Beacham Insider: What do Atlanta’s real estate market and this barbell have in common?

PHOTO CAPTION: Marci Rosell, formally chief economist for CNBC and now chief economist for Leading Real Estate Companies of the World of which Beacham & Company is a member, says to think of America’s population as a “barbell” with Baby Boomers on one side and Millennials on the other (with Gen X the tiny handle inbetween). Millennials and Boomers are, in many cases, pursuing the same type of housing (albeit for different reasons) which is extending an unprecedented housing inventory shortage.

 

The continued slowdown in Atlanta home sales along with the unabated year-over-year surge in average home sales prices are the biggest takeaways in the recently-released summer issue of The Beacham Insider. However, the market results from the first part of 2017 bely a complicated story about the factors and facets of the Atlanta real estate market right now.

A persistent lack of housing inventory priced less than $750,000 (higher in some areas like Buckhead) along with a surplus above that threshold continues to play havoc with the market and create vastly different scenarios for buyers and sellers. The reason for this divergence has a lot to do with population demographics. Marci Rosell, formally chief economist for CNBC and now chief economist for Leading Real Estate Companies of the World of which Beacham & Company is a member, says to think of America’s population as a “barbell” with Baby Boomers on one side and Millennials on the other (with Generation X the tiny handle in-between). Millennials and Boomers are, in many cases, pursuing the same type of housing (albeit for different reasons) which is extending an unprecedented housing inventory shortage. Also, Generation X is not large enough to absorb the inventory of downsizing Baby Boomers.

The market below $750,000 – which has just a three months’ supply of inventory but represents 96% of all sales – has driven home prices to 20 consecutive months of new record highs, while the average sales price of homes priced $1 million or more – which has a months’ supply of nearly 18 months and represents less than two percent of the market – has declined for nearly four years.

Interestingly, areas of Atlanta that experienced the greatest increase in single family detached home sales from the first part of 2016 to 2017 featured areas surrounding the new Atlanta Braves stadium: Sandy Springs north of I-285 (+9%), Smyrna (+26%) and Historic Vinings (+130%). For condos, Decatur led the way with a 29% increase from 2016, followed by Smyrna (+18%). Buckhead sales were down 9.5% through the first five months of the year, the second straight year of declining sales. Sales of homes priced $1 million or more increased 7.5% through May led by noteworthy jumps in Buckhead condo sales and Atlanta Intown (Morningside/Virginia Highlands) single family detached homes.

What do local experts predict for Atlanta real estate in the second half of 2017 and beyond? Read the Insider to find out.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent, more than any other Atlanta real estate firm.

Beacham agents, staff donate more than $11K to Crohn’s and Colitis Foundation

PHOTO CAPTION – Kate Kratovil (second from right) of the Crohn’s and Colitis Foundation (CCF) accepts a check for more than $11,000 from Beacham & Company, REALTORS on July 11 as part of the company’s new quarterly charitable giving campaign called Beacham Gives Back. Also pictured are, from left, David Sirzyk, Beacham Gives Back Q2 captain; Dac Carver, Vice President and Managing Broker of Beacham & Company, and Beacham owner and founder Glennis Beacham.

 

ATLANTA — On July 11, the agents and staff of Beacham & Company, REALTORS made their first donation as part of a new formal charitable giving initiative called Beacham Gives Back. The first Beacham Gives Back recipient was the Crohn’s and Colitis Foundation which was presented a check for more than $11,000 representing fundraising efforts for the second quarter of 2017.

Since the firm was founded in 2006, Beacham & Company has given or committed an estimated total of $250,000 to Atlanta charities and non-profit institutions. Some past recipients include the Atlanta Symphony Orchestra, Childrens Healthcare of Atlanta, Forward Arts Foundation, Emory Winship Cancer Institute and the Genesis Women’s Shelter. Beacham Gives Back was formed in March to give more formal structure to the firm’s charitable giving initiatives. Every three months, Beacham sales agents nominate charities for which they have a personal connection and the recipient charity for the quarter is determined by a vote of the entire company. CCF was nominated as the second quarter charity recipient by David Sirzyk, an agent with Beacham who has Crohn’s disease.

Crohn’s disease and ulcerative colitis (UC) are inflammatory bowel diseases (IBDs). Crohn’s Disease is characterized by inflammation of the digestive, or gastrointestinal (GI) tract while ulcerative colitis is inflammation of just the large intestine. Crohn’s is a chronic, life-long disease that requires constant treatment. Crohn’s has no cause or cure and can require multiple surgeries in severe cases although some medications can help manage or prevent flares of the disease. About 700,000 people in the United States suffer from Crohn’s.

The Crohn’s & Colitis Foundation is a non-profit, volunteer-driven organization dedicated to finding the cures for Crohn’s Disease and ulcerative colitis, and to improving the quality of life of children and adults affected by these diseases. CCF funds cutting-edge studies at major medical institutions, nurtures investigators at the early stages of their careers, and finances underdeveloped areas of research. Its scientific journal, Inflammatory Bowel Diseases, enables medical professionals to keep pace with developments in this rapidly growing field. Beyond research, CCF collaborates with healthcare providers to improve IBD quality of care, as well as educating, supporting, and empowering patients and their caregivers through patient-centric education and advocacy programs. According to the American Institute of Philanthropy, CCF utilizes 80% of its funding to all such endeavors.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent, more than any other Atlanta real estate firm.

 

Errors, flawed data, and lawsuits part of Zillow track record

PHOTO CAPTION: Zillow CEO Spensor Rascoff purchased this Los Angeles home for $2.4 more than the Zestimate after selling his Seattle home for $650,000 less than the Zestimate – a more than $3 million difference in total value for both homes. Photo courtesy of The Agency and Curbed Los Angeles.

 

The data on Zillow’s website is frequently wrong, their Zestimates are hopelessly inaccurate, the company is the target of lawsuits, and Zillow doesn’t provide anything to the consumer that the consumer can’t find on many real estate brokerage websites and apps. If a product was this bad, you would think the owner would only continue to offer it because it makes a profit– but Zillow never has.

Yet many consumers continue to invest time and energy into this hopelessly flawed website. However, at least one homeowner is pushing back (maybe more – class action lawsuit, perhaps?). An Illinois woman sued Zillow in March for estimating her house is worth $100,000 less than comparable homes. The suit alleges Zestimates are proxy appraisals and Zillow needs an appraiser license to publicly offer statements of value. The suit comes on the heels of Zillow settling a lawsuit by Realtor.com which alleged Zillow stole trade secrets. Zillow had to fork over $130 million of non-existent profit from shareholders.

Even Zillow acknowledges that its Zestimate is flawed. In fact, Zillow says that the median margin of error for Zestimates is nearly 10%. One in five is off by more than 20%. Zillow CEO Spencer Rascoff knows this math all too well. He sold his Seattle home for $1.1 million – $650,000 below the Zestimate. He then purchased another home for $2.4 more than the Zestimate.

Real estate brokerage firms can easily duplicate a “Zestimate” feature on their websites but good luck trying to find one that does. Real estate brokerages understand that such estimating tools aren’t reliable and cause more harm than good.

Errors on Zillow? Where do we begin? One of Zillow’s worst flaws is its inability to recognize listings that are withdrawn from the MLS. Listings are sometimes withdrawn from the MLS because the seller has to do work on a home or is taking a break from the market. When the listing is re-entered, Zillow doesn’t automatically pick up the new listing data.

Only half of MLS brokers in the United States send their MLS listings to Zillow while Realtor.com and real estate brokerage websites cover 100% of the market (which begs the question why any consumer would use Zillow). Still, some agents desperate for an edge resort to gimmickry by flouting MLS agreements and advertising listings on Zillow before or without entering them in their MLS. Any seller who would let a listing agent do this risks not getting fair market value while the agent risks advertising an unrepresented seller who is fair game for prospecting (listing agreements require MLS entry).

Sound like a mess? It is. Is it necessary? No. Nearly 90 percent of homebuyers use an agent (a percentage that continues to rise) and most agents do not use Zillow, they use the MLS. Why? It’s reliable. Don’t just take our word for it; ask the real appraisers who rely on the MLS to establish loan values for lenders when you go to buy a home. Think they rely on Zillow? Not!

As noted in the May 30 issue of AppraisalNews, an appraisal industry newsletter, “Ouija boards, tarot cards and…Zestimates. Enjoy them for what they are. When making a serious medical decision, you seek out a licensed, experienced doctor; when making an important decision regarding one of your biggest assets (your house), there is no substitute to using a licensed, experienced professional appraiser.”

 

Atlanta real estate closings rebound in May as home prices continue to soar

Sales of Atlanta residential real estate rebounded a bit in May as the number of homes sold in the five-county metropolitan area rose 1.3% last month compared to May 2016. The modest increase follows two other months this year (February and April) when the Atlanta market experienced declines after two years of positive year-over-year comparisons and record closings. While closings year-to-date were still on their best pace ever through May, a persistent lack of housing inventory priced less than $750,000 continued to hamper the market.

Areas of Atlanta that turned in strong closing performances in May included East Cobb County (+20.9%) and Vinings proper (+76.3%). The Atlanta “Intown” condo market (Midtown/Ansley Park/Va-High/Morningside) led decliners (-11.6%). Buckhead sales were flat in May but were up for the year after a down year in 2016.

Sales of homes priced $1 million or more increased 26.2% in May led by noteworthy jumps in Buckhead, Atlanta Intown, Brookhaven, and North Fulton. The $1 million and up market represented 2.2% of all sales in May versus 1.7% in May 2016. That was good for an increase of 29.4% in the luxury home market year-over-year.

The average sales price for single family detached homes sold in Cobb, DeKalb, Forsyth, Fulton and Gwinnett counties last month set another all-time high of $347,696, or an increase of 6% from May 2016 ($328,116). The average sales price of attached homes (condos and townhomes) rose 8.1% to $246,131. Record average sales prices have been set every month since October 2015, a span of 20 consecutive months.

At a local housing summit conducted by Atlanta-based new home consulting firm MarketNsight on June 9, the firm’s principle, John Hunt, noted that “moderation (in resale and new home prices) is the new normal because people’s incomes won’t let prices grow any higher.” Along with restrained lending practices, slow income growth has created a “hard ceiling” on the market he added.

The months’ supply of inventory in Atlanta remains a significant hindrance to keeping prices in check, however. A market considered in balance between supply and demand has a six months’ supply of inventory according to the National Association of Realtors. The months supply of inventory in May was 4.7 months. That number didn’t tell the tale of Atlanta’s two markets though. Whereas the months’ supply of homes priced less than $750,000 was 4.3, the months’ supply of homes priced more than $750,000 was 15 months.

Powered by sales in some of the aforementioned top performing areas of Atlanta, Beacham & Company set an all-time sales record in May for number of sales in a month while dollar volume of real estate sold was the second highest ever. The firm’s number of home sales exceeded May 2016 by 22.5% and dollar volume increased 18.2%. The monthly records for May also marked the third time this year the firm has set all-time records for monthly production.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent.

Beacham sets all-time monthly sales record in May; third time in 2017

Above: This home on Dellwood Drive in the Haynes Manor neighborhood of Buckhead sold last month – part of another record year for Beacham & Company in 2017. The home was on the market for $1.195 million.

In May, Beacham & Company set an all-time sales record for number of sales in a month, while dollar volume of real estate sold was the second highest ever. The firm’s number of home sales exceeded May 2016 by 22.5% and dollar volume increased 18.2%. The monthly records for May also marked the third time this year the firm has set all-time records for monthly production.

While complete May figures for the five core Atlanta counties (Cobb, DeKalb, Forsyth, Fulton, Gwinnett) will not be available for several weeks, it appeared the overall market gained strength after a down month in April. Year-to-date through May 15, the number of sales rose 3.6% from the same period a year ago while dollar volume sold increased 8.5%. After a down year in 2016, Buckhead rebounded with a 13.2% rise in home sales and a 12.9% increase in dollar volume closed. Other areas of strength included North Fulton (Alpharetta, Milton, Roswell) and Smyrna.

The average sales price for a single family detached home in Atlanta was at an all-time high in April of $337,767. The high water mark is especially noteworthy because price records are always set in June or July when demand in the 12-month real estate cycle peaks because of families moving in preparation for the next school year. The unusual timing of the record was a result of a market where demand continued to outpace inventory among homes priced less than $750,000. The months supply of inventory in that price range is well short of six months, an industry benchmark for a market in balance between supply and demand.

Further evidence of an overheated market: the National Association of Realtors reported this week that the number of days on market in the United States was less than 30 days for the first time in history, although in Atlanta it was slightly higher (34 days for condos/townhomes, 45 days for single family detached homes). The best solution to the inventory challenge according to economists including Georgia State University real estate professor Jonathan Wiley is for builders to ramp up production of new construction homes. In Atlanta, builders appear to have listened; starts of single family detached homes in the area are up 7.7% in 2017 according to the U.S. Census Bureau.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent.

 

 

Every day is Mother’s Day at Beacham & Company

PHOTO CAPTION: The mothers and daughters of Beacham & Company, from left, (front row) Kristen Sodemann (mom Ruth Skogstad not pictured), Georgia Hart, Jan Hart, Glennis Beacham, Blayne Beacham Macauley, Elise Lowe Baumann, Janey Lowe, Nicole Farmer, Rachel Farmer, (middle row) Shelley Sloan, Lynn Sloan, Charlotte Perry, Douglas Perry, (top row) Gail McCown, Claire McCown, Melissa Morris, Becky Morris, Lauren Oshnock Zgutowicz, Sue Oshnock.

It’s Mother’s Day this weekend but really it’s Mother’s Day every day at Beacham & Company, REALTORS. That’s because more than 20% of the firm’s agents are mothers and daughters who work together.

Now in its eleventh year, Beacham has always had a strong mother-daughter influence. Many attribute the fact that owner and founder Glennis Beacham started the company with her daughter, Blayne Macauley, so the welcoming platform for mother-daughters was established from the very beginning.

Some of Beacham’s mother-daughter teams have been with the firm nearly as long as the firm has been open (Janey Lowe and Elise Baumann) while others are very new additions (Gail and Claire McCown, whose sister works in Beacham’s marketing department). In all, there are 20 mothers and daughters who work together at Beacham.

Somewhat suprisingly, Beacham moms and daughters have a wide variety of reasons why they enjoy working with each other. Jan Hart, who works with daughter Georgia Hart, echoed the sentiments of many Beacham mothers when saying the trust component was very important. She also said, “I know I can her at 11pm at night and say, ‘help,’ I have an emergency.”

Ms. Beacham said of working with her daughter Blayne: “If a parent really loves their child they can’t get enough time with them. As they grow older, it becomes harder and harder to have time with them so this is a great way for us to get to spend more time together.”

Rachel Farmer said working with her daughter Nicole, a recent graduate of Ole Miss, “provides me with renewed energy. Plus she is teaching me the Millennial way of life. It’s rewarding to be her mentor.”

Kristen Sodemann, daughter of Ruth Skogstad, said, “Nobody can make me laugh like my mom and help me put life into perspective. Whenever I’m around her, I’m a more positive and productive person. She makes work fun for me.”

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent.

 

 

 

Buckhead real estate market uneven due to various inventory pressures

The number of homes sold in Buckhead declined 6.1% last year as affordable condos and single family
detached homes (those priced less than $700,000) were either nonexistent or in less than desirable condition. Sales of homes priced $1 million or more were also a drag on the market, with value relative to asking prices acting as the primary difference in a better performance.

Buckhead clearly has a thirst for condos and townhomes as more than 1,400 changed hands in Buckhead in 2016 although just 44 of those were new construction. Condo sales represented 66% of all sales in Buckhead last year.

Inventory conditions in Buckhead are not expected to signifi cantly improve in 2017. Many homes that might be tear-down candidates are approaching asking prices that create a situation where builders would have to bring a home to market at a price where the months’ supply of inventory is already high.

What’s the answer for the Buckhead market going forward? Here’s what we would like to see more of:

• Construction of moderately priced condos

• Modest single family detached renovations

• Flips priced $1 million or less.

Economist paints rosy picture for 2017

Beacham & Company participated in the annual conference for Leading Real Estate Companies of the World (LeadingRE) at the Fontainebleau Hotel in March. The conference and its participants represented 25 percent of all real estate business done in the United States in 2016.

Among the conference’s many nationally known speakers was Marci Rossell, formally chief economist for CNBC and now chief economist for LeadingRE. Rossell said three major factors will influence real estate and the U.S. economy over the next 3-5 years:

• India will become the new world economic growth leader and the most populous country by 2020. The world’s economies are more interconnected than ever and must be considered when forming projections about our own economy including housing.

• The U.S. dollar surged 40% last year. A strong U.S. dollar often attracts foreign investors which in turn helps propel our economy through new investment including housing.

• A demographic “barbell” with Baby Boomers on one side and Millennials on the other will continue to create tension in everything from U.S. politics to housing. Millennials and Boomers are, in many cases, pursuing the same type of housing (albeit for different reasons) which is extending an unprecedented housing inventory shortage.

She also said the economic outlook for 2017 is looking better and better because of prospective fiscal stimulus in the form of tax cuts for individuals and corporations, deregulation, and possible infrastructure spending. She also said she expects the Federal Reserve interest rate to increase twice in 2017 but even after both increases the Fed’s monetary policy would still be considered “loose” and that we are just beginning to experience the economic benefits of a historically low Fed funds rate.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent.

Spring 2017 issue of The Beacham Series published

The Spring 2017 issue of Atlanta’s premier real estate magazine, The Beacham Series, recently published featuring 5525 Long Island Drive on the cover. The issue marks the beginning of the magazine’s eleventh year in print.

The cover home was originally designed by Keith Summerour and built in 2000 by Benecki Homes. Part of a 1.6-acre gated estate on the Buckhead side of Sandy Springs, this light and airy home has six bedrooms, seven full baths, two half-baths and a four-car garage. It features exquisite finishes such as reclaimed wood floors, steel windows, and Venetian plaster walls. Other features include a home theatre, exercise room, billiard room, new Pebbletec pool with separate full pool bath on the terrace level, and a new limestone outdoor fireplace. The home is on the market for $3.2 million.

In the forward to the current issue, Beacham & Company founder and owner Glennis Beacham predicted another year of tremendous opportunities in the Atlanta real estate market. She credited her firm’s commitment to integrity, emphasis on thoughtful analysis, exceptional marketing, and a sincere, hands-on approach with clients as reasons for optimism in 2017.

The Beacham Series has a circulation of 25,000 including Atlanta’s most influential and affluent addresses. The magazine is also distributed to top executives in the world’s largest real estate relocation network, Leading Real Estate Companies of the World.

Click here to view the current issue of The Beacham Series online. To obtain a print version, email [email protected] or call 404-261-6300.

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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent.

Why some Millennials are missing out on the real estate boom and what they can do to change it

Royalty-Free Stock Photography by Rubberball

We love Millennials. So many of them are smart, sociable, passionate, eager to try new things, and want to be challenged/inspired by their work. It’s a fun generation!

Unfortunately, the Millennial generation is trailing previous generations in first-time home ownership rates (near a 30-year low according to NAR). In many ways, this is understandable considering many of them came of age during the Great Recession and its aftermath when job prospects were limited. As a result, their growth into the predominant home buying sector is more tempered than it would have been had the Great Recession not occurred. Even though they now make up the largest part of the home buying market, more young adult children are living at home now than at any time since the Great Depression of the 1930s.

While it’s easy to understand why some Millennials have delayed home ownership, what’s not is why some continue to pay average rent of $1,300 per month for a one-bedroom apartment in Atlanta (The Apartment Guide) when they could be paying the same amount to own a home ($1,300 per month based on a $250K mortgage loan amount at a 4.5% interest rate). They also are missing the opportunity to build wealth through asset appreciation and to save money on their income taxes through the mortgage interest tax deduction. If they stay in a home at least two years, they also get to keep the money gained through appreciation tax-free. With Atlanta home prices averaging an annual gain of 5%, that’s a potential two-year gain of more than $25,000 on a $250,000 home.

We want Millennials to prosper and take advantage of the next 5-10 years when we think we will see the best real estate bull market run possibly ever due to the sheer size of the Millennial generation. Here is what some Millennials tell us and what we tell them about buying a home now:

  • I can’t afford the down payment. Understandable, but easy to overcome if a parent or grandparent is willing to loan the money for the down payment (send this article to them ;-)). Many Baby Boomers are beginning to be forced to make 401k withdrawals this year and real estate is as good as any place to park money. Also, FHA loans offer options for as little as 5% of the purchase price for a down payment (compared to 20% for most conventional loans) and if you’re living at home you already have a way to save for your down payment through free rent.

  • I’m afraid there is another “housing bubble” due to run up in home prices in recent years. The housing bubble of the late 2000’s was a once in a lifetime event. For the 50 years that the National Association of Realtors has tracked home prices, 2008-09 was the only year home prices declined. Also, oversupply and easy credit were the reasons for the housing crisis of the late 2000’s and neither condition exist today. In fact, supply is dangerously low and demand is at a record high (for Atlanta). If home builders will build more homes and more home buyers become interested in renovations, this market will have serious legs.
  • I can wait because I don’t have to buy now. Since 2011, waiting to buy has cost renters more than 55% in home price appreciation per the local MLS. On a $250,000 home, that’s a gain of $137,500. The return on real estate will be nowhere near where it was between 2010-2015 but it will continue to appreciate because of Atlanta continues to attract new businesses and population, the economic outlook is favorable with anticipated tax cuts, deregulation and infrastructure spending and the sheer demographics of Millennials. Also, the Federal Reserve funds rate is set to go up again this month and most think it will happen again in 2017. Buying a home tomorrow even without taking into consideration price appreciation will be more expensive than it is today. If all of that rings hollow, just remember what Mark Twain said, “buy land, they’re not making it anymore.”
  • What I want to buy doesn’t exist. This is a challenge for all buyers right now. Many Millennials want to be in walk-able neighborhoods close to work, restaurants, shopping, etc. and very little of that exists ITP (Inside the Perimeter) that is affordable (less than $500,000) and doesn’t need work or isn’t otherwise “apartment perfect”. There are some new condos under construction but virtually all are high-end. Many Millennials are flocking to areas with either walkable town centers or transit connectivity such as Roswell, Smyrna, Kirkwood (East Atlanta) and Chamblee. Some areas that are even more affordable and may fit the same bill (long-term): Riverside (at the end of Moores Mill Road), West End, and downtown East Point. Buying in these areas will require Millennials to embrace “fluffing” (painting, landscaping, minor updates) and flipping homes.

Read more about the state of the Atlanta housing market in the current issue of The Beacham Insider.