State of Georgia Ranked #24 for House Appreciation in 2007

According to a report published by the Office of Federal Housing Enterprise Oversight, Georgia ranked number 24 for percent change in house prices from the year before.  The state increased at 2.55% in 2007 than in 2006.  The top three states (in order) were; Utah (9.27), Wyoming (8.27), and North Dakota (7.87).  The bottom three were; Florida (-4.69), Nevada (-5.86), and California (-6.65).

Ranked metropolitan statistical areas and divisions which is calculated using estimates of all transactions house price index which includes purchase and refinance mortgages found that the communities of Atlanta-Sandy Springs-Marietta ranked 151 nationally.

Below is a chart depicting the fourth quarter price change by state for the entire United States.

The graph above shows (click to enlarge) that the state of Georgia had an increase of 2.6% in the forth quarter.  Though these are tough times felt across our nation the market in Georgia isn’t as bad as one may think.  Georgia can contribute its continued appreciation to the many new jobs and population growth that the state has experienced.

Search Georgia homes for sale.

 

The Beginning of the End of Super-Low Mortgage Rates?

There are several factors that indicate that home buying will be increasing which in turn will help fuel a recovery of the housing market.

The National Apartment Association recently conducted an online poll in which results showed 17 percent of renters plan to purchase their first home within the next year; 41 percent of the 2,041 respondents planned to be home owners within two years.  Only 31 percent planned to still be paying rent five years from now.

The past six months have seen a drastic drop in mortgage rates, however fixed-rate mortgage rates rose to 6.32 percent, the highest it has been since October.  Following the months of aggressively dropping interest rates, many feel that the Fed will be forced to raise rates back up.  If interest rates rise, so to will mortgage rates.

According to a press release by Freddie Mac, Frank Nothaft, Freddie Mac vice presient and chief economist said that, “Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman Bernanke and Vice Chair Kohn, expressed concern over a threat of inflation.” We may very well be seeing the beginning of the end of the super-low mortgage and potential buyers may realize that with rising rates, now may be the time to jump in. Nothaft added, “Moreover, pending home sales for April unexpectedly rose by 6.3% and mortgage applications for home purchases … were also up last week.”

Will House Prices Continue to Drop? Is it Safer to Rent and Buy Next Spring?

If you are like most of my clients, then you are probably asking these same questions. I thought it might make sense to share the dialogue between a client of mine that might help answer these questions. Dialogue below.

Client: Do you think the house prices will continue to drop? Should we consider renting, and buy next spring?

Brenda: I have been in real estate in Atlanta for 5 years and during the past 5 years have seen our average appreciation to be between 4% - 6% depending on the area. Right after the bank issues that occurred in the banking industry (July/August), we began to see a leveling off. During the 4th quarter of 2007 we began to see a decline, although still not significant compared to other US markets. In the first quarter of 2008 we saw prices, on average to be 6.6% below the same quarter of 2007. We are seeing a climb back upward, but it is hard to know if that is just because of the time of year or if we will continue to see the market recover. Some are already beginning to say the recovery has started, others say it has not. I will not have Q2 numbers until mid July to know the trends for sure, but even if I do, it can only give me a snapshot of the rear view mirror vs. a prediction of the future.

I can tell you that our team is swamped! It has really exploded for us in the last two to three weeks. This time of year is always busy, but we are really seeing alot of activity. Our Keller Williams office, of about 250 agents, has also just had two of its strongest months if that is any indication. Regarding waiting until next spring, I would have a hard time advising you to do that based on what I am seeing. I think now is the absolute best it has been in our market to buy in some time. It is always possible it will go lower, but I also think it may just level off and then recover as well. But if I could predict it for certain, I would be a very rich person!

I have been working with clients all week that are also relocating and want to live in Forsyth County. They thought they would have a lot of flexiblity to negotiate price, especially on new construction. However, just today they said to me that it is harder than they thought it would be to get sellers to negotiate their prices down. But, from my perspective, it is still the most flexibility I have seen over the past 5 years to negotiate prices. Depending on where you choose to live may also impact your negotiation. There seems to be more flexibility on price out in Forsyth County then there is in Dunwoody/Sandy Springs.

Below is a chart that might give you a little better visual on what we have seen in our market since 2000. As you can see we are currently on par with the same trend line we saw in 2004. Prices are currently holding at levels between 2004 and 2005:

Let me know if you have any other questions.

Client: I am working hard to be educated. Another family from here is relocating to the area and they feel that the housing prices will drop more and they plan on renting. I was trying to locate more factual information so I can make an educated decision. I appreciate all of your help.

Brenda: You are smart to try and gather factual information. I think it is very hard to do right now as the media has really run a bit wild with all of this. You can literally find two articles in the paper some days that say two totally different things about the market. The media also tends to paint the housing market with a very broad brush. The national statistics often do not apply at the local level.

I am pasting an article below that I think was one of the most factual and balanced articles that I had seen in a long time. It was in CNN Money and outlined the Top Ten Cities that would likely recover the quickest from the housing market challenges and why. Atlanta was ranked as #4.

I am not sure what your relocating friends are basing their information on, I can only tell you what I see happening and I work in this every single day and have for the past 5 years. I cannot say with absolute certaintly that we have hit the bottom, but I can say with certaintly that this is a great time to buy. Waiting may gain you a few more bucks, but I really do not see it being anything dramatic in the Atlanta market. And, in fact, I think waiting is more of a risk. If you wait for prices to go lower, but interest rates or inflation rise, then you waited for nothing. Instead, you have just spent more money on rent and storage costs…something you cannot recuperate.

Those who seem to know what they are talking about when it comes to our specific local market will consistently say that Atlanta did not see the extremely high appreciation rates that other cities experienced and as a result, Atlanta will also not see the lows. As a result, if we drop any further in our average prices, it would likely still be in the lower single digits. Even if we were to drop another 3%, on a $500K home, that is $15K. My sense is you could likely negotiate that 3%, and probably more, off the current price of the home now and not incur the additional rental and storage costs…not to mention the hassles of renting. It is pretty difficult to time the stock market and the housing market is the same.

The other thing that you see in many of the articles is they compare how much the prices have dropped from the same month/quarter of 2007 to 2008. I think 2007 prices are long gone and it doesn’t make sense to continue to compare to them. What does make sense is to look at if the 2008 numbers are following the natural trend lines that we see in Real Estate month to month as you can see visually in the graph below.

Inventories are also at their highest right now so you have the best selection to choose from. As we get past the summer months, selections will be a bit more limited. I have an entire book of about 30 charts that I get updated every quarter regarding how the market is doing. I’d be happy to review them with you guys when you are in Atlanta next….the file is too big and complicated to just send via email. If you find any other information that you would like me to take a look at, I am happy to do so.

Client: Thank you so much for the article. My sense is that with the continued growth that Atlanta experiences the housing market cannot bottom out like other areas. We tend to do the research and want to buy in an area that tends to have good resale. I try to take the media with a grain of salt.

30-Day Housing Trend for Horseshoe Bend Neighborhood in Roswell

Currently there are 18 active listings in the Horseshoe Bend neighborhood ranging from $307,900 to $1,595,000. Of the 18 active listing one listing is currently under contract as “Contingency-Other”. The listing at 400 Wayt Road came back on the market and sold after reducing their asking price by nearly $25,000. A total of 5 houses are currently under contract, 4 houses sold, and 4 listings expired.

The Benefits of a Recession or Down Market

In times of recession most people are fearful and uneasy. They are worried about their jobs, mortgage, bills, etc. We are currently experiencing a slowed economy which has created an economic crisis. The Chinese character for crisis is composed by combining two different characters; one represents fear and the other represents opportunity. While the current state of our economy creates fear it is also important to look at the opportunity that it presents.

Refinance Your Home
During a slowing economy it is standard practice for the Federal Reserve to make interest rates extremely low in the attempt to ward off or get out of a recession. This is a great time to refinance your home and lock in at a lower rate.

Declining Real Estate Prices
The law of supply and demand is at work. A surplus of homes and land for sale will result in falling prices which creates a buyer’s market. Because fewer people are looking to buy versus individuals trying to sell, fewer people benefit so prices fall rather than increase. If you are a first time home buyer, someone who is “buying up” or an investor this is a great time to buy.

Time to Streamline Finances
Prior to most recessions is “the boom”, a period in which the economy flourishes, when this happens individuals and businesses often lard up the muscle with fat. Money is spent foolishly and budgets do not dictate how money is spent. A recession forces both individuals and businesses to diet…to trim down and get back into shape. They look at ways in which they can better spend their money and how to maximize the value of every dollar spent. A shift occurs and money isn’t spent as freely as it is during times of rapid growth.

The Rebate Check
Starting in June most Americans will receive a check or direct deposit from the IRS, possibly for $300, maybe $600, or perhaps $1,200 or somewhere in between. The check is an advancement on 2009 returns so the money isn’t exactly free…consider it more like an advancement from the government or a “no-interest” loan.

Undervalued Stocks and Bonds
Simply put; buy low, sell high. In a bull market short-term investors ride the rising tide…in a bear market it is the long-term investor that prevails. This is a great time to buy stocks because many are undervalued due to the current economic state of the nation. The market will eventually bounce back and those that have invested and bought low will reap the financial rewards when they sell high.

Lower Credit-Card Rates
Individuals with good credit rating are now in a position to ask for favors from their lenders. It is common that during a recession credit-card companies see a greater amount of delinquent payments, and as such it becomes important they keep their good, paying customers. As such, if you have good credit you can request to have your interest rates lowered and annual fees waived.

Vacation
Vacation get-a-ways and resorts suffer in times of recession and as such they tend to offer great deals and packages…take advantage of this great opportunity!

Become an Economist
That’s right…put your minor in Economics to use and woo your friends with your understanding of the economy!