Atlanta Real Estate Blog

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!

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.