Thursday, May 16, 2013 / by Ira Miskin
Each Spring since the housing bubble burst in October 2008, as the flowers begin to bloom, pear and cherry trees begin to blossom, and new seasonal grass begins to sprout green, East Cobb home-sellers hope against hope that the bottom of the housing market has been found and prices will, once again begin to rise. If hope springs eternal, then 2013 just may be the year hope is found.
For the entire Atlanta Metro Area the bottom was hit in October 2011. The average selling price for a single family home was $158,000. The Atlanta residential home market had lost $117,000 of value in the crash. By the end of February 2013, the Metro Area had recovered nearly 37 per cent of the June 2007 market high when the average sale price reached $275,000. Is the market still under water? Yes. But are recovery signs evident? Yes.
In three of the most sought after East Cobb high school districts, among the top 250 selling properties in each of the districts, the average sale price rose 9.23%. In Walton, sale prices rose 12%. In Pope, sale prices rose 10%. And in Lassiter, sale prices rose nearly 4%. In all three school districts, new home construction is beginning to return – a sign the number of move-in-ready re-sale homes are down. Lower inventory means higher prices, but also more competition between new home construction and resale homes.
For home buyers seeking to not miss the home price lows, and ready to take advantage of historically low interest rates for home loans, there is a unique opportunity that may well be gone in a year or so. For home owners who have been sitting on the fence waiting for the market to recover so they can sell and move up, or sell and downsize, there is opportunity as well.
Buying or selling a home is a unique experience when, often, the emotion of the sale seems to overshadow the business side of the sale. Working with a Team lead by your Realtor and his or her real estate professionals is critical to a successful transaction. The Realtor, acting as Team leader must be a professional who can empathize with the emotional side and deftly help you manage the business side. Here is some sage advice from Amy Johnson, an experienced and savvy real estate professional.
Q: What is the first point you try to help sellers, who also are home buyers, understand about the process they are about to begin?
A: For a home seller who wants to take advantage of the upside of selling while benefiting from the still low pricing for buying, learning to wear two hats and set aside as much of the emotion as possible is important. By wearing two hats I mean thinking like a Buyer while also thinking like a business person working on a two-sided deal.
Q: Tell me what you mean when you say two-sided deal.
A: Well, in today’s market where home selling values are beginning to rise, most homes are still valued at less than they were just five or six years ago. So for many sellers, the equity they hoped to have to help them buy their next home is less than they want. But if they look at the lower equity value of their current home as a loss, they are missing the bigger picture.
Q: Which is?
A: Although the seller may be realizing a smaller equity return on the sale of their current home, even in today’s slowly appreciating market, prices are so low the gain they will have in five to seven years on the low price they pay for their next home could more than make up for the lower value of their current home. Profit in residential real estate – if you look at buying a home as a business transaction – is made when you buy it not when you sell it. The goal is to get the best home at the lowest price so that normal market appreciation will add considerable equity value in the years to come.
Q: And how are the currently low interest rates for home loans affecting buying and selling decisions?
A: Simply put, I suggest to many of the Buyers I represent that getting a 15 year fixed rate home mortgage is a great advantage to them because it not only gets them a super low interest rate, they save thousands in interest payments and build equity at a much faster rate. If they plan to move again in 5 to 7 years, the amount of savings as well as equity built up can be a huge advantage in their next move. This is the business side of the purchase.
Q: So planning and working with a Team that can help Sellers who are also Buyers to develop a good plan is an essential part of preparing to sell and then buy homes?
A: Exactly. And that takes an experienced real estate professional with a Team including experienced mortgage lenders, top notch marketing, research capabilities, and support professionals to make both sides of the transaction work. On the selling side, plan the sale to get full market value. At the same time, make the buying side work by purchasing a home with the most upside potential at the lowest price possible.
About the author: Stephanie Miskin is Market Area President for Optimus Real Estate Brokers. Amy Johnson is a senior member of the Optimus Team. Stephanie and Amy are available for private consultation by appointment by calling 404-660-7300.