OK, I'll rain of the parade and expand a bit on what Derek said -
I think everyone breathing can agree that "now is a great time to buy" - provided that you can actually afford to own a home, understand the requirements, have reasonable expectations of the future value, understand the process and assume personal responsibility for the decision to buy. Not everyone should own a home...even "when it's a great time to buy". Most owners are in trouble because of stupidity - they overextended, overleveraged and overspent. Of the thousands of foreclosure appraisals and deal I've negotiated just a handful of folks were there because of unexpected circumstances.
Now, unless you are completely read in on trends with condos/townhomes I would avoid attached homes as much as possible right now. Derek is right and I'll expand on his comments. In addition to being a broker, Iâ€™ve been appraising here in the metro area since â€™93 and had one of the larger appraisal firms on the north side. The condo craze started here when the Olympics came to town â€“ Atlanta was branded as a 24 hour international cityâ€¦it was going to rival NYC, Boston, Chicago, San Franâ€¦..so builders went crazy with condos in the city and on up the 400 corridor. Some 10+ years later Atlanta is instead home to arguably the highest attached home vacancy/foreclosure rate in the country, and this is at all price points from the city to the â€˜burbs. My appraisers feasted on this inventory and Iâ€™ve continued to appraise/review even â€œluxuryâ€ units in buildings where construction has halted. The attached home/condo market is as solid as pudding.
Now â€“ to the area that you mentioned. Of course builders are offering incentives, what choice do they have? Think about the sheer number of units sitting empty; both new and foreclosed. Add to that the number of owner occupied units with sellers just looking for anyone to get them out, even at a loss. Sure, youâ€™ll get a great buy getting in but what happens when you want to sell? Getting in is easy â€“ getting out is like leaving the Mafia.
The bottom line is that developers completely disregarded the economic indicators and continued to build. Part of the issue is that once money and permits are granted, they have a limited time to work or risk going through the process again â€“ with no guarantee of success. In a sense, once the process starts itâ€™s almost always going to finish regardless of the market. We now see the results of all of that.
Anyway â€“ I would encourage you to backward plan; if you buy whatâ€™s the exit strategy? I tell my clients that under the best of circumstances breaking even constitutes success with attached homes. Youâ€™re looking in a great area but keep in mind that when we appraise units here weâ€™re still taking up to 10% annual depreciation and adjusting dollar for dollar for seller concessions. Those 10% - 15% builder incentives are hollow given that many are still holding to 30%+- profit. Despite the sniveling, many builders are content holding as long as they can. I know several, have negotiated with several and have many agent friends that work with them. Are we at the bottom? Probably close but the bottom will be flat and I expect weâ€™ll be well into this year before we start to very slowly pull out.
So, yes itâ€™s a good time to buy but only after tearing apart the data and making certain that you have a pragmatic and somewhat grounded team (like us!) to advise you. Historically low rates and historically high inventory are green lights but only if you cut through the nonsense and get to the number crunching â€“ remove the emotion and focus on the numbers. Drop me an email if you have specific questions â€“ hang in there
Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty