Post 2 of 3 in the Atlanta Real Estate Recovery series (energy, housing, credit).
Roger Tutterow Ph.D. and Dean of Economics at Mercer University gave his opinion to Sally’s Roundtable on the Recession of 08’ as it relates to Atlanta Real Estate.
Housing
In the metro Atlanta area, Existing home sales are down about 38% (units) and new sales are down 68%. In itself, these figures create an over inventory of homes which causes a longer time on market. However, this news is not all bad either.
If you are a watcher of the National Evening News, we have been told that housing prices have dropped at staggering numbers 20%, 30%, 32%. In metro Atlanta, those numbers simply AIN’T true. All Real Estate Markets are local! The city of Atlanta is very different from Marietta or Woodstock, GA and especially Coastal Florida, I-95 from Northern Virginia to Maine, and Napa, LA, and Vegas. The best estimate is that the average home price in Metro Atlanta has slipped about 6-8% in the last year which equals about two years of appreciation for the average homeowner.
Good News: Though it will take longer to sell your home, you should expect a selling price that can actually make a sale worthwhile.
What about foreclosures?
Many of us recognize that GA led the nation in foreclosures over the past year. There are a couple of reasons for that: Atlanta and the “burbs” has a lower average age for first time homebuyers than in comparison to most of the nation. So my opinion is that many of those college grads were some of the same one’s who had school loans, credit cards, new cars, and a huge appetite of I want it now.
I want it now truly became available to first time buyers by the creation of creative financing. Zero down payment, Discounted ARM’s, low credit score, and Excessive Seller contributions allowed a family with an income of less than $75,000 to buy a home at $350,000+. Those days are gone for now as borrowers are seeking FHA financing and Plain Vanilla 30 year fixed rate mortgages. Why? Those are the only kinds of loans available.
Secondly and more importantly, Georgia is a Non-Judicial Foreclosure State. In short, this means that the lender does not have to sue a delinquent borrower in court to get control of the home. In many states, like California, it can take 4-6 months for a lender to actually take a home back in foreclosure. In Georgia, you have 30 days and it will be sold on the courthouse steps to the highest bidder.
Most of the homes that builders have defaulted on have been taken back by the banks which present a real opportunity for those who can buy now. Most homes will be sold for much less than original price – builder profit. In addition, there is a great chance that the final price can include additional concessions from the local bank that now owns the property. (IE: a further reduction in price, a better loan, upgrades, etc.) Work with a Realtor who can think outside the box. When you are getting a deal, do not dwell on trying to beat the bank up. Search for opportunities to get things you want, albeit at a great price. Check out Atlanta Foreclosures to see some great houses that meet this requirement. Atlanta is still affordable!
The expectation is that homes that are occupied will see fewer and fewer foreclosures as time progresses. Interest rates are being manipulated by the Federal Reserve and the “Bailout” has been designed to allow homeowners an opportunity to refinance in order to avoid foreclosure. Just yesterday, a number of mortgage companies were offering rates in the high 4% and low 5% range, almost 1% point lower than earlier in the week. As a result, there should be no reason to expect a further increase in the number of monthly foreclosures.
What are your thoughts on foreclosure? Do you have a tale to tell? comment below
Read Part 1:Energy and Part 3:Credit
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