Heery Brothers’ Year in Review – 2013 and the Outlook for 2014

2013 will be remembered by many in Atlanta’s residential real estate market as a tipping point. 2012 showed early signs of recovery, but going into 2013 we did not know whether this trend would continue. Closings where still anemic until the end of February and then, Kaboom!  Two thirds of our annual volume closed between March and the end of September. The result was 2013 sales increased by 20% to 30% over 2012. 2013 was the second best year in the last decade.  Joy Andrews joined our team in March and helped us achieve our goals. We start 2014 very strong with about seven deals under contract.  The outlook is very bright.

The below chart shows Heery Brothers production levels over the decade:

   Under $500,000  

   $500,000 to $1 mil  

   $1.0 to $1.5 mil  

  $1.5 mil + 

  Grand Total 

Sold 2004

1,174,500

2,407,500

1,595,000

$5,177,000

Sold 2005

1,515,000

2,854,250

8,502,814

3,387,494

$16,259,558

Sold 2006

1,795,000

4,649,700

5,355,000

10,296,000

$22,095,700

Sold 2007

456,000

3,962,000

8,595,000

17,405,000

$30,418,000

Sold 2008

2,126,000

6,263,500

1,150,000

6,248,000

$15,787,500

Sold 2009

2,115,400

3,845,300

3,095,000

  $9,055,700

Sold 2010

1,535,100

5,631,500

3,659,000

5,160,000

$15,985,600

Sold 2011

4,461,600

7,011,750

2,685,000

2,700,000

$16,858,350

Sold 2012

4,479,000

7,409,000

4,875,000

1,795,000

$18,558,000

Sold 2013

5,372,561

11,167,500

6,635,000

3,878,900

$27,053,961

Grand Total

$25,030,161

$55,202,000

$41,456,814

  $55,560,394  

   $177,249,369  

Percentage

14%

31%

23%

31%

Cumulative   Percentage

45%

69%

100%

 

Looking at these figures and market trends, here are the highlights of our optimism:

More new houses coming soon – We are very fortunate to represent many good developers bringing new and renovated homes to market. In fact, from 2013 lot acquisitions, we have seven new houses coming to market not yet shown in the listing service.

Supply constraints will continue to be a source of upward pricing pressure – Whether looking at this entire market (e.g. Fulton County) or just Buckhead, the hallmark of our market is constrained inventory. Depending on product type, location, etc., Atlanta prices are up about 15% to 20% in 2014. This applies to single family housing, condos, and rentals. In fact, the rental market basically was in crisis earlier this year. There were many more tenants than property options. While there are many factors driving the strength of today’s multifamily market, chronic under-supply of quality single family rentals is also an important factor.

Market psychology – From 2009 through 2011, most residential purchases had to be highly rationalized and led by the buyer’s perceived value. Starting in 2012 and now clearly in 2013, real estate is starting to again be viewed as a safe harbor. While real estate return’s in 2013 are not in par with the S&P 500’s 29.6% increase, real estate was part of a clearly rising tide. In 2014, real estate will increasingly be viewed as an asset class reflecting a flight to safety with bond-plus returns in 2014 and more so in 2015.

Interest Rates – No, we are not going to tell you interest rates will continue to be 4% to 5% for a 30 year for the next couple of years. What we will say is there will be a nice spread between real estate returns and interest rates for the foreseeable future. We see good availability of mortgage products applicable to Atlanta’s diverse price points, product types and locations.

Rental Rates – One way to increase consumer confidence and value is to give owners another exit strategy. Let’s put it this way, if you cannot profitability rent that new purchase, you might be paying too much.

Let us know how we can be of service to you in 2014.

Leave a Comment