I just read an article about buying real estate, NOW, written from a national perspective, and I’m including a nifty graphic from a TIME magazine article with this post that should interest you.
I’ve noticed that many of the clients that I’m working with are watching the market and looking for certain timely advantages. There is a lot of evidence to say that our Buyer’s market will continue for months, but in the Intown submarkets, Buyer showings are steadily increasing, week by week and pending sales – contracts on the top 20% of the available properties – the best of the lot – are piling up.
I like the momentum that I’m seeing, and with that increased demand, and the more steady sell off of inventory that we are seeing, I expect that when the market turns, todayâ€™s bargains will be yesterdayâ€™s missed opportunities.
While it is conceivable that home prices may drop further, it is likely that these decreased prices will be accompanied by increased financing costs due to rate increases by the Fed. The rate increases aren’t just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.
The table below demonstrates how even as home prices may drop, monthly mortgage payments basically stay the same, due to increased interest rates:
Here is “today’s” scenario…
|Home Price $218, 900|
|Interest Rates 6.04%|
|Monthly Payment $1,054|
Here’s scenario #1 – if home prices drop 5%, and if rates go up .5%
|Home Price: -5% $207,955|
|Interest Rates: +0.5% 6.54%|
|Monthly Payment $1,056|
Here’s scenario #2 – if prices drop 10%, and if rates go up 1.0%
|Home Price: -10% $197,010|
|Interest Rates: +1.0% 7.04%|
|Monthly Payment $1,053|
Table: Kadlec, Dan. “Ignore the Headlines!” Time 25 February 2008
I know that you may have had conversations with mortgage lenders about even better interest rates that are available to you because of your financial strength, so don’t count on the rates stated above – the rates come from an example in the TIME magazine article that ran in mid-February.
Nevertheless, as demand increases, the good properties are getting sold. The rest languish, expire or withdraw and lick their wounds. The best buys are being purchased by qualified, happy buyers, and those folks are hitting the streets daily.
I’m noticing more showings on our listings – I’m also noticing that more showings are needed to get to a contract with a buyer. In a seller’s market, or a more balanced market, about 8-10 showings in the first 30 days will usually produce a contract, based on my Intown Atlanta sales experience.
In today’s Intown Atlanta Buyer’s market, which is over one year old, a Seller needs about 25-30 showings, in about 90 days, to produce a contract.
I read an end of the year statistic for 2007 that stated that across metro Atlanta only 16% of all Sellers actually sold during their listing period (90-180 day listing periods, usually) without a price reduction. That should be a major “eye opener” for 2008 Sellers, but Seller expectations are still quite a ways apart from Buyer expectations.
That 16% statistic is probably holding up in the first quarter of 2008. We shall see.
The advantage to the buyer buying before June seems apparent, but everyone has unique priorities and you may seek to wait.
If you are considering an Intown Atlanta or Decatur purchase, then get your real estate on!