If you’ve been watching news stories about real estate, the national message has been:
· Inventory (supply) is up
· Prices are going down
· Volume (home sales) is similar to last year’s record low
· Interest rates may come down in September
The overall Atlanta market is somewhat consistent with the national message, although our prices are not going down. Inventory (active listings) is up 26%, prices are unchanged, and volume (homes sold) is down 4.8%. Real life application is that while Buyers have more choices, they remain pushed to the sidelines due to prices and interest rates… mostly interest rates.
How do interest rates affect Buyers even more than price? Interest rates affect Buyers’ monthly cash flow more than overall price. Take a look. |
A first-time home Buyer purchasing a $400,000 home with an interest rate of 7% can expect to pay $2661 per month. But a reduction to 6.25% brings that mortgage payment down to $2528, a monthly savings of $133. In an economy where the price of everything has skyrocketed, that is a significant difference in monthly cash-flow.
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As you can see, there are big differences in inventory (supply) depending on the suburb. Sellers in Sandy Springs can expect to hold their higher prices compared to Sellers in Suwanee who should be prepared to lower their prices. And that is, in fact, what we find when we dig into price trends.
Sandy Springs showed a 59.7% increase in average price compared to Suwanee’s 3.4% decrease, demonstrating yet again the unbreakable link between supply and demand. Real life application is that Buyers in Suwanee can make more aggressive offers while Sandy Springs Buyers may find themselves in multiple offers scenarios. |
The number of sold homes is very close in many of these cities, but has actually declined in Johns Creek, Dunwoody, Cumming, and Marietta. Buyers are not buying even though inventory is increasing. Why?
Interest rates are the obvious culprit. Secondary causes may be Buyer Exhaustion. Buyers have been watching the market for so long that they are weary. And while they’ve been watching the market, they’ve also been watching HGTV and have come under the HGTV spell which has convinced them that buying a house takes 30 minutes or less, and climaxes with a dramatic reveal of the perfect house! Mark Steve-Graham states, in his LinkedIn article entitled, Are First-Time Home Buyers Too Picky, or Is the Market Really That Tough?, “Some Buyers mistakenly believe their first home should be their forever home, leading them to reject houses that don’t fit every one of their desires.” He goes on to say that budget is the most important factor in buying a home so trade-offs and compromises should be expected. HGTV reality is not reality and should be rejected.
Why? Because time is of the essence. Historically, prices go up. As Buyers wait for the perfect house, prices quietly bypass them, which causes Buyers to give up and remain on the sidelines where house appreciation and inflation shrink their buying power. Prices always trend upward.
This chart makes it clear why owning a home is the foundation for generational wealth.
Lesson for Buyers: Buy now if you can!
Gail & Claire McCown are Realtors with Ansley Real Estate/Christie’s International and have a combined 20+ years in buying and selling North Atlanta Real Estate. Call them today. 678-807-9566.