It is almost like someone turned on a light switch. While January and February are generally slow months for homebuyers, 2012 started off like a rocket. We have seen a dramatic rise in activity. And it isn’t just here in Atlanta, we are hearing the same thing from offices all over the country.
I thought maybe it had something to do with the un-seasonably warm weather but it feels bigger than that.
Consider the following thoughts and how they may be contributing:
1) Home affordability is at the highest point in decades. With home prices dropping around 30% in metro Atlanta (on average) and interest rates at the lowest levels since the 1940’s, housing is looking mighty attractive. Are clients are getting smoking hot deals and locking in rates that make renting look downright expensive relative to the mortgage payments. We have one client that just bought a 4,500 square foot house for $250,000 and with just a 5% down payment ended up with a mortgage payment of just $1,600. If you had to rent that same house it would be at least $2,500. For every 1% increase in the interest rate the payment would increase by $150.
2) First time homebuyers are in the driver’s seat. It really is cheaper now to buy than it is to rent. There are plenty of programs out there that allow you to put as little as 3.5 – 5% down payment. You can now buy a $100,000 house with 3 ½% down and have a payment of around $750. And you wouldn’t believe how nice the houses are that people are finding for that price. In this example, you would only need $3,500 out of your pocket to buy this house if you structure the contract correctly.
3) There is a high demand for renting homes because there is a certain segment of the population that won’t qualify for a new loan. So we are now seeing a number of folks who just want to move and can’t stand it anymore. They are now taking advantage of the current market by purchasing a new home and renting out their existing place until the market improves. While there is certainly risk in this, there is also significant opportunity. This strategy may allow you to by a property significantly below market and lock in a historically low rate and at the same time buy yourself enough time to reduce the loss you would have taken by selling now. As they say, maybe you can have your cake and eat it too!
4) More confidence in the job market and the economy in general. I just think people are growing slowing more self assured in their own situation which provides that comfort level to make a big move. That coupled with deals that are hard to ignore provides a formula for increasing demand for housing. If you want to make a move and you really don’t feel comfortable without selling your existing home, don’t despair. Housing prices appear to be at least, stabilizing in many sections of the city. The key is to have your house in tip top condition and priced right from the beginning. We have found these properties are often attracting multiple bidders.
Make sure you get pre-approved and Certified before you start looking or putting your home on the market.