COVINGTON - Sales activity in the Newton and Rockdale county real estate markets is showing slight improvement, but home values are averaging more than 25 percent less than a year ago.
Dale Pearce, a Realtor with Prudential Colony Realty in Covington and incoming president-elect of the East Metro Board of Realtors, said information from the Georgia Multiple Listing Service shows that pending sales in July in Newton and Rockdale counties were up slightly over pending sales in February, which may indicate improvement in the housing market. He cautioned, however, that the increase in sales may be somewhat affected by the time of year.
In July, pending sales in Newton County totaled 150, compared to 109 in February; Rockdale's pending sales in July were 97, compared to 67 in February.
"I think that's probably the bright spot," Pearce said. "Year over year, pending sales are up nationally, and we are reflecting that locally."
Closed sales are also approaching previous levels, Pearce said.
A review of closed home sales for the 12 months of August 2008 to July 2009 for Newton County showed that 15 fewer homes sold compared to the same 12-month period last year. In Rockdale, the gap was a little wider, with 66 fewer homes sold.
Though single-family housing sales appear to be gaining on previous levels, Pearce said home values are shrinking and will take longer to show significant recovery.
"The average value has come down considerably, and so it's bad for most of us in the business and for the homeowners, as well," Pearce said.
Based on closed sales for the past 12 months, Pearce said the average price of a home in Newton County has decreased by 27 percent and the average value in Rockdale is down 31 percent. The average home price in Newton County is now $117,635, compared to $161,243 a year ago. The average price in Rockdale is $148,013 based on the past 12 months, compared to $214,448 a year ago.
Many of the homes on the market now are bank foreclosures, which has contributed to the dip in home values. Charles Staples of Lee Staples Realty in Conyers, said the valuation of a house for sale has been difficult to gauge because each lender's circumstances are different.
"One bank may come up and price a house that sold two years ago for $100,000 at $85,000, and another bank might price it at $50,000," said Staples. "That's a puzzling part that's been skewing the prices a little bit."
Staples, who has worked in real estate in Rockdale County for 33 years, estimated that half the houses for sale in Rockdale now are foreclosures or were purchased as foreclosures for investment purposes.
"I would venture to say that what's being looked at now are vacant homes that have either been renovated by investors or are bank foreclosures, and I would say they would easily be half the market," Staples said.
Pearce said decreased home values won't be remedied overnight.
Based on an annual rate of 5 percent growth in value each year, Pearce said it could take six years for home values to recover to former levels.
"I hate to say that as a Realtor, but it's reality," he said. "We simply would like to get back to a typical market. Probably a 4 or 5 percent appreciation rate on real estate is a typical market."
Staples said despite the decrease in values, it is sometimes difficult to get houses to appraise at or above the sales price in this market.
"Appraisals are difficult because I think the appraisers are scared," he said. "What truly is the value of a house? If you went back and looked at some of these properties, what these houses sold for in 2006 and 2007, they were crazy numbers. They shouldn't have worked; they shouldn't have appraised out."
With so many foreclosure sales on the market, Pearce and Staples both said most buyers are looking for a bargain.
"Everybody is looking for the deal," said Pearce, "and typically they are going to go at least look at foreclosures. Once they see some of them, they may decide it's a little more work than they want to get into."
Anyone looking to sell a home in this market should price the property realistically, Pearce said.
"They need to price it attractively to get buyers to come look at it," he said. "Some sellers think 'I'm going to price it above the market, and they'll make an offer.' They just don't. They don't come look at it if it's not priced right. And of course, always get (the house) in good condition to sell. The biggest thing we find with sellers is that you live in your house and you get a lot of stuff in your house."
Those in the buying mode should also know that lenders are looking for better-qualified buyers.
"The 100 percent loan programs have pretty much gone away, with the exception of the USDA loan program, and it's only available in rural areas, some outlying areas in Newton County and all of Walton County," Pearce said. "The most popular loan program right now is the FHA, which requires 3.5 percent down."
Staples said successful buyers are required to have a higher credit score than a year or so ago.
"They must have a 620 score, and if they've got any boo-boos on their credit, it's really easy to get into the 500s," he said.
In the long run, Staples said, the housing market will improve as the unemployment rate drops and the business sector grows.
"It is really going to depend on the success of the Chamber of Commerce and the Board of Commissioners attracting new businesses to bring jobs here," Staples said. "I think that's going to be critical. And, of course, the other thing is that we've got to get people to shop at home."