Rent vs. Buying in ATL

These people DO realize that you could buy a nice HOUSE in-town for somewhere close to the monthly rents listed, right???

Click HERE for the story. Bottom line--if you can afford rent over $1200 per month, you can afford a home!

Good news/bad news

So for the good news: mortgage rates are lower than they have EVER been in recorded history. Can you believe that? Rates are 'around' 4% and some say they may fall UNDER 4% if this QEII is successful. What's the bad news? Atlanta home prices (per the National Association of Realtors) have fallen 12.3% for the 3rd quarter, relative to prices a year ago. Not only that, the median sales price for ATL is $113,500 which is 34% lower than the peak prices of 2007. The odd thing about that is that I've heard so many say that ATL really didn't have much of a 'bubble' in real estate (truth be told, we had a bubble in real estate construction--which is why oversupply still exists)! Regardless of all that, keep positive and let's get people in houses! Time to move out of that basement and get into your new home! I hope sales remain strong for the next few months! Have a great weekend, Bo

Big Ben says "Loosen the Guidelines"--Hear hear!

As an Atlanta closing attorney, we are on the front lines of the real estate and mortgage business and see 'what's really going on'. In lieu of continuing to generically (is that a word?) blame this all on "Wall Street" (which did contribute to this mess a few years back) let's take a look at one of the major reasons why we are STILL not seeing a solid real estate recovery--tight guidelines! (and appraisals--try googling HVCC if you want more info about well-intended legislation with unintended consequences) We see it all the time-people with good jobs, credit and income who cannot get a loan. With mortgage rates hitting an all-time low of 4.44% it's an awesome time to buy or refinance! Click on THIS LINK for a video from THINK BIG work small. Cheers, Bo

While I'm at it...

Metro ATL's unemployment rose to 9.9% in May (from 9.8%) per the GA Department of Labor. As for Georgia, the state's unemployment rate declined from 10.3% in April to 10.2% in May. For one final happy thought, May was the 32nd consecutive month GA exceeded the national unemployment rate (all per Atlanta Business Chronicle article 6/24/10).

When you're happy and you know it clap your hands....




(sound of crickets chirping)

Time for a Summer Vacation? Hope not...

As noted in last month's email, the tax credit has expired and related closings have to take place by the end of June. What about July? Are we all just going to be sitting around with nothing to do? I for one (a) hope that's not true and (b) don't believe it to be true. Yes, there are many issues lingering (like dropping prices and an ever-rising tide of foreclosures) but more core items are coming together (like economic growth, increased employment and better rates). If we could just get some common sense underwriting as well as reasonable appraisals, I think we'd be in much better shape! By way of reference, for a great article on the current state of appraisals, click here (great work, Jim!).
Home prices are still dropping, thanks to foreclosures. That isn't a problem for buyers (except as noted in the article above) but it is an issue for sellers. Yes, you can swallow your pride and lose several thousand on a sale in order to save many more thousands on a subsequent purchase, but first you need to find a buyer. What if there is a foreclosure and/or a short-sale around the corner? Unless they are in a hurry to buy, those properties may be more attractive as they can be purchased for pennies on the dollar versus your need to at least pay off your mortgage--therein lies the problem! I have no solution to offer, but at least rates are still incredibly low--the average 30-year is reportedly 4.78%, which is the lowest of the year (compared to December 2009's record low of 4.71%) and more positive news is being reported, except for the BP oil fiasco and European money woes. However, we are benefiting from their problems as investors seek a safe haven in our bonds (which in turn helped our rates). As Europe 'heals' and our recovery continues, however, rates are likely to move higher as investors seek higher returns and focus on riskier investments than our bonds. So go for it now (like all the other consumers applying to refi--currently the highest level since October 2009, per the MBA) and lock in while you still can!
Have a great holiday weekend; THANK YOU to all who serve (or served) in our military! God Bless America!

AJC Survey

I had the opportunity to take a survey from our local paper, the AJC. One section asked to rank what I thought was the most important for the Atlanta Metro area. Using their topics, I ranked them as such: Transportation, Quality of Life, Economic Development, Regional Cooperation/Governance, Education and Health Care access and delivery. Why? As I drive up and down I-75 each day, our commute has gone from a 'typical' 45 minute drive to around an hour each evening. WHY? I have no clue. Driver's habits are one thing, volume is another and of course having trucks on the road are another issue (wouldn't that poorly planned 'northern arc' be great right now?). I got to give my 2 cents on education (I wish the teachers were allowed to TEACH), transportation (have GA take over MARTA and push it out to North Point Mall, Cumberland Galleria and the Mall of GA), the regional economy (again, fix transportation, and water woes--why do we allow so much lawn watering?), and quality of life (all of the above!). I gave a lot of thought to my answers; we'll see how they use the info!

Time is up! (and time to move to ATL!)

All too often you hear the phrase "For A Limited Time" tossed out in marketing. As noted in last month's email, time may be running out for these incredibly low rates due to TODAY's end of the Fed's $1.25T (yes, Trillion) program to purchase mortgage-backed securities (MBS). The program provided liquidity for Freddie and Fannie, keeping rates low and reducing financing costs. Low point? 4.71% for a 30-year fixed in December! But "what now" since the Fed is ending this program? I predicted a larger jump in rates but I have to retract based on what I've recently read (either way I hope rates remain low!). Estimates from Freddie/Fannie expect a rise of less than a quarter point in the next 3 months (a rise of about $30/month payment on a $250K loan). Why so 'low'? Right now the investment 'spread' for US Treasuries is low but higher for MBS so they are attractive to money managers, banks and pension funds (I also read that China is not buying as many Treasuries so be aware that the USA could face higher interest rates to finance our ever-increasing budget deficits, but I digress). In essence, the private industry players are stepping in to fill the void left by the Fed so rates should remain lower, though the (estimated) average will be just over 5% and under 5.25% (for reference, the average for the past decade was 6.2%). Note-the Fed is poised to 'jump back in the market' if there is a significant 'run-up' in rates.
So rates should be 'okay' but are we out of the woods yet? Well, we don't know what will happen after April 30th when the tax credits expire (actually, July 1 will be the true barometer as you MUST be under contract by 4/30 and you MUST close by 6/30 to get the final tax credit). Robert Shiller (of the S&P/Case-Shiller index) said "You don't make addicts go cold turkey. The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house." All I can say, try being a seller! Talk about a bad mood... or why not try to buy a short-sale? THAT'S truly 'bad mood' material!
Let's talk about ATL now. No less than the New York Times (albeit in blog form) noted "Don't count Atlanta out." Harvard Economics Professor Edward L. Glaeser notes that ATL has had its ups (#2 in population growth of 1.13M people from 2000-2008) and downs (annual building permits dropped like a rock from 2005-2009, highest of any other metropolitan area) but we have many things going for us. Click on the link to read the article but John Adams has a companion article that sums up his 3 maj or factors for our future success: ATL is dominant in the region, with no real rivals; we have a 'business-friendly' political environment; we have a highly skilled population (nearly 43% of adults have college degrees vs. 27% nationwide). Not only that, a recent KPMG study ranked ATL the second most cost-competitive 'large city'. They used a matrix of 26 cost components such as labor, taxes, real estate and utilities as it relates to 17 industries based on a 10-year time period. Tampa was #1, with a cost index of 96.0 (100.0 being the national baseline) and ATL was 96.3. Our ranking was based on our competitive business costs (office leasing, transportation, labor, employee benefits and corporate tax rate). Miami, Baltimore, and Dallas round out the top 5. LA, NYC and SF were the three most expensive.
SO tell your friends it's time to relocate to ATL! Buy now, save now, and pop some bubbly along the way!

ATL job losses

Atlanta took a big hit with job losses, as did most large metropolitan areas. This press release from the US Bureau of Labor Statistics gives all the gory details. So out of the nation's 372 largest labor markets only ONE managed to squeak out a net increase in 2009--McAllen TX. ATL lost just over 105,000 jobs in 2009 and as you know our unemployment rate in Georgia is stagnant at just over 10%. Las Vegas lost over 7.4% of its workforce (they are "number 1" in the country, how proud they must feel) and we "only" lost 4.4%. However, if you look at year-end unemployment rates thirty-four of the top 100 markets ended 2009 with jobless rates of 10 percent or more (including ATL). Obviously, we have a long way to go and there may not be a 'silver bullet' for this problem. BUT there are additional signs that the economy is improving. Pending home sales are up, manufacturing activity is up and even car sales are up for many makers (GM, Ford and Nissan, for example, but not Chrysler, Honda or Toyota). Who knows, hoping that we start seeing some additional home sales soon (besides the people trying to get that last-minute tax credit). Keep praying for recovery! Take care, Bo