Augusta GA - An Undervalued Real Estate Market
Lydia Taylor February 4th, 2008
In a survey of 100 real estate markets, localmarketmonitor.com (a real estate research firm) rated Augusta Ga has one of 13 ‘undervalued markets’ when comparing historical real estate values to the equilibrium or ‘expected’ home value.
They compared Augusta GA’s average home selling price of $173,400 to the expected value of $204,700- yielding a result that is approximately 15% under the expected average valuation. What follows are the cities on their ‘undervalued’ list:
- Wichita, KS -23%
- Fayetteville, NC -20%
- McAllen-Edinburg, TX -20%
- Memphis, TN -19%
- Indianapolis, IN -19%
- Pittsburgh, PA -18%
- Little Rock, AR -17%
- Dallas-Fort Worth, TX -17%
- Cincinnati, OH -16%
- Des Moines, IA -16%
- Columbus, OH -16%
- Augusta, GA -15%
- Houston, TX -15%
The situation here in Augusta continues to fuel a marketplace that is friendly to buyers, while providing a further indication of the lack of a ‘bubble’ in the area. Home values just weren’t driven very high by cheap mortgages and investor speculation, promising a smooth recovery for the local housing market over the next year to two years. Even better - if the data holds up - home owners should see a significant rise in their home’s value as the market recovery continues.
The survey found that 47 of the 100 markets studied were ‘overvalued’, and 40 were ‘fairly priced’. If you are curious about those overvalued markets, here are the top 10 most overvalued markets according to their research:
- Naples, FL 90%
- Riverside-San Bernardino, CA 75%
- Modesto, CA 74%
- Miami-West Palm Beach, FL 69%
- Stockton, CA 69%
- Santa Barbara-Santa Maria, CA 68%
- Port St. Lucie-Fort Pierce, FL 67%
- San Jose, CA 65%
- Los Angeles-Anaheim, CA 63%
- San Diego, CA 60%
The average home in Naples Florida sells for $521,900 when the expected equilibrium price should be around $274,900. I can only imagine the correction that has to take place in some of those markets before recovery. Wow.
If you would like to see a historical record of average home prices in Augusta, I’ve included one here (click for larger version):
UPDATE: As if to put an exclamation point on my post, Mark Thompson, PhD and a Chair in Business at ASU, also wrote a piece today in the Augusta Chronicle today titled Area’s housing market can wait out US decline (registration required).
- Market Reports
- Comments(11)
Good Information, but it is almost a year old, so it may not be very
useful.
Do you have any updated information on this subject?
It would be interesting to see the impact of Augusta’s declining
housing market on these numbers.
Average home values have to decrease at least once compared to the previous period, measured quarterly or annually, in order to have a ‘housing decline’. (That is a little bit of Economics 101 to all of those starving journalists out there trying to mislead the public about real estate.)
A housing decline has not happened in Augusta. And preliminary data on the MLS for housing sales in 2008 strongly indicates that a positive trend will continue.
As for updated information, I posted the article below in December:
http://www.northofthesavannah.com/posts/market-report/columbia-county-real-estate-over-time/
PS. The data may appear old, but it’s through 1Q 2007, so it’s only about six months old. 4th quarter 2007 still has some contracts pending/not keyed yet.
Speaking of misleading, since you introduced the subject, let’s talk about the MLS data.
If you really want to see how much this market is declining, do the following:
- Remove all Presales from your data (these are last year’s home prices)
- Compute your asking to sales price ratio using the home’s initial asking price
- Include all Seller Incentives as part of the asking to sales price ratio
I believe this will provide a true picture of the Augusta Housing Market!
Markets can only be judged by final price of the commodity sold.
Go ahead and list a ramshackle shack at 1 billion dollars, and reduce it later (or introduce incentives) until it sells, but don’t ask me to include that in my analysis of the market.
I will point out now that I have allowed your comments on my blog despite asking posters here to use their real name. This blog is not your mouthpiece to attempt to insult me or my community behind a fictional name.
http://www.northofthesavannah.com/posts/news-flash/a-quick-note-about-comments/
Lydia,
Great information for those interested in Real Estate in Augusta, Ga. Great Post! My brother lived outside of Augusta for several years. He was in the Military. Thanks again for the great information.
Chad
Greetings from Naples Florida, the most over valued property prices in the US.
I have to take exeption. According to our Sunshine MLS, our median house prices now stand at $444,198. We are trending upward in median price however we are in our “busy” winter season. After April -May will tell the tale. Our prices, I feel, are not only justified but actually beginning to level off instead of declining. We have an influx of Europeans buying like crazy and the majority of our sales are in the $200k to $500k price range. There are also several programs to help 1st time home buyers and those in services i.e. medical, police and teachers which come into play. I believe the overvalue comes from the mega mansions ($1 million and up)that bump the curve up. They have been selling very well all through out this slow down.
The media loves bad news. I can only give you an on the ground report from my friends I see at Board of Realtors committee meetings and such that are title and mortgage brokers. They are getting busy and not with re-fi’s. I am optomistic. I feel sorry for those who don’t take advantage of the market to buy into one of the most beautiful places in the world, Naples Florida!
Lynn, nice to hear from a fellow Realtor. It sounds like you may have encountered a correction down there- but not to the degree that one may have led to believe. I agree with you that the whole bubble has been oversold by the media. To what degree is the million dollar question. I am glad to hear business is doing well, and improving. If you ever want to write a guest post about the market down there, drop me a line!
Thanks Lydia for posting some great stats. I think that it would not make sense to
- ‘Include all Seller Incentives as part of the asking to sales price ratio’
What is more important is making the data consistant. So if you include seller incentives for one year you also include for the next year.
- ‘Compute your asking to sales price ratio using the home’s initial asking price’
The initial price really doesnt have much to do with the market value. What does determine market value is the selling price.
Thanks for the comments Ki. Including data on initial asking price is pretty much pointless, as listings priced above market don’t sell anyway. The only trend you could hope to discover in looking at that data is a sellers ability to determine the value for their home in their neighborhood. If you are trying to analyze a market trend, you want to look at closed sale prices, not pricing mistakes.
Anyway, presale pricing is shown in our MLS here, and has been reported on this blog several times, the most notable being this article:
http://www.northofthesavannah.com/posts/local-interest/popping-the-bubble-disproving-the-national-real-estate-market-collapse/
Another nice post Lydia. I have to say your “Elegant Augusta Real Estate Blog” is just that, Elegant. I love the look and feel of it, congratulations on it, I am sure you are proud of it.
Yes it looks like you have the statistics to support that Augusta is a undervalued real estate market.
Jim Boyer
Thanks Jim for your wonderful praise. I have tried to make the site attractive, informative, and easy to use for everyone - especially the public. I hope you stop by again!