In the middle of 2009, homes listed for sale in Metro Atlanta topped 120,000 units. As of today, homes listed are hovering around 85,000 units available.
In short this is a GREAT statistic to embrace but it must be tempered with a dose of reality. There are two reasons for the decline of inventory over the past year.
1) Yes. Homes Actually SOLD. WooHoo!
With a combination of tax credits, low interest rates, FHA funding, and government support of the mortgage market, homes sold at an impressive rate for purchase prices under $300,000. Many homes sold at full price, by and for regular families, and many homes sold for tens of thousands of dollars more than the foreclosure down the street. One thing I have learned over the past 2 years is when it comes to buying a home, most people will buy the one they like over the (uglier, less impressive) better bargain.
2) Shadow Inventory
Shadow inventory are the homes that our neighbors decided not to sell becasue they did not have to sell. Also included are the homes that banks did not foreclose on because they were able to receive partial payments from homeowners while deferring the inevitable.
Shadow Inventories represent as much as 30% of the decrease in the number of units available for sale. Recall the decrease of 125,000 to 85,000 units. Not all of that decrease was sold outright. Many were simply pulled from the market as the sellers decided to wait for better times. Further, foreclosures that did sell have not been replaced by the amount of new foreclosures on the horizon that experts predict will be coming shortly.
So, there are still great buying opportunities upcoming and available now. Couple this with historically low interest rates, and yes it is a great time to buy if you are strongly considering a home purchase. As a seller, we will continue to have competition from the foreclosure market. Good news though! Home-buyers purchase what they like. Which in most cases means you can get a higher price than the foreclosure if your home is truly “Move-In Ready”.
Check out this article which parallels the issue of shadow inventory.
