The pieces are edging into place for what could be an absolutely stellar buying and selling season for residential real estate here in Atlanta.
It is this time of year when those looking to sell their homes are hiring the painters, flooring companies and handy-folks to pretty-up their homes for the stage of the spring season. It seems that this year, more than years before, there may be more people doing that.
Numbers reported in the Atlanta Business Chronical show that total home sales were up 7.8 percent in January from where they were January a year ago.
With an increase in the number of closed transactions also came an increase in the median sale price. The average sales price in the metro area was $336,000, up 6 percent from a year ago. The increase in sales price hints that we are in a seller’s market, meaning there are more people out looking to buy than are listing houses. That’s not great news for buyers, especially those who want to wait another year. A house that was $400,000 last year will go on the market at $424,000 this year. At that same pace, it will be $449,440 next year.
Local experts have been saying that companies in the metro area have not increased wages enough to keep up with the increase in home prices, and this has kept buyers out of the market. What has changed though since last year is a very steep drop in mortgage interest rates. The drop in rates to near historic lows (3.51 percent for a 30-year fixed conventional mortgage, according to MortgageNewsDaily), has made homes more affordable for those looking to buy their first home, and for those looking to move up.
The issue before had been that home prices have gone up so much, that those looking to move up into bigger or better house are finding that the homes they are already in have increased in value to the point where they are already living in their move-up price-point. If you bought a house for $300,000 five years ago, that house might be worth over $400,000 today and isn’t much less expensive than what you can afford to move up into.
With rates sunk deep into the mid-3 percent range right now, a homebuyer will be paying about $250 a month less on their mortgage for a $400,000-house this year than they would have last year. That should help motivate more potential homebuyers to moving into the market for two reasons.
The first is that many have been sitting on the fence because they could not qualify for a mortgage in the range of their desired price-point. Now many can.
The second is that many think this venture into such low rates will not last for long and now may the time to take advantage. They just might be right.
It is almost a proven fact that rates were pushed down significantly by the flu outbreak in China. It has freaked out the markets and rates will very likely jump back up once it is contained. Also, later this year, after the country decides on our president, there is no telling how rates will react.
Spring and summer are typically the two strongest buying and selling seasons, mostly because parents like to move when school is out. It’s hard to find a good, leading indicator as to how the spring season will fare. But one could be how busy the painters are. For this article, I called a good friend who owns a painting company. His answer: “Were covered up.”
Geoff Smith is a mortgage banker with Assurance Financial focusing on residential home loans for refinances and home purchases.
*The views and opinions expressed in this column do not necessarily reflect the views of Assurance Financial Group