4Q Atlanta / Sandy Springs Real Estate predictions

As we enter the 4th quarter of 2009, we've seen a sluggish economy continue for the year. We have extensive statistics for real estate and sales are down dramatically overall for the past few years. Having said that, some recent indicators are that sales will be improving. I'd love to believe that is true, but I am not betting the farm on this. There are a number of reasons why.

First, to buy a home, folks have to be credit worthy. Credit is definately tightening and much larger amounts down in terms of percentages are required. For instance, if the loan amount exceeds $417k, it's considered a Jumbo loan amount with a minimum of 25% down with a limit of 75% LTV (Loan to Value). This is a big change from years past when even at a sales price of $800k, I saw 100% financing.

Along that same line, the value is challenging to ascertain in today's market. Buyers want to buy with room for the market to fall. Banks and mortgage companies have made so many bad old loans that for today's loans they want a great appraisal or two. Along the appraisal guidelines, those have changed with comparable sales needing to be within 3 months and close by. More and more homes today, even if they go under contract are having a huge challenge getting a solid appraisal that will meet the lenders criteria in today's market.

Uncertainty with the job market is another big factor. Even if one still have a good job, those big bonuses probably won't hit this year or the concern about losing a job is forcing some folks to put off buying.

Importantly along those lines is the consideration is how much house do I need. We see this especially in the Buckhead, Sandy Springs market I work where the Mega McMansion is really hard to sell these days. Folks are deciding how much house, payment, taxes they need and I would say we are seeing a scaling back trend that will continue.

Lastly, there is definately a wait and see trend going on. Folks are on the fence about the prospects of real estate and when the market is going to recover. It has made for a robust leasing market. While there are more homes on the market to lease, there are more folks looking to lease, waiting to see if they want to purchase.