One of the most challenging aspects of selling your home is pricing it accurately so it results in the optimal return.
We found several neighborhoods in Metro Atlanta where sellers significantly overpriced and underpriced their homes last year, and a deeper look into each of the areas showed us that the predominant socioeconomic status plays a role.
The TL;DR? Sellers in largely white areas overprice their homes, while sellers in primarily black areas underprice.
Overall, we found that some 27% of homes in Metro Atlanta sold under asking price in 2016, meaning that about one in four sellers in the market priced their homes too aggressively.
We evaluated five neighborhoods where at least 33% of the homes sold below asking price last year, and soon realized that those five of the neighborhoods had something in common: Their citizens live in higher-income households, and they are predominately white.
Take a look.
Buckhead Heights and Lenox (Atlanta) - Lenox is known for its position as a trendy city center of sorts. High-end stores, upscale hotels, fancy restaurants and luxury condominiums abound.
It comes as no surprise that the neighborhood’s median household income is on the higher side, coming in at $81,794. Of all the areas we analyzed that overpriced their homes, Buckhead Heights/Lenox is the most diverse. Still, it is predominately white with 64.6% of citizens identifying as such.
Though the area is desirable, last year’s sellers might have overestimated its appeal.
Approximately two in five homes that sold in Buckhead Heights and Lenox in 2016 were discounted. Sellers asked for a median price of $387,000, while their condos ended up selling for 20% less, at a median price of $309,500.
Buckhead Village (Atlanta) - Buckhead Village sits adjacent to Buckhead Heights/Lenox, but it is a bit more residential and even more affluent than its neighbor.
The median household income is $85,993, and in terms of demographics, we see that 83.8% of residents are white.
While a significant portion of the homes for sale last year were condos, the properties that sold for the highest amounts were single-family, detached homes. Regardless of home type, however, sellers in the area were pretty off base with their pricing strategies. Some 37% of homes sold in Buckhead Village in 2016 went for less than their asking price.
Sellers listed their homes for a median of $549,000, and they ended up selling for 17% less, with a median sale price of $451,000.
White, Georgia (Zip Code 30184) - White came up in our recent analysis of homes that were on market last year for longer than average. The fact that homes were overpriced might add another layer as to why it took so long for them to sell.
Thirty-seven percent of the homes in White sold for less than asking price.
With a median household income of $57,234, the area isn’t as affluent as others, but it does mirror them in terms of demographics. Some 93.5% of the citizens in White, Georgia are indeed white.
Cumming, Georgia (Zip Code 30041) - Cumming has a tumultuous history of racial tensions, which was notably addressed on the Oprah Winfrey show in 1987. Over the last few years, the area has diversified a bit, but white citizens still comprise 87.3% of the population.
With a median household income of $92,733, this neighborhood of Cumming is highly affluent. And the home values absolutely reflect that. Homes that sold last year went for a median of $335,000. Still, 35% of those houses were discounted. Sellers were asking for a median of $379,050.
Canton, Georgia (Zip Code 30115) - With two golf/country clubs in the vicinity, it’s quickly evident that this area of Canton, Georgia is an upscale community.
This neighborhood is 90.4% white, with a median household income of $73,032.
Sellers asked for a median of $314,944 for their homes, yet one-third of the homes sold 33% went for under asking price.
According to our data, some 19% of homes in Metro Atlanta sold above asking price in 2016.
We evaluated five areas where at least 28% of homes sold above listing price, and much like the five neighborhoods where sellers overvalued their homes, these five areas also had something in common: All are predominately black and lower income.
There’s a deeper story here, though – and it has everything to do with gentrification.
East Atlanta - East Atlanta has been gentrifying pretty heavily for the last decade, according to research from Governing.
This neighborhood’s population is 62.9% African American, and the median household income is below the U.S. average at $44,129.
Because East Atlanta is increasingly becoming a desirable neighborhood, 35% of the homes that were sold in that area last year went for above asking price. Sellers listed their properties for a median of $266,000, and received within 1% of that price from buyers.
Kirkwood (Atlanta) - Kirkwood is also undergoing a pattern of gentrification. The neighborhood remains predominately African American, and its $50,548 median household income is comparable to the median household income in the U.S.
The fact that 35% of homes sold for above asking price is telling of how attractive the neighborhood is right now. The median asking price for homes in 2016 was $355,000, while the median sale price stood at $349,200.
Summerhill (Atlanta) - Summerhill has also been the target of gentrification. And its demographics demonstrate how much has changed in the neighborhood over the last few years.
The population is 56.4% black, a decrease of roughly 10% since 2000, per an analysis of numbers from City-Data.com. The median income of Summerhill households is $39,105, significantly below the U.S. median.
Sellers asked for a median price of $285,000, and 29% of the homes that sold went above asking price.
Norcross, Georgia - Norcross is located in Gwinnett County, and is undergoing an interesting transition. According to the Boston Globe, this small city was 95% white just one generation ago. Today, white residents make up less than 20% of the population. The city has seen an influx of Hispanic and Asian immigrants, attracted by affordable housing and employment opportunities.
Some 29% of homes in Norcross went for above asking price, which stood at a median of $143,900.
There’s something else worth noting about this area. Some 40% of its residents have not completed a high school education. This is reflected in the neighborhood’s median household income of $35,037.
Hunter Hills (Atlanta) - The Hunter Hills section primarily consists of people who rent their homes. Only one in five are owners.
This neighborhood of Atlanta is 95.7% black, and its residents see a median income of $23,649.
People who bought in Hunter Hills are likely investors who want to get into the market at a low price. Although 28% of homes went for above asking price, the median selling was just $35,000.
White sellers in some of Atlanta’s most affluent areas tend to price their homes more aggressively. These sellers have likely invested in home renovations over the last few years. There’s a chance they are assuming the market considers their renovations just as valuable as they do. This, combined with a strong overall market is driving them to price their homes too aggressively.
Meantime, their black counterparts in lower-income neighborhoods aren’t pricing aggressively enough. The fact that approximately one-in-three homes in these areas is going for above asking price indicates that these buyers are in need of better pricing strategies. When we look at income and education statistics, particularly in Norcross, we’re finding that these sellers may not have the resources to price and negotiate their homes.
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