Atlanta Real Estate Blog

The following article is a summary from Metrostudy, a respect source on Atlanta’s New Home Market.

Atlanta Business Chronicle – by Lisa R. Schoolcraft Staff Writer

Metro Atlanta’s housing stock is shrinking, with new home starts down to the lowest level in decades.
“The homebuilding industry has severely limited the amount of new inventory introduced to the market, which in turn, has limited the number of unsold new homes,” said Eugene James, director of Metrostudy’s Atlanta division, which recently released first quarter data.
New home inventory has declined substantially, with more homes closed than started every quarter for the last 30 months, James said.
In March 2009, quarterly starts fell 74.8 percent year-over-year.
Housing inventory is currently at a nine-year low, with only 20,657 units under construction or finished and vacant in the 22-county metro Atlanta region.
“At its peak in mid-2006, new-housing inventory in Atlanta exceeded 41,000 units,” James said. “Currently, there is no oversupply of homes, but rather the demand for housing continues to be suppressed for multiple reasons, including lack of consumer confidence, fear of job loss and fear of falling home prices.”
New home closings declined 41.4 percent year-over-year in March.
Some metro Atlanta homebuilders have begun offering peace of mind with price guarantees, James said.
If home prices decline by certain amounts, those homebuilders will refund the difference. Others are offering to pay mortgages or buy back homes if buyers lose their jobs.
While the pullback in housing starts has helped shrink inventory, it’s done nothing to reduce Atlanta’s swollen inventory of developed lots, James said.
Finished lot inventories have leveled off and now stand at 150,004.
“It’s going to take a very long time to go through such a large number of lots,” he said, “but the superior lot locations are already being acquired and some homebuilding is beginning to occur.”
Nationally, unsold new home inventories are beginning to stabilize in many markets, Metrostudy reported.
Builders continue to report the lack of available credit from banks to support new construction, and consumers are squeezed by their own credit issues, the residential real estate research firm said.
Those two factors indicate the industry is nearing stability, but a recovery in sales and construction is unlikely to occur before mid-2010.

The following is a well written article about this important first time home buyer incentive aimed at stimulating the economy. As I have said many times before – if you know your job is secure and you have good credit, there has never been a better time to buy an Atlanta home or Atlanta investment property. Robert Whitfield

By Amy Hoak, MarketWatch 2/25/09

CHICAGO (MarketWatch) — First-time home buyers who purchase a home this year can now take advantage of the stimulus bill’s $8,000 tax credit, the U.S. Department of the Treasury said in a news release on Wednesday.

Unlike the previous $7,500 credit available to this group of buyers, the credit outlined in the American Recovery and Reinvestment Act of 2009 does not have to be paid back — if the home remains the buyer’s “main home” for at least 36 months after the purchase date, according to the Internal Revenue Service’s Web site. First-time buyers, for the purpose of this credit, are those who have not owned a home in three years.

Buyers must purchase a home before Dec. 1 to be eligible, and the credit can be claimed on a home buyer’s 2008 or 2009 tax return. Tax returns for 2008 are due by April 15, but most taxpayers can get automatic extensions to Oct. 15 without citing a reason. (You must pay any estimated tax liability at the time the extension is filed.) Filing an amended 2008 return after you buy would also be an option for getting the credit sooner.

“For first-time home buyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit,” said IRS Commissioner Doug Shulman, in a news release. “This important change gives qualifying home buyers cash they do not have to pay back.”

Buyers can claim 10% of the purchase price, up to $8,000, or $4,000 for married individuals filing separately, according to the IRS’ Web site. The credit starts to phase out for those whose adjusted gross income exceeds $75,000, or $150,000 for joint filers.

The IRS has posted a revised version of the form required to claim the credit, Form 5405, on IRS.gov. Visit IRS.gov’s first-time home buyer page.

Now is the time to call your county tax commissioner and find out the deadlines for protesting your property tax assessment in your particular county. Contact us for market stats in your neighborhood during 2008, especially the foreclosures and distressed sales. The Atlanta housing market has been ranked one of the ten most stable markets in the US during this sub prime economic mess, however, our have values have declined year over year since 2006, albiet not as severly as most other areas of the country – still it is wise to make sure you are not paying more than your property is worth.

We have seen several cases where Metro Atlanta county property tax assessments were clearly off base with market realities and the year to year decline in property prices for 2008 vs 2007. No matter what the proposed valuation from the county is, it’s worth a postage stamp to file a protest based on the recent decline of property values in your neighborhood. Most counties are over-valuing now due to the failure of owners to protest, and yet it’s so easy to file a protest. The county will even assist you in filling out the papers. And it could save you a chunk of money for years to come.

By Robert Whitfield
I wanted to take a moment to address the current economic situation and reassure you that your Atlanta area home is still one of the best investments you could have made or own during these troubled times.

I watch Squawk Box on CNBC every morning and always note the latest DJIA current and year to year stats. Just before this writing – stocks were down 38+ % from the same time last year! I am sure many peoples investment/retirement portfolio has lost even more. Except for certain California and Florida “bubble” markets, nowhere have home prices dropped nearly as badly as stocks. For example, per the latest Case-Shiller index, Atlanta prices are off only 10.8 percent over the same time last year. Since early ‘07 Forbes and Business Week have ranked Atlanta in the top 15 most stable US housing markets.

The market will come back as it always does and you can bet future home prices will only rise. Why do I and so many others think buying real estate is the best investment of all time? For many reasons – the worlds population keeps growing and people will always need somewhere to live. I have personally made and helped others make more profit in one transaction in a short amount of time than they ever could have in the stock market with the same amount of money and time span. In addition, as my grandfather used to say and as we’ve all heard “they aren’t making any more land” – thats true and one of the fundamental powers of real estate, but in the context of this article I am referring to “developed or improved land”. I dont recommend investing/speculating in raw land ever – unless you’re a developer, a population trend expert, visionary, or gambler with deep pockets! Why, because the hold time can be decades! Sure, I know someone who made a fortune selling land in and around the Perimeter Mall area 25 – 30 years ago but that land was in the family for half a century and the area was essentially a cow pasture then! I dont personally know too many other people who have done very well in land speculation. I do know plenty of people who have made money with single family homes and for the more sophisticated investor, multifamily apartment acquisitions.

Investors are absorbing great deals right now which is advantageous to themselves and the market as a whole. (Let me rant for a moment.) I get disgusted when certain media refers to investors as “vulture investors” – as if buying an already foreclosed home is doing a disservice to the family who used to own it! If investors don’t “take advantage”, many markets will remain so flooded with deteriorating bank REO assets (foreclosures) that it will take much longer for thier housing markets to stabilize. Someone should ask these reporters, “Would you rather see a foreclosed home on your own street become a vacant (often vandalized) REO home – a neighborhood eyesore that only drives down prices the longer it is vacant, or be purchased ASAP by someone who will fix it up, rent it to a deserving family and sell it for the highest possible price when the time is right – thereby maintaining or even raising neighborhood values?” The answer is obvoius when you frame it in reality – investors play an important role in bringing this housing market back to some kind of equalibrium – and in my opinion, we should be thankful they have the money, intestinal fortitude, and vision to do what they do.

Couple all of the historical and forward looking benefits of owning real estate with some of the current advertised and unadvertised deals available, the cheap mortgage money, and our up to $10,000 Cash Reward and a reasonably well planned real estate transaction can be a great opportunity.

The Economic Downturn is a Huge Plus for investors, first time buyers, and even move-up buyers needing a larger home. Move up buyers? Yes, as an Atlanta area seller you will not get as much for your home as in ‘06/’07, but you can more than make up the difference when you buy, and if your credit is good, mortgage rates are really outstanding. Investors, you need a buy and hold strategy; flipping is tough unless you’re a pro at certian market segments or wholesale deals to other investors. Buyers, get with your lender before you even think about looking – rates are great but qualifying is harder – it’s a good idea to make sure you can get a loan! I have seen to my surprise a few deals not be approved or not be viable because of extra underwriter requirements this year (not subprime either) that would have been a slam dunk in 06 and even the first half of 07. One involved credit scores in the high 700’s, the other was a Physician making over $800K a year. Exceptional deals are there IF you have cash or can get a mortgage. This market will be looked back upon by buyers and investors who are making shrewd acquisitions now and in the comming months, as one of the golden opportunities of a lifetime!

WASHINGTON – Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been – with banks unwilling to lend even to other banks.

But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720?
Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there’s a lot more light there than in most other financial sectors. Consider these facts:

• There is no shortage of money available for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the American mortgage market has been federalized – at least for the time being. More than 90 percent of new loans now are being made through FHA, the Federal Housing Administration insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury.

• Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA’s credit standards are generous and forgiving – the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit score requirements over the past year, but buyers and refinancers with scores in the upper 600s can still qualify for loans carrying reasonable rates and fees.

• Despite the global financial system’s quakes, mortgage rates not only remain low by historical standards, but for the week ended October 30, 2008 while 30 year fixed rates ticked up to 6.46% from 6.04% a week earlier – that is still among the lowest rates for a 30 year mortgage in the last 25 years!

• Maximum “jumbo” loan amounts through FHA, Fannie and Freddie in high-cost local markets on the West and East coasts continue to be $729,750 through December. In January, the high-cost maximum is projected to dip to approximately $625,000.

• Home prices – pushed by foreclosures and short sales – have rolled back to 2003 and 2004 levels or lower in many of the former boom markets. As a result, growing numbers of buyers are coming off the sidelines, making offers and writing contracts. The pending home sales index jumped by 7.4 percent based on purchase contracts signed in August, according to the National Association of Realtors. The heaviest increases – pointing to higher closed sales in the coming two to three months – were in California, Florida, Nevada and the Washington, D.C., metropolitan area.

Housing and mortgage leaders say consumer worries about the stock market have obscured positive developments under way in real estate, where pricing pain and downsizing have been facts of the life for the past two and a half years.

David G. Kittle, president and CEO of Principle Wholesale Lending Inc. and incoming chairman of the Mortgage Bankers Association, says “the mortgage market has never shut down” despite the global financial crisis. Money is “clearly available as long as you can qualify for it” with at least a modest down payment and decent credit history.

On the front lines, mortgage company owner Jeff Lipes, president of Family Choice Mortgage near Hartford, Conn., says “I don’t think consumers really know how free-flowing capital is right now in the residential mortgage market. There are no shortages, no breakdowns. People ought to be aware of that.”

Bottom line: Scary as the news has been about stocks and banks, this is not the case for mortgages. Besides shopping at large national lenders, check in with local banks and credit unions who may be originating loans for their own portfolios – not for Fannie, Freddie or FHA. Many of them are healthy, have plenty of cash to lend, and may be surprisingly competitive on terms and rates compared with the big boys.

Contact Robert Whitfield at Advantage Realtors if you need a good source for home equity lines – we have a local North Atlanta lender with more relaxed underwriting guidelines and better rates than the big national banks.

From one of the greatest Presidents of all time, and the writer of perhaps the best speech ever delivered in human history – and to this writer, the single Greatest American who ever lived…Abrahm Lincolin.

I received the following email from my favorite closing attorney, Brian Dubuc, and had to post this.

During this political season let’s be reminded of these wise words:

You cannot help the poor by destroying the rich.

You cannot strengthen the weak by weakening the strong.

You cannot bring about prosperity by discouraging thrift.

You cannot lift the wage earner up by pulling the wage payer down.

You cannot further the brotherhood of man by inciting class hatred.

You cannot build character and courage by taking away people’s initiative and independence.

You cannot help people permanently by doing for them, what they could and should do for themselves.

Abraham Lincoln

Beleive it or not I am about to share some with you – both nationally and locally! I know everyone is tired of the bad financial news so here goes – a little upbeat housing market news…

Existing Home Sales Rise on Improved AffordabilityWASHINGTON, October 24, 2008

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007.
Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” he said. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord, said low home prices and low interest rates have been attracting buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” he said. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

Total housing inventory at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.
“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices,” Yun explained. “The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

Now for Metro Atlanta…

According to Smart Numbers, after 18 consecutive monthly year-to-year percentage closing declines metro Atlanta will post an increase in the number of single family closings once the September closing lags are reported. Additionally, the number of closed transactions for September may be close or even exceed August 08’s 4180 closings. This is especially good news since historically September experiences a 10 to 25% decline in closed transactions compared to August.

Finally, according to the Standard & Poor’s/Case-Shiller Home Price Indexes as reported by Reuters on September 30 2008, markets in Atlanta, Boston, Dallas, Denver and Minneapolis showed the most evidence that a bottom has formed, with home price increases for the past three months or more.

While the two presidential candidates were taking time away from their campaigns this week to attend congressional hearings on the $700 billion dollar “bail out”, the internet and chat rooms in Atlanta have been on fire. Apparently a local Atlanta real estate Broker has been endorsed by people all over the country as a possible candidate! CNBC’s Wolf Blitzer says this is nothing short of a Phenomenon! Click the following video for this emerging story.

 
The Robert Whitfield Home Selling Team hope you enjoyed the video and the consensus is, there is very little chance of Robert being called away to Washington – at least for the near and far foreseeable future! Robert in a recent press release stated emphatically, My skill sets and intersts will keep me here in Atlanta – I am still available to assist the public with unmatched service for all their Atlanta Real Estate needs!

The Current Market Is Allowing More Atlantan’s To Treat Themselves To The Solitude And Splendor Of A Second Home Or Vacation Home – With More Options And Better Deals Than Anytime In Recent Memory

Today there are over 7 million vacation homes in the United States. With interest rates extremely low and hundreds of very desirable vacation home opportunities within a 2-5 hour drive from Atlanta, your dream of owning a vacation home may be easier than you think.

Whether you dream of a mountain lodge or a beach house on the Gulf of Mexico or off the coast of South Carolina, there are many options to choose from, and Robert Whitfield can help you.

According to  Walter Molony a spokesman for the National Association of Realtors (NAR), sales of second homes hit a new record in 2006, with over one million buyer purchasing vacation homes. In 2007, second homes and vacation homes accounted for more than 12 percent of all home sales. A NAR study found that the typical vacation home buyer in todays market is 46 years old, with a median annual income of $99,000.

“There are some great deals to be made in real estate right now,” said Molony, citing the large number of homes on the market, low interest rates and a 2.5 percent decline in home prices in 2007. “Buyers, especially financially fit baby boomers, are looking to diversify their portfolios. Historically speaking, real estate typically appreciates in value considerably over the years making it an excellent long term investment,” he said.

NAR reports that about 60 percent of vacation homes buyers choose locations within easy driving distance of where they live, with the average distance being about 220 miles, just a 4 to 5 hour drive. Because of Atlanta’s close proximity to the North GA and Blue Ridge mountains and even sections of the Gulf of Mexico, there are wonderful options that are anywhere from one to three hours away.

There has been a surge of interest in vacation home communities anchored among scenic natural settings, near a gorgeous mountain range, or the sandy beaches of a clear lake or sea coast.

Things To Consider Before Buying

Location, Location!

Select homes that are near outdoor recreation attractions and nature, especially those with or near breathtaking views – and homes where the return has been historically high. Properties along the Gulf Coast are popular with Atlantan’s and continue to have a great resale and return on investment potential.

Talk To Your Lender!

Lenders may require a larger down payment and charge a higher rate for second homes. To keep your costs down, you may want to consider financing a portion of your vation home with a home equity loan on your primary home. Home equity loans have lower rates than conventional mortgages. Robert can not only help you find a great vacation home, but refer a great home equity lender with some of the lowest rates around as well.

Check With Your Insurance Agent

Premiums for homeowners insurance for vacation homes are usually higher than your primary home, especially if you are far from a fire hydrant or fire station, or, you plan to rent the home out while you aren’t using it.

Consult With Your Tax Adviser

Have your tax adviser explain all the tax issues that pertain to a second home especially if you plan to rent it out, and if you don’t treat it as an investment property.

For more information, contact Robert Whitfield, Broker/Owner Advantage Realtors

Early reaction to the Fannie-Freddie takeover by the Fed has been roundly positive. Mortgage rates dropped almost a half point and that will be a boon to homebuyers with decent credit as rates are in the 5% range again as they were in 2005.

As Treasury secretary Paulson had hoped, the spread between the yield on mortgage-backed securities and risk-free Treasury bonds narrowed sharply Monday and mostly held those gains Tuesday. The tightening of those spreads has the effect of bringing down rates on the mortgages the companies are eligible to buy or guarantee – so-called conforming loans, typically those of $417,000 or less though up to $729,000 in some pricier areas. The rate for a conforming 30-year fixed mortgage fell to 5.88% Monday from 6.26% a week ago, according to BankRate.com.

The steep decline in mortgage rates will be good news for the housing market if it holds, by allowing some troubled homeowners to refinance and by generally making financing more available.

“Mortgages tightened a ton,” says Merrill Lynch mortgage-backed securities strategist Akiva Dickstein. “The question now is whether there’s more tightening to come.”

If so, people looking to buy houses could find purchasing a house more affordable. That could bring more buyers into a market struggling to digest near record levels of houses for sale, and slow the decline of prices. Prices in 20 big metro areas have fallen 16% over the past year, according to data from the S&P/Case-Shiller national survey.

In an additional bit of good news, Treasury bond prices rose in the wake of the rally in mortgage-backed bonds, and the dollar continued its two-month-long ascent against other major currencies.

Now is one of those windows of opportunity to refinance, buy a new home, or buy a second home – especailly now that the deal out there can be acquired with cheaper money.