We've seen a lot of downward activity in terms of price and units sold in the Atlanta Metro area over the past 18 months. While there is possibly more shake out happening, there are some great indicators that the downward trends are moderating. For instance, April to May statistics in Atlanta by SmartNumbers showed a .4% reduction in price month to month for 2009. Also, even more interestingly, fewer homes have been listed, expired and withdrawn.
On the flip side we have started to see interest rates inching up from mid 4% to low to mid 5%. This makes a huge difference in what a home "costs" you. Let's look at an example. Say you are buying a home for $480,000 and taking a $400,000 mortgage. If the interest rate is 5%, just the interest payment alone is $2,000. Should the interest rate increase to 7% that same payment of just interest would climb to $2,800. As inflation is expected, this is probably not out of the question in the next year. Along that same line, if the interest rate climbed to 9%, the interest portion of the payment would be $3,600. None of these figures includes the principal or taxes payments would be fixed for all three of those interest rates.
To make money in real estate you need to buy low and great a great rate. If we are at, close to or just past the bottom of the market, the next biggest factor is the interest rate. This will dramatically affect what you can buy. Along these same lines, our supply of inventory is decreasing and demand is holding steady if not very slightly increasing. More and more agents I talk with have business and are going to closings. (This was not the case six months ago.)
Having said all this it only makes sense to buy if you DO NOT have a house to sell and can get a great deal on the house you buy as well as a great rate. If you do have a house to sell, sell it, rent for a temporary period and then buy when all the cash is in the bank.
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