What happened to the housing “recovery”?
Just as the Atlanta July home statistics were giving us a ray of hope then we got the update for September from Steve Palm with Smart Numbers, which is a most reliable source for tracking monthly Atlanta real estate data. What happened? September home sales are trending worse, not better, in just two short months.
This summer had truly offered an outstanding opportunity for home buyers. Interest rates are incredibly low-which means more qualified buyers can move into home ownership. I remember in the 90’s home buyers thought an 8%, 30 year fixed loan was a dreamy opportunity. My first home, in the Jimmy Carter administration, started out at 9% when construction began on our home in 1980. We closed at 13%. That was an enormous jump in 5 short months! But home interest rates went to 17% and higher after we closed. We were “lucky”. Many first time home buyers do not realize how very, very quickly interests rates can zoom upward and force them completely out of home ownership dreams for a very long time. Home ownership is a great investment opportunity because you can live in it while it appreciates and have access to tax benefits.
GA. Senator Johnny Isakson was a highly respected veteran and icon in the Atlanta real estate industry before we sent him to Washington years ago. As the housing bubble began to explode, he was on top of it and began crafting legislation for a home buyer tax credit. The legislation got whittled down to only first time home buyers, just $8,000 and expires Nov. 30, 2009. Now many in Congress are burying their thin, stiff necks in the ground and can’t decide what to do next. You can read about Senator Isakson’s testimony on October 20, 2009 and new proposal here. If other senators across this nation can’t understand how to improve the economy they need to resign. They are hurting us. The extended home buyer tax credit would help our economy immediately.
So what happened to Atlanta real estate in September?
- At the time the report was released on 10-21-09, there was a 16.8% year to year DECLINE for all single family homes.
- There were only 4,280 September 2009 closings vs 5,144 in September 2008 and 4,610 closings in September 2007 for all single family homes.
- Single family detached homes closed 3,583 in September 2009, a decline of 18% from September 2008. August 2009 was down 8.8%.
Steve points out that we had more homes go under contract in the past few months vs 2008, so how could there still be a year to year decline in closed sales?
Some homes under contract could have been affected by the Atlanta September floods. He points out homes under contract could have been at banks taken over by the FED-but there is no shortage of mortgage lenders in the Atlanta market. He feels, as I do, the banks are having a “liquidity” problem-and its worse now, not better.
My Summary:
If you are a seller, price your home to sell in today’s market. Home sales prices two months ago may not be valid today. My service area is primarily in North Fulton County in the cities of Alpharetta, Johns Creek, Milton and Roswell. What’s happening in our market is a little different than other areas of Atlanta. Regardless, lenders are sharpening their teeth on appraisal numbers. If you really want to sell, price it to sell today, move on and take advantage of the low rates and price on your next home purchase.
Washington’s indecision on extending the home buyer tax credit is going to result in fewer qualified buyers. A home buyer tax credit program needs to be extended and expanded to include ALL buyers-not limited to first time home buyers. Everyone knows interest rates will go up. We have already seen them inch up some in the past few weeks. I can personally testify how quickly rates can increase. A higher interest rate eliminates qualified buyers and with fewer buyers home prices will continue to decline because there will be an over-supply of homes.
What’s going on with the banks? Why are they backing out of loan commitments at the last moment? Did some of the brightest in Washington create more “guidelines” that are straining the banks? Maybe banks are making up their own rules. The system isn’t working at its full potential. I thought Bernanke and Paulson fixed the “liquidity” glitch.
An improved housing market is crucial to an economic recovery. Employment and the housing market are the foundations to a faster economic recovery. The housing sector employs more than just construction workers. Small business suppliers are dependent on housing market.
Many in Washington need to pull their stiff necks out of the ground and go to work-help the hard working people of this country protect the largest investment they own-a home. Continued indecision is a sign of incompetency.
