Monday, March 11, 2013 / by Ira Miskin
One of the greatest attributes of our American economy is that no matter what damage may be done by “Wall Street manipulators,” or politicians feuding in Washington, or terrorists crashing into iconic symbols, the underlying strengths of our American economic system show extraordinary resilience. In recent years we saw the 9/11 tragedy change things in an instant. Yet the “ding” to our economy healed. Then came the dot-com boom and bust cycle that drove the market down… and again the economy recovered. In 2008, the housing market crashed along with many elements of our economy.
Yet, miraculously, and seemingly despite the efforts of political leadership to, indeed, show political leadership the stock market has recovered all its losses, businesses are recovering, the housing market in Atlanta has found its bottom and is also beginning to recover. Although recovery can often be painful, in segments of Atlanta and especially in East Cobb, recovery is becoming more apparent. There has never been a better time to use the leverage of generationally low prices, record busting low interest rates and shoppers eager find a great deal. The objective being to sell your home and trade up to a bigger home before the great deals are all gone. The twin benefits of a recovering housing market in East Cobb with gradually increasing prices and low mortgage interest rates are bringing values back to a level above 2008 post-crash period.
So what does this mean? If you want to take advantage of today’s recovering market, there will not likely be a better time to sell a home and use market leverage to find that trade-up home bargain than in 2013. In the year following the apparent market bottom – which was in October 2011 – the average sale price for all East Cobb properties has appreciated 4.5%.
In the Walton school district homes that sold and closed by December 2012 showed an appreciation of 6.75% over 2011 prices. In the Pope school district appreciation in values for sold and closed properties was 5.8%. And in the Lassiter school district homes that sold and closed appreciated 2.3%.
Here’s the logic of using appreciating prices and low interest rates to leverage value over the next several years. With the market’s slow but steady recovery, you will receive more for your home in a sale, and the demand for homes now, before the market more fully recovers, provides you with greater flexibility in the sale of your home. Inventory overall in Atlanta is down substantially from the post-crash 2008 high – meaning there are fewer choices available for the average buyer – causing the best valued homes in top condition to receive multiple offers. As a seller, that’s great news. As a buyer, although there are fewer choices, therefor pushing the market back toward a seller’s market, astute shopping using a well-informed Realty Team can find the hidden gems still readily available - if your Team knows where to look. Once you find the perfect home, here is where the leverage of low interest rates makes all the difference.
For example: Suppose you are thinking about taking advantage of today’s market conditions to move up to a larger home, and you were moving up from a home valued at $150,000 to a home valued at $300,000. Even though the price of the property you are purchasing is double the worth of the home you are selling, if you have not refinanced your pre-crash mortgage, your interest rate could be between 7% and 8 %. A $150,000 mortgage at a 7% interest rate would carry a monthly principle and interest mortgage payment of about $1000 per month, plus property tax and home owner’s insurance payments. In today’s market, moving up to a home that is double the value - at around $300,000 - would carry a monthly mortgage payment of around $1500 per month plus property tax and home owner’s insurance payments. That’s double the value at only one and a half times the cost because the interest rate on a 30 year fixed-rate home mortgage loan is hovering at around 4%.
If you own a home almost anywhere in East Cobb – from Sprayberry to Kell to Lassiter, or Wheeler to Pope to Walton, evaluating your investment in your current home to benefit from low but recovering prices and low interest rates is a smart choice for wise shoppers. Have a Realtor with a full service Team complete a thorough market analysis and an in-home analysis for your current home. At the same time have that Team begin a market search that fits your exact move-up criteria so see just how much you can benefit from a market that may not be with us all that much longer.