Blog posts by mpennington:
Atlanta Real Estate Recovery
Posted: December 12th, 2008
Category: Atlanta Real Estate, Market Reports, real estate news
Post 3 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.
Credit Markets
As far back as July 2007, Wall Street began to question the true value of Mortgage Backed Securities. Interesting how it really became a household word in recent months. Either way, banks are continuing to search for ways to loan money to the masses. The original bailout for Fannie Mae and Freddie Mac was probably the smartest move that Washington could have made. In essence, it allows lenders the ability to continue to bundle loans together and sell them to a company that is backed by the full faith and credit of the US government.
Banks, mortgage brokers, etc are in the business to originate loans. Most do not have a true mechanism to keep them in house and actually hold for 30 years. Therefore, without the ability to bundle and sell, loans would not be written.
Good News!
We are at or past the bottom of the Real Estate curve in GA. Home prices have stabilized and inventories are flattening. With the ability to actually borrow money at still all time low rates, the expectation is that the best deals will sell first which would include Pristine foreclosures, New deeply discounted homes from builders, and resales where the owner can take a loss to get a better deal on a more expensive home.
As an aside, I was working with a retired buyer couple from Florida and during the conversation we were comparing markets between Orlando and Woodstock. Since they are so similar (right!) they had the expectation that they would be able to move here, buy a home for about 60 cents on the dollar, and retire, again. The reality was that it was not going to happen unless they wanted a real fixer upper. In Woodstock, a $300,000 home is still affordable to many individuals and this price point recognizes the high end of activity in the area. In this case, I suggested we look at foreclosed builder homes or homes between $500k and $800k if they truly wanted to get a 30% discount. In the end, some people will let expectations driven by their local market or worse, driven by the national news, get in the way of truly a great buy. So what do we have to look forward to?
In 6 months or so, those with little to no equity will see a more stabilized and active market. Today, there is no place to go but up and do not let the Evening News Talking Heads tell you differently. Our problems are nothing like so many others. Real Estate is Local and it is not as bad as others would think.
Read Part 1:Energy and Part 2:Housing
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Atlanta Real Estate Recovery
Posted: December 10th, 2008
Category: Atlanta Real Estate, Foreclosures/Short Sales, Market Reports, real estate news
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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Atlanta Real Estate Recovery
Posted: December 8th, 2008
Category: Atlanta Real Estate, Market Reports
Recession is Official: Let’s Chart the Recovery
Post 1 of 3 in the Atlanta Real Estate Recovery series (energy, housing, credit).
Yesterday, 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. It was great to hear that it seems we are now at or past the bottom of the curve and the expectation is that in late 2nd Qtr and Early 3rd Qtr 2009, we will see a noticeable improvement in some key statistics. As this information will address a number of issues, I will publish this as a series throughout the week. Be sure to check back often to read the next update on the Atlanta Real Estate Recovery. Forbes magazine also projects job growth for Atlanta as a catalyst for recovery.
Here are some notes and facts as presented by Tutterow, along with my personal commentary:
Experts Announced: US Economy is in Recession
Not that we all would not believe it! Our friends on the news like to say a recession is when there are two consecutive quarter’s of negative growth. That is incorrect. A recession involves looking at the following sectors and establishing negative trends in all of them: Manufacturing and Trade Sales, Personal Income Levels, Non-Farm Payrolls, and Industrial Output. So while we know that a recession is upon us, it is usually months after the fact that the data will prove it.
What we do know is that this is not going to be as bad as the Great Depression but will resemble the deep recessions of the 80’s.
3 Contributing Factors of the Current Economy
1) Energy Costs
Since the Worldwide recession of 2001-2002, all international economies were growing at a staggering rate. The BRIC nations of Brazil, Russia, India, and China held some of the leading growth rates and thus created a higher demand for all commodities: Oil, Metals, etc. So as oil prices grew at staggering rates, speculation began to take place in the form of long positions on oil futures that pushed the price of oil from $100 to up to $150/barrel.
Now that the world is in yet another recession, oil prices have dropped to $45/barrel in a short period of time as demand has decreased and speculators eliminate long futures. The target price for oil may be $65/barrel.
This affects the economy in two ways: Driving costs and Manufacturing costs. It is estimated that $4.00/gallon gas in Georgia costs the average driver about $2,000.00 additional per year. If you have two wage earners in the family, this could easily double. So to break it down to real impact, out of each paycheck, the average employee will spend an additional $75 out of pocket per paycheck. This money was no longer spent on clothing, movies, eating out, etc. This had a tremendous effect on the state of the economy.
More importantly are the costs that we as consumers do not recognize. Second to labor costs, energy costs are extremely expensive in manufacturing. Converting raw materials and delivering goods has squeezed the bottom lines of most companies and could have resulted in higher prices paid at the register, had the price of energy remained at all time highs.
In the end, the single largest positive news is that we are looking better than worse. Oil and other commodity prices have dropped with the strengthening of the US Dollar and the lack of demand on the worldwide stage. This will make large differences in manufacturing costs, disposable income, and Industrial Output. In addition, the Consumer Confidence level will rise as predictability becomes more evident. Quite simply, who would by a home when the price of gasoline is $4.00/gallon and rising? Not many, I am sure as evidenced by recent sales data. Now that we are seeing $1.60/gallon is it reasonable to assume that some of the uncertainty is going away?
Read Part 2:Housing and Part 3:Credit
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4 Reasons To Buy an Atlanta Area Home before October 1st, 2008!
Posted: August 16th, 2008
Category: Atlanta Real Estate, Marietta Real Estate, Roswell Real Estate, Woodstock Real Estate, real estate news, tips, tools & tech
4 Reasons to Buy a Home before October 1st, 2008!
$7500 First Time Home Buyer Tax Credit
Atlanta First Time home buyers can receive a $7500 credit on their 2008 returns for purchasing a home between April 2008 and July 2009. So, in addition to your itemized deductions you will receive for being a homeowner, there is another $7500 to reduce your income just by purchasing a home.
Sunset Date for Nehemiah Down payment Assistance is September 30, 2008.
The Nehemiah Downpayment Assistance program is one of the few ways to have a seller pay for part of your down payment. Sellers have always had the ability to pay closing costs. However, the ability to actually make part of the down payment has been a questionable practice where many of these amounts were paid after closing or POC (Paid Outside of closing). At any rate, this program ends on Sept 30, 2008 so if you need help with a down payment you should get moving.
Call me if you have any questions!
FHA Free-Money
The FHA has set up a 5 to 1 matching down payment grant up to a total amount of $10,000. This program is based on family income level and is reflective of the county that you live. However, if you want to purchase a home, this may be the best way to get FREE MONEY. Government Grants!
Change in FHA Down payment Requirement
Though most of us are not familiar with FHA loans, today (post mortgage meltdown) these loans tend to be the most available mortgages. The US government has raised the lending limits of all government sponsored mortgages which makes the FHA very useful for home purchases of $200,000 to $400,000. However, most FHA’s in the past required a 3% down payment. Though you now know that sellers can pay this for you or even the government, the rate will now change from 3% to 3.5% for all loans after October 1, 2008.
If you have questions about these programs as they relate to Atlanta Real Estate you can call or e-mail me. Even though I do specialize in commercial, I do locate and represent residential properties.
Just ask!
My mortgage broker, and friend, is one of the most knowledgeable originators in the country and so any questions you may have will answered ASAP! According to the FHA, a “First Time Homebuyer” is anyone who has never owned a home, or has not owned a home in 3 years.
Discussion: Comments
A Deeper Understanding of the “Short Sale”
Posted: August 8th, 2008
Category: tips, tools & tech
Here is an interesting article that I found on Rain City Guide’s blog on the short sale.
Why Do Banks Take So Long To Approve a Short Sale?
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