Get Off The Fence Now For A Great Deal in Atlanta

	Dana Bauguss
	Managing Broker Snellville, Georgia 30078 Office : 770-972-3811 Email: [email protected] Website: www.danabauguss.prudentialgeorgia.com	Tweet

 

Get Off The Fence Now For A Great Deal in Atlanta

 

The Atlanta metropolitan area or Metro Atlanta is made up of so many distinct, yet cohesive counties, cities and neighborhoods.  Atlanta is the most populous metro area in Georgia and the ninth-largest metropolitan statistical area in the United States.  In addition to Atlanta, Georgia’s capital and largest city, the Atlanta metropolitan area spans up to 28 counties in north Georgia and has a total estimated population of approximately 5.5 million.  It is important to know that Atlanta can be divided into four distinct, geographic regions of dogwoods, azaleas and Southern hospitality when looking for a home.

 

No matter the area of Atlanta you want to live, now is the time to buy!  Metro Atlanta ranked 3rd nationally in 2010 in foreclosures according to RealtyTrac. Metro Atlanta had 95,145 filings in 2010, which is equal to 4.4 percent of its total housing units or one foreclosure for every 23 housing units.  Atlanta’s foreclosure rate was up 20.7 percent over 2009 and up 42 percent over 2008.

 

Remember, people do not buy houses in America or even in Metro Atlanta.  They buy a specific property on a street in a local community.  Real estate is local and every market is different.  Your local REALTOR® expert can help you understand the specific metrics in your local market.  However, these metrics are a good general indication on what is happening in the Atlanta market.  The Case-Shiller index of home values which reflects “the averages” for all of Metro Atlanta set a new 10 year low in December 2010.

 

The current index reflects values similar to home values in the winter of 1999.  What an unbelievable deal! The root cause is the aggressive prices of short sales and foreclosures in the Atlanta market and originally from the overheated home prices and bad loans.  A second wave of foreclosures has actually been caused by unemployment and economic displacement.  The peak of the Atlanta market was July, 2007 according to the Case-Shiller index.  Since July, 2007, the home values have slipped 26.78%.  The trends for new “notices of foreclosure” or pre-foreclosures continue to be significant for the Metro Atlanta market.  Equity Depot reports that pre-foreclosures have been in the 10,000 – 12,000 range each month for Metro Atlanta since mid-summer 2010.  This is up from the 7,000 – 8,000 range.  These increases are driven by unemployment, adjustable mortgages resetting to higher levels and general economic conditions.  However, we are finally seeing the bottom of home values for Metro Atlanta but do not expect a fast recovery.

 

There were 49,118 closings for all single family homes in Metro Atlanta in 2010.  This was 7.5% below 2009 and the last time we had fewer annual closings was 2000.  The average sales price for all single family homes in 2010 was $191,398.  This was up 0.4% over 2009, but still 25% below the 2007 all-time annual high of $254,157.  There were 40,778 active homes for sale at the end of 2010.  This is a 5.6% reduction from the end of the 2009 inventory level and a 36% reduction from the 2007 end of year all- time high.  We expect to see annual home values slowly increase over time with a few bumps along the way.  The big factor to watch will be the pace of short sales and foreclosures entering the market.  Remember, you will not know the bottom of the market until it is already passed but we believe that we are now seeing the bottom of the market.  So Buyers must not wait to buy if they want to get the good deal.

 

So where will home values go from here for Atlanta? The key factors that will impact our home values include the following.

1. Demand From Buyers – We expect demand to improve for 2011.  First time homebuyers will continue to be over 50% of the sales.  Remember, the definition of a first-time home buyer is “a buyer who has not owned a primary residence in the last three years.”

 

2. Mortgage Rates/ Credit Availability – Average mortgage rates in the past 50 years were 8%.  We expect to continue to see historically low mortgage rates but expect to see rates rising during 2011.  In a few years, rates should be 1-2% higher.  We also expect to see adjustable rate mortgages and other more exotic loan options disappear in 2011.

 

3. Supply/ Inventory Levels – We expect inventory to remain at slightly low to normal levels with a heavier mix of short sales and foreclosures for the next two years.

 

4. Competition from Short Sales/ Foreclosures – We expect to see significant numbers of short sales and foreclosures for the next two years.  Analysts predict that short sales and foreclosures will be over 60% of the transactions in 2011.  However, we do not expect a flood of foreclosures that drives the overall inventory too high.

 

So what does this mean to sellers or buyers in metro Atlanta?

 

For sellers, it means that you and your REALTOR® need to carefully watch the trends for future listing inventory in your local area.  This includes notices of foreclosure or pre-foreclosures that will become short sales or bank-owned properties.  This also includes the “shadow inventory” that banks are holding.   If the banks decide to dump the inventory onto the market too fast, it will have a negative impact on market values.  Yet another category to watch includes the “sideline inventory” of sellers that are expected to come into the market if values slightly improve.  Right now our inventory levels are down 28% from last year.  Pending sales are running at about the same pace as last year.  For now, we are consuming our inventory.  If that remains the case, property values will remain stable and may even pick up slightly.  It is all about the balance for buyers and the current listing inventory.  As the market changes, REALTORS® will see the trends first and can help you optimize your value proposition to stand out from your competition.

 

For buyers, there are still tremendous deals in our market.  There are fabulous resales, builder short sales, residential short sales and bank-owned properties.  Many of these are priced below their replacement costs.  It is wise to work with a REALTOR® who understands both the short sale and REO markets to evaluate the best opportunities.  Buyers need to buy now and take advantage of historically low interest rates, unbelievable prices, and a fantastic property selection.  Now that prices have dropped, buyers are able to afford properties that were previously unrealistic for them.

 

Yes, we will continue to see some ups and downs along the way, but Atlanta home values will rise again.  There are still a large number of foreclosures occurring in our housing market which is keeping home prices low, but combined with very low interest rates this will be a great spring buying season.  At this time there is only a 9.9 month supply of houses available.  However, if our economy starts improving and there is more demand for housing then expect interest rates to go up quickly.  Taking this into account, this is a good time to take advantage of a good spring buying season.   In a few years, short sales and foreclosures will return to normal levels and the new homes inventory will remain low.  That means we will see an undersupply of homes for sale and values will begin to rise.  In 5 or 10 years, many will look back and regret not buying their dream home when they had the chance!

 

Since Now is the Time to Buy, Buyers should know the five insider tips when buying a home in Metro Atlanta.

 

1. The Georgia Association of REALTORS® contract forms  has a Seller’s Disclosure form that Sellers can fill out and disclose anything that is wrong with the house.  Buyers need to know that Georgia is a “Buyer Beware” state and they must do their homework.  Although the Seller’s Disclosure should disclose concerns and is intended to help the Buyer make a good buying decision, one must look for the clues that the Seller may not want the Buyer to know.  Also, a Seller’s Disclosure is not mandatory so ask if the Seller filled one out on the property you wish to buy.

 

Bank-owned homes, investor purchased homes and new construction will not usually include a Seller’s Disclosure.  When you receive a disclosure, you will need to study this document closely, looking for the age of depreciable items and any item that is marked with a “Yes” or “Don’t Know” as a disclosure.  Any “Yes” needs to have an explanation that is detailed with what, when and how.  If the item is not detailed, ask for further explanation.  “Don’t know” should be taken seriously and inspected by your inspector.

 

The disclosure also tells you what is included in the sale.  This list includes many small items that Buyers think automatically come with the home.  Make sure that you ask for any items that are in the house that you want included in the sale by comparing the disclosure against your own list.

 

The document will also tell you about neighborhood assessments, warranties on items in the home and any bonds that are on the home.  Be sure to ask for all the paperwork and copies of warranties to be given to you at closing.

 

Use the disclosure to also have your inspector search for specific problems that the Seller has claimed on the disclosure.  Remember that “Don’t Know” items need to be thoroughly inspected.

 

Should you find anything that needs to be updated by the Seller, ask the listing agent to get the Seller to make the corrections and add Revised, the date and their initials. The Seller’s Disclosure is a very important document and it should be taken very seriously.

 

2. Most neighborhoods in Metro Atlanta, including homes, town homes, and condos, have rules that their homeowners must follow. These communities are regulated by a homeowners association (HOA), and corresponding covenants, conditions and restrictions (CC&Rs) that constitute the rules.  These rules that govern communities were written and filed with the county government by developers or the Home Owner’s Association when the neighborhood was built.  If the homeowner chooses not to follow the rules, called Bylaws, the neighborhood will assess fines and perhaps even file court procedures against the homeowner.  All of these rules are part of the Covenants, Conditions and Restrictions.  You will also find the budget and monthly expenditures in this important document.

 

A Buyer should always ask to see the CCR’s during the Due Diligence period.  Also, a Buyer must check to see if there is an initiation fee or if the HOA has placed any liens against the property.

 

3. The Georgia Association of REALTORS® Purchase and Sale Agreement is very clear that it is the Buyer’s responsibility to inspect the neighborhood in respect to:  “ (1) in every neighborhood  there are conditions which different buyers may find objectionable and (2) Buyer has had the full opportunity to become acquainted with all existing neighborhood conditions (and proposed changes thereto) which could affect the Property including without limitation land-fills, quarries, high-voltage power lines, cemeteries, airports, prisons, stadiums, odor and/or noise producing land uses, crime, schools serving the Property, political jurisdictional maps and land use and transportation maps and plans. It shall be Buyer’s sole duty to become familiar with neighborhood conditions of concern to Buyer.  If Buyer is concerned about the possibility of a registered sex offender residing in a neighborhood in which Buyer is interested, Buyer should review the Georgia Violent Sex Offender Registry available on the Georgia Bureau of Investigation Website at www.state.ga.us/gbi/disclaim.html.”

 

During the Due Diligence period Buyers should visit at least 3 neighbors and ask questions.  Some of the questions should ask about the HOA, assessments, construction of homes, crime, social activities, amenities, why neighbors are moving and would they buy in this neighborhood again.

 

4. Once you have decided where you want to be, let a REALTOR® set up a search for you on their MLS (multiple listing service) so you can be notified of  new homes as they come on the market. This MLS “gateway” is a free service and is very valuable for a home buying education. The system works based on your price range, location and criteria. When a house that meets your criteria comes on the market, you are sent an email.  This is very effective and every buyer should be on this system.

 

5. There is an unknown tool that most Atlanta home buyers and sellers don’t know about that helps with the real estate transaction.  The C.L.U.E. report provides invaluable information about the prospective property to both Buyers and Sellers in different ways.  A C.L.U.E. (Comprehensive Loss Underwriting Exchange) Report is a personal property report that provides a seven-year history of losses associated with an individual and his/her personal property from the insurance carrier of the property.  All claims, payouts and information regarding the property are on the report.  However, Sellers don’t need to worry because their personal information is omitted.
The original purpose of this report is all major insurance companies could report risk associated with the homeowner and the property itself.  This report is similar to an individual’s credit report or a car’s report such as Carfax.

 

It can be used a couple different ways for both Sellers and Buyers.  For Sellers, it can help jog the memory to aid in filling out the Seller’s Disclosure and it can help fill in the clues of what happened before the current Seller purchased the property if the current owner has not lived in the property for the last seven years.

For Buyers, it is critical to understand the risk of the property and what has happened to the property.  Risks could include flooding, lightning and any other routine risk as well as theft.

Buyers must ask the Seller to provide them with the C.L.U.E. report as only the owner can secure this document.  A Buyer should ask for this report during the negotiation of the purchase.

Once the Buyer has the document, it would be wise to closely compare the document to the Seller’s Disclosure.  If something is noted in the report that the Seller has not added to the disclosure, ask the Seller to revise the disclosure and to give you the details of what happened from their documents.  This would also be a great time to ask for copies of the documents to compare to the report and give a head start to the Buyer’s own house file.

Sellers can obtain this report for free from www.choicepoint.com by filling in just a few fields. You will get the report immediately online.

 

Since Now is the Time to Buy, why are you waiting?  Contact a REALTOR® TODAY and buy the American Dream.