All real estate is local. Just because values may be skyrocketing in New York, it doesn’t mean they’re also skyrocketing in North Georgia. These are two completely different areas. Thankfully, in Adairsville, we’re not covered up with hard-to-understand Yankees.
Home values have been dragging along the bottom for about a year. I explained that values would rise only after the excess inventory was gone. They stated that there wasn’t any more excess inventory in Cartersville, Georgia. I asked, “How did you come to this conclusion?” “We read the paper and watch TV news,” they replied.
Folks, if you really want to know what’s happening in the housing market, turn off the news, get in your car, drive to a neighborhood in your area and start looking around and knocking on sellers’ doors. And that’s exactly what we did. We drove to one of the nicer subdivisions in Cartersville and started poking around.
As we entered the subdivision, I asked, “How many distressed properties are in here?” Neither knew, but both guessed that it wasn’t many. As we started, I asked them to picture every distressed home we came across as being painted Pepto-Bismol pink. This would allow these homes to really stand out from the non-distressed homes.
After a few hours of work, our job was done. The two professionals were amazed by the results of our efforts. Of the five sellers we had met with, three were behind on their mortgage – one hadn’t made a payment in a year-and-a-half. We also found five vacant homes. They were just empty – no For Sale sign in the yard or anything. There were also nine bank-owned properties for sale. This totals 17 Pepto-Bismol pink properties in this one subdivision.
Here’s the problem: There’s still a lot of great homes out there that you can buy for less than they cost to build. For example, we recently bought a really nice three-bedroom, two-bath home in a great area of Cartersville for $38.92 per square foot. It would easily cost $85 per square foot to build this same home. Bottom line: We bought the property for less than half of what it cost to build.
For home values to begin to rise – really rise – first we need to get rid of the excess inventory. That’s beginning to happen. We’re seeing more and more investors on the courthouse steps with more and more properties being bought at auction. In addition, banks are getting better and faster at selling houses they take back.
Hopefully, within the next year, it’s gonna finally get hard to find cut-and-dried deals. As this happens, because of a lack of inventory, values will begin to rise. Once that happens, you’ll start hearing the beautiful sound of nail guns popping all over North Georgia as new home construction gets back underway.
That’s gonna be a beautiful day.
Bill and Kim’s North Georgia Real Estate Investors Association meets on the second Thursday of each month, from 7 to 9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Georgia. For more info, go to REIoutpost.com.