Housing Market Myths
If a new home is in your sights, is now a good time to buy? Should you consider selling? Not clear on what to do in today’s housing market?
Three Intown professionals hope to set the record straight by schooling you on some of today’s myths regarding the current climate. They include Weslee Knapp, real estate consultant and managing broker, Keller Knapp Realty (kellerknapp.com); Dac Carver, vice president and managing broker, Beacham & Company (beacham.com); and Randal Lautzenheiser, managing broker, Atlanta Intown Real Estate Services (AtlantaIntown.com).
“A lot of buyers are not hearing the most up-to-date information because the market is changing faster than the economists can often project or respond,” explains Knapp. “It typically takes analysts six months to a year of previous data to decipher trends in the market, but by that time conditions have often changed and the findings are outdated. The best way for most buyers and sellers to find out about market trends in real time is to consult with a Realtor.”
What are some misconceptions (on the part of homeowners and potential homebuyers) you’re finding in today’s real estate market?
Weslee Knapp: Yes, homes are at great prices, but there are not enough of them. In 2009, we had 123,000 different units on the market in metro Atlanta. Today, we have just over 51,000 homes on the market (GAMLS). There are a glut of townhomes and condos on the market. Condos and townhomes represent less than 11 percent of total product on the market right now. New-construction condos are at the lowest quantity they have been in the last decade. I’ve been a realtor for over 10 years now and I’ve never seen this low of product out there.
Dac Carver: There are [fewer] homes on the market now than there were 10 or 11 years ago; when we tell them housing inventory in Atlanta is at a 10- or 11-year low, everyone is always surprised. We project in Buckhead, it’s more around a 15-year low.
Randal Lautzenheiser: The biggest misconception from both buyers and sellers is that the property will sell for substantially less than the list price. If a property is correctly priced it will sell very close to the list price. The average that is being negotiated right now is about five percent in the Intown neighborhoods, meaning that houses are selling for about 95 percent of the list price. The average days on market is 85.
Knapp: I’ve never seen a better time to buy since I’ve been in real estate than right now. There [are] fewer homes on the market; I believe you’re going to start to see prices go up. It’s a rare time where interest rates are also extremely low. Very few homes on the market in key areas will mean higher prices, which may start as early as this spring. Higher prices will create more opportunity for sellers who could not previously sell their homes. It also means that buyers should take a serious look at current prices in combination with low interest rates of today.
Carver: I think it’s a buyer’s market to some extent. It’s not the same buyer’s market it was two years ago. It’s easier to get financing than it was a couple of years ago. Interest rates are still phenomenally low. But because of the inventory factor and the fact that a lot of sellers who had to sell have sold, there’s pressure on prices to go up. We see the market starting to turn and on its way up.
Lautzenheiser: It is definitely a buyer’s market because prices are as low as they are and interest rates are so low. Anybody who can buy right now should buy right now. If someone already owns they should buy a second home or investment property to take advantage of the low prices and interest rates. The market will turn around and come back up and there are excellent investment opportunities everywhere.
Knapp: We are at unusually low interest rates currently. Rates have remained low to spur additional home purchasing. However, as we see the market starting to turn, you will see rates start to rise toward the end of the year.
Carver: They’re historically low. They remain some of the lowest we’ve had in generations. We don’t foresee that changing going into the spring. It means that buyers can get much more house for their money than they could four years ago. If you compare the payment for the same house to four or five years ago, in some cases you’re paying half what you would have four years ago for a house.
Lautzenheiser: Interest rates right now are at an unprecedented low and when they start to go up it is doubtful that they will come back down this low any time soon.
What are your forecasts for 2012 and maybe even a little beyond?
Knapp: I believe that 2012 will be a solid year for Intown real estate and markets with solid school districts. In those areas, you will a small rise in prices. I believe that 2012 will be remembered as the first year in the beginning of the next positive real estate cycle.
Carver: I think we’ll see prices continue to increase in our areas – Buckhead, Intown. I don’t know that we’ll see an overall increase for Atlanta, but I’m optimistic.
Lautzenheiser: Home prices have reached bottom and they are currently stabilizing.