Why Now is the Perfect Time
Buying a Home in Atlanta
by Kevin Forest Moreau
If you’re dreading your impending move to the Atlanta area because ofthe current economic situation, you’re hardly alone. The real estate market is still recovering from the recession, and many homeowners who would otherwise be selling are holding back, resulting in fewer homes on the market.
But that cloud presents a silver lining for potential buyers.
“There are still a lot of uncertainties in the current economy,” says Steve Palm, president of SmartNumbers, which provides statistics, analysis and forecasting for real estate brokers, developers and banking professionals. “But you can absolutely get good deals.”
The fact is, this is the ideal time to buy a home in Atlanta.
“Interest rates are at an all-time low and affordability is at an all-time high,” says Kathy Connelly, senior vice president of corporate services for Prudential Georgia Realty.
What’s more, “it’s actually less expensive to buy right now than it is to rent, in many cases,” Connelly says. According to the Washington Post’s Wonkblog, “the biggest divide between rents and prices, both over the last year and the last three years, has been in Atlanta. … prices have continued falling in the last three years, even as equivalent rents in Atlanta have been rising slightly.”
A Perfect Storm
A number of factors have combined to create a kind of perfect storm of affordability in the Atlanta home market. But as with all storms, it won’t last forever.
Interest rates reached record lows in October 2012, when the government-sponsored home loan corporation Freddie Mac reported a 3.36 percent average rate for a 30-year fixed mortgage. Of course, those low rates depend on such factors as your credit score, the size of your down payment, a stable job history and finding the right lender. But as recently as late December, a 30-year fixed mortgage was available for as low as 3.4 percent, and a 15-year fixed mortgage could be had at 2.7 percent.
“Our overall economic climate has been a challenge, so I think there are lots of programs that are trying to drive interest rates down to stimulate the economy,” Connelly explains. “That’s part of it. Also, they’ve increased some of the criteria for actually qualifying for a mortgage, so there are probably fewer people eligible for fully documented mortgages today.
“To lock in on a 30-year mortgage at less than 3.5 percent is pretty amazing,” she continues, “especially when you calculate what that looks like in terms of payment. So we have greater affordability today than we’ve had in many years.”
“Looking at consumer confidence numbers nationally and locally, they’re improving,” says David Ellis, executive vice-president of the Greater Atlanta Homebuilders Association. “That’s when people buy homes. Add in the prices and good interest rates and it all comes together to bring people back into the housing market.”
But those conditions are fluid, he warns, and interested homebuyers should act quickly.
“If homebuyers don’t move now, they’ll miss out on historically low rates,” he says. “In this environment, we don’t know how long they’ll stay that way. As the economy improves, interest rates will rise. There’s no telling when things will happen.”
In addition, “We’ve started to see a drop in the number of available properties on the market,” Connelly says. “And following supply and demand trends and patterns, that’s when demand goes up, when availability drops.”
And, Ellis adds, home prices are beginning to rise. “Prices are starting to go back up again, and home values are going back up,” he says. “This really is the right time to buy.”
Good Value All Around
With a drop in new construction over the last few years, “resale properties are probably going to be better than purchasing new-construction homes” in the short term, says Connelly.
But Ellis adds that new home sales have been increasing at a steady rate, and “we should see that increase in 2013. There’s reason for optimism there if you’re selling homes.”
So where should you concentrate your search if you’re looking to move to the area? And where are the deals?
Ellis points to proven areas such as north Fulton, Cobb County and the southern part of Forsyth County. And as always, prices get more attractive if you’re willing to look a little further out. “You can still pick up a good deal in East Paulding, southern Henry or southern Hall County,” Palm says.
But the good news is that for the most part, good values aren’t restricted to any particular area. “I think we’re seeing a pretty broad demand across the city,” Connelly says.
“There’s good value all around,” Ellis agrees, adding that “everything depends on where you work and where you want to live.”
“For someone looking to move within a specific timeline, then the urgency of that and the number of available properties are going to dictate [where you live],” Connelly says.
“Newcomers to the area also usually have school considerations and things like that to take into account,” she adds.
Another thing to take into account, the experts agree, is that a good price doesn’t necessarily equal a good investment—or the right home for your family. “With a short sale or a foreclosure, for instance, on the surface, it may look like a great deal,” Connelly says. “But it’s safe to assume that if people aren’t making mortgage payments, they may not be maintaining the property, either. If a buyer is getting a home for the right price, they may decide it’s worth it to make repairs. But all of that needs to be taken into consideration.”
“Make sure to understand your market. Do your research and be patient,” Palm advises, noting that if you don’t see a deal right away, more are likely to appear soon. Many people wait until the end of winter to put their homes up for sale. “We’ll get a lot of homes coming on the market in the spring,” he says. And as the market improves, more and more sellers who haven’t been willing to risk taking a loss will become encouraged and enter the market, Connelly says.
Above all, she adds, a home is only really a good investment if it fits your desired quality of life.
“We always tell people, don’t just buy because it’s a great value,” she says. “You have to make sure it fits your lifestyle needs or it’s not going to be a great value.”