All Forum Posts by: James Park

Vincent Crane

Since the Atlanta housing market hit rock bottom on March 2012, we are back up 51.27% from the bottom and 8.5% below the last peak in July 2007 as of June 2015. We are already back to 2007 prices in the North Fulton and South Forsyth. My forecast for 165 index will be reached with the assumption that the inventory continues to be tight like it is today and the population growth is as strong as it is today. However, if the population growth suddenly slows or reverses or the big national builders suddenly floods the Atlanta market with inventory that reaches 140k +, my curve forecast will start to flatten and will start to correct. I see no sign of this near term.

I have always believed that the Atlanta's median home price will eventually double from the March 2012 bottom. Only time will tell how accurate my forecast is.

@Assaf Furman,

My guess is that we are probably at the half way point on this appreciation cycle. I really do believe that we will surpass the 2007 peak levels like Dallas, Denver, and the Bay area market has done unless the population growth into Atlanta metro market suddenly comes to a halt or suddenly all the national builders flood the market with inventory which reaches above the 140k level. One trend I am seeing is that the smaller mom and pop private builders are being bought out my national builders. One example of this is JEH homes was recent acquired by Taylor Morrision, a major builder in Southern California. 

@J Scott,

I know you are a smart guy and I am also a big fan of your flipping book. I just wanted to get your opinion on something. I know that majority of the investors in Bigger Pockets believe that appreciation cannot be predicted, and that you are only speculating on your investment if you believe in this... but can't an investor somewhat predict what will happen in your housing market in the next 2-3 years simply by just understanding inventory levels, population and job growth, household income moving into the area, and unemployment levels by county? Some of the course work I took while in college and even in grad school that I really enjoyed was economics, especially macro economics. I think that is one of the reasons, I have always been drawn to the commodities and the forex sector since my early 20s as the investing knowledge you need to succeed in these sectors is just simply understanding and forecasting supply and demand. If you know that that there will be a shortage of a certain commodity down the road, you concentrate your resources on buying this specific sector and you know that a sharp bounce is coming when demand outstrips the supply. I think this type of knowledge has also served me well in my buy and hold real estate investment decisions. I knew back in 2012, prices in the Atlanta market, homes were trading at the 1996 price levels. I also knew that the inventory levels in metro Atlanta below 40k, was extremely low and would not be able to sustain at these levels compared to the population moving into the Atlanta metro area. The reason I don't think that the Atlanta market is at the bubble stage yet is because at the last 2007 bubble right before the crash, inventory levels reached 138k, but today we are sitting at 45k and the population moving into the Atlanta metro market is much greater today than it was 8 years ago. What is see in the next couple of years in the atlanta metro housing market is appreciating at a faster rate than normal. My thoughts will change on this when i see the population growth slowing down and inventory levels reaching back up to the 120k plus levels. At this point i would expect prices starting to level off, and a correction taking place. As for the macroeconomics cycle for where the stock market is today is a whole different story. Do you have any reason otherwise why my theory may be flawed and why we may be at the housing bubble stage today?

Thanks J.

The median asking price for homes in Atlanta peaked in May 2008 at $219,675 and bottom at a low of $150,800 in January 2012. Quite often I am asked by my clients where we are currently at in the current real estate cycle. In the north fulton, south forsyth area, median home prices have already reached the July 2007 peak prices. In order to properly answer this question, one needs to look at the inventory data and understand simple economics concept of supply and demand. You can see the inventory levels reached its peak at 138,442 (peak) in Sept 2007 and dropped to 38,832 (bottom) in Jan 2013. If the inventory levels in Atlanta reached 140k or above today, I would say that we are a bubble and real estate prices can potentially crash like it did in 2007, but today's Atlanta metro inventory sits close to 45k, unlike the pre-crash inventory of 138k.

I see this as a simple Econ 101 rule of suppy and demand. If the demand of homes in Atlanta far exceeds the existing 45k inventory, prices have no where to go except up. Builders can't build fast enough to accommodate the buyer demand.  So when will be a good time to unload your buy and holds and take profit. Personally, I would wait until I see inventory levels in metro Atlanta spike up above 100k, and prices leveling off before I would consider unloading my properties.   

Below is the unemployment rate in all of the counties in the state of Georgia. Forsyth County is not only the wealthiest and the fastest growing county in the state, but also has the lowest unemployment rate in the state at 4.9%

Source:

https://www.scribd.com/doc/276500105/July-2015-GA-...

this thread is over a year old. Are any of you still profitably flipping in today's market environment.

@minh le,

Detriot and cleveland are the only msa cheaper than atlanta metro, however Detroit and Cleveland's population is shrinking while Atlanta is growing. If you look at the largest inflow states from 2010-2014 they are, 1) texas, 2) california, 3) florida 4) georgia. Denver, CO and SF, Dallas all have had the highest appreciation in the last 12 months. Denver and Dallas are already making new highs while SF and Atlanta are very close to our last peak before the crash prices. I think the SF housing market is already there.

Even though the housing costs and taxes are ridiculously expensive in California, people will continue to move to California because it is California. It is like a status thing when you tell out-of-staters that I am from Cali. Texas and Florida both have the 0 state income tax attraction factor and georgia also has a robust and growing diverse job market. All four ultra-high inflow population states are major immigration gateways to Hispanics and Asians.

Minh Le, if your prophecy holds true that the bay area market will correct 25%, you can expect a phone call from me as I will be taking a flight out to SF so that you can show me where are the best Flips are located in the Bay area :)