the right home for the neighborhood. In east Cobb it’s been about luxury homes in more intimate communities to coincide with the higher cost of land. But we just opened our first community in West Cobb, called Westpark, where the focus is a little more on families and affordability.”
“Last year was a great year for Lennar in Cobb County, but our sales thus far in 2013 have been even stronger because of much higher demand,” he said. “In fact, right now it feels like we’re selling homes faster than we can build them.”
Gregg I. Goldenberg, president and CEO of Acadia Homes says land in prime locations is scarce.
“It really is getting tougher and tougher to find land in Cobb's best school districts,” he said. “We are focused on keeping a presence in Cobb but land and lot availability is keeping a lid on our plans.”
Acadia’s strategy has been building for different buyer groups. His company developed Arbor Green in Kennesaw for active adults; Reece Farms and Eagle's Crest in West Cobb for executives and Sherwood Park in Smyrna for the infill buyer.
Goldenberg expects steady improvement over 2012 numbers. “To be honest, after what happened from 2006 through 2011 we are glad to see just some stability and measurable growth,” he said.
Lessons Learned from the Crash
Cox says due to current lending guidelines and strict appraisal processes, another housing bubble is not likely.
“The current lending guidelines are reasonable, but not liberal like the non-conforming loans originated during the housing bubble,” he said. “The non-conforming loans fueled the rapid and unsustainable increase in home prices as they flooded the marketplace with buyers that should not have been extended credit to purchase a home.”
Lennar’s Jones says he is also seeing a positive financial trend with buyers. “Banks are still pretty demanding when it comes to mortgage lending, but we are seeing that buyers are much more qualified than in recent years,” he said. “The average credit score for a Lennar homebuyer is improving each month, which reflects the overall economic improvement here in Atlanta.”
Jobs and the Real Estate Effect
A timeless fact is that jobs create housing demand. According to the Georgia Department of Labor, the metro Atlanta region saw a 2.4 percent rise in jobs year over year ending March 31 — creating 55,200 net new positions. Private sector jobs did even better creating 61,300 positions, up 3.1 percent.
Metrostudy’s James said most job sectors were up, including construction jobs (up 2.8 percent) and finance jobs (up 1.4 percent).
“This is the first time in years since such a healthy increase has been seen in these sectors and reflects what we all have been experiencing in the housing sector,” he said. James said in Cobb, construction starts are up by 31 percent, year over year. “The job market has gotten a lot better, but now we don’t have enough houses to meet buyer demand.”