Happy Thanksgiving From Ashford Capital
I trust you had a healthy and pleasant Thanksgiving, spending quality time with friends and family. During challenging and uncertain economic periods, it is important to remember that we ALL have reasons to be thankful, and to value the quality time with those who know and love us best…
In addition to the many personal reasons I have to be thankful, I’m also excited to be in a business that offers my investors some of the best investment opportunities available in today’s market. This year, we have been working very hard to identify and purchase some of the most attractive properties in the Atlanta market – and we have been able to negotiate tremendous purchase price discounts.
This week, a new real estate report came out, identifying some of the most attractive markets available for investors… I’ll bet you can guess which city hit the top tier in terms of sales activity…
Atlanta Leads the Competition
The October existing home sales report was encouraging no matter what city you invest in… (ok, New York and Washington DC were slightly lower, but all other major cities reported gains). For the month, total existing home sales were up 1.4% from September’s reading – and 13.5% above the October reading from 2010. No matter how you slice it, home sales are picking up which is great for our business.
But as I’ve mentioned quite a few times, real estate is a “location” game – and national trends aren’t nearly as important as what is happening in our own back yard. Well, you’ll be happy to know that Atlanta is “on the map” when it comes to a robust recovery in housing.
According to the National Association of Realtors, Atlanta placed second among the top-tier metro regions with an increase in sales of 33.4%. To give you some perspective, the only city that beat Atlanta was the Miami / Ft. Lauderdale region which saw sales pick up by 33.6% – not a meaningful difference.
It’s hard to overstate just how important this reading is. As sales levels pick up, the level of “inventory” – homes for sale or ready to be put on the market – declines. Basic economic theory tells us that when supply levels decline and demand picks up, price levels naturally rise. This means that the properties currently held by Ashford Capital are increasing in value, leading to positive returns for our investors.
Fewer Distressed Homes in Play
One of the key components to consider when looking at home sales figures is the number of “distressed” sales versus more traditional transactions. “Distressed” transactions are divided into two categories: foreclosures, and short-sales…
For the month of October, distressed sales made up 28% of the total – down from 30% in September. It’s interesting to see that although the total number of sales was higher, the quality of transactions were actually higher (a smaller percentage of foreclosures and short sales).
The decline in distressed transactions points to two important concepts. First, we’re seeing banks and the FDIC slowly working through their inventory of foreclosed homes – and the number of homeowners “stuck” in short sale situations is reaching an inflection point.
Second, on the demand side, investors are looking for higher-quality houses. There is less demand for the perceived “beat up” houses that usually fit into the distressed category, and more demand for high-end housing that is more in line with the new home business that we cater to.
The bottom line is that this report was an important indicator of strength in the housing market, and more specifically for our local Atlanta region.
Let’s Have A Post-Thanksgiving Lunch
I know that this soon after Thanksgiving, the last thing you may want to think about is eating… But I’d still like to chat with you about our real estate opportunities.
Maybe this week – after the in-laws leave town and the schedule gets back to normal – we could arrange a time to meet. I’d love to grab lunch with you, or even just a cup of coffee, and discuss how Ashford Capital can help you meet your investment goals.
There is tremendous opportunity in our market right now, and we’ve worked hard to be in a place to take advantage of these trends. I look forward to our conversation.
Wishing you every success,
Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners