The seller’s market continues on in the Atlanta area. I have recently heard Realtors talking about their clients making offers on homes that have 12 – 15 competing offers. One Realtor friend told me about a home that he listed last December. The Realtor did painstaking research on the neighborhood and comparable properties. The analysis said a fair price was $299,000. The winning offer was $355,000! That’s about 18% over the asking price.
So how did we get to this point? According to a recent Wall Street Journal article, one key factor is that for over 10 years now, home construction has not kept pace with US population growth. The article stated that current home construction per household is close to its lowest level in 60 years – since the late 1950’s. In years past, this lower construction level was somewhat offset by the number of foreclosed homes available for purchase. But that is no longer the case as foreclosure rates have decreased dramatically since the Great Recession.
In the Atlanta metro area, this housing “shortage” is compounded by population growth. The Atlanta Journal Constitution reported in June that the metro area’s recent annual population growth of 1.5% exceeds the rates for eight of the top ten US metro areas. With this growth rate, Atlanta is on pace to surpass the population of Philadelphia by 2022, becoming the eight most populous city in the country.
All of this affects the mentality of a big group of potential home buyers. They currently own a home, and they want to move to meet the needs of a growing family or shorten their commute. But their income level will not support two mortgages, so their offers must be contingent on selling their current home. That creates two problems. The first is that sellers can choose from multiple offers and they are much more likely to choose a non-contingent offer than a contingent one. Secondly, these would-be home buyers are very reluctant to list their current home without having a new home under contract. And it makes sense – they don’t want to sell their current house and not be able to buy a new one. Let’s face it…moving stinks, and having to move twice stinks twice as much. So many would-be home buyers are “sitting on the sidelines,” waiting for the market to get less competitive before they seriously look for homes.
Dunwoody Mortgage can actually help our clients better position themselves to win competitive home purchase situations. You ask, “How can the lender help the buyer win a contract?” I’ll tell you…in the next blog post. If you or someone you know wants to buy a house and doesn’t have time to wait for the next post, call me. I would love to tell you how Dunwoody Mortgage can help home buyers win in this sellers market.
