Homebuyers Could Miss Affordability Window – Sally English

 

Affordability Declines

Two economic forces are driving the affordability of Atlanta real estate market toward a dramtically different place than we have been in some 6 plus years.

 

• Interest rates are starting to increase
• Inventory of available homes for sale has started to decrease.

Home buyers who have sat on the sidelines are now learning the costs of inaction.  Rising costs of home ownership and settling for less house than they had hoped to buy are the results of failure to act in the 2012 home buying market. Affordability of homes has decreased for Atlanta home buyers

During 2012 home buyers had a strong upper hand in the market place. Home buyers could dictate many terms of the purchase agreement including price and seller concessions and the affordabilty index was high. 

The table has turned as of March 2013 and it is now my experience that the home seller holds most of the cards in the negotiation game. And homes are less affordable because of rising interest rates.

Multiple offers are the rule of the day as my seller in Woods of Henderson learned this past weekend.  After receiving some low ball offers earlier in the month, we suddenly received two very attractive offers over the weekend.  A bidding war ensued as a call went out for “highest and best” offers to be made.  This is a call I ever had to make in 2012.

Another phenomena I have encountered this month is the “pocket listing” scenario.  Two sellers had advised me they intended to list their home for sale – with me – later in the month.  Both were taking care of odds and ends around the house prior to the listing.  Each wanted to make a good impression on home buyers when their house hit the market and MLS.  In each instance, I had home buyers I had been working with who instantly wanted to see the homes – before they hit the market. 

These home buyers instinctively knew the home they really wanted would not last long on the open marketplace.  In each of the two situations I arranged a showing of the home and BOOM a sale was made.  Both buyers and sellers had struck a good deal and each got what they needed.

“Waiting” to buy a home could mean higher mortgage interest rates (already up about ½ a percent since 2012) and along with fewer available homes that meet buyer expectations. Home mortagage interest rates are still very affordable – hovering around 3.5% for a fixed rate 30 year mortgage with 20% down payment, 740 credit score and monthly PITI payments . BUT, every climb in the interest rate increase the monthly payment and decreases affordabilty and how much home you can buy.  Match this up with rising home prices and you have a scenario where the affordability boat is pulling away forom the dock for many potential home buyers.

Call me now at 404-229-2995 to discuss affordability options for buying or selling a home in 2013.  The Spice girls had a catchty tune that sums it up nicely:

“Yo, I’ll tell you what I want, what I really, really want

So tell me what you want, what you really, really want

I’ll tell you what I want, what I really, really want

So tell me what you want, what you really, really want”

Spice Girls

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