By Curt Yeomans
State and local realtors are urging potential home buyers to take advantage of the current state of the housing market.
The average price of a single-family home in Henry County has dropped by $4,322, while Clayton County saw a $10,398 drop in the average sales price. Across Atlanta, and the rest of a 20-city composite, the average price of homes dropped, based on the findings of the Standard and Poor's Case-Shilling Home Price Indices.
The findings were released Dec. 26, based on monitoring conducted in October 2007.
Atlanta saw a decline of 0.7 percent during a one -year period ending in October 2007. The price of an existing single-family home in the indices' 20 city composite dropped 6.1 percent during the same period.
The result, realtors say, may see sellers lamenting, while buyers are elated.
"You can get a nice-sized, two-story home for $200,000," said David Barton, vice president of governmental affairs for the Metro South Association of Realtors. He works with realtors in Clayton and Henry counties.
"In Clayton County, you could get a 3,000- to 4,000-square foot home for that much money. In Henry County, however, it would only get you a 2,500- to 3,000-square foot home," said Barton.
The reason prices dropped at the end of the year is partly because sub-prime mortgage loans "blew up" in August 2007, and builders have been "building like crazy," said Van Johnson, the president of the Georgia Association of Realtors.
Johnson said sub-prime loans were designed for people who didn't have as much financial resources, or as strong a credit rating, as someone who qualified for a prime loan. Those loans were offered to buyers with little, or no down payment. Eventually, enough buyers were failing to make payments and companies on Wall Street decided to stop funding the loans. Johnson said the Atlanta area was the part of Georgia most affected by the sub-prime loan collapse and the excess of available housing on the market.
North and southwest Georgia were affected by Florida residents, who traditionally buy second homes in the Albany or Hiawassee areas, who have not been able to sell their homes in the sunshine state.
Not all areas of Georgia struggled in 2007. The coastal area stretching from Savannah to Jacksonville, Fla., did not see a drop in home prices.
"People still want to live on the beach, or near the ocean," Johnson said.
Johnson explained that 2006 was the strongest year for home sales in recent history, and it was hard to sustain those levels in 2007, especially considering the collapse of the sub-prime boom near the end of 2007.
"The first half of 2007 was great, but the second half of the year struggled ," he said.
Barton and Johnson both believe the next six months are the best time to buy a home. Johnson says there are three factors why buyers should search for a home now, rather than waiting six months, including:
· A large inventory of unsold homes currently exists.
· Builders, sellers and bankers are motivated to work with buyers, and sell the housing inventory.
· Interest rates are hovering around 6 percent.
"This is a great time to buy a house," Johnson said. "Right now, deals are being cut and the smart people are out there buying homes."
Barton echoed Johnson's statements, adding "This is absolutely a buyer's market."
Johnson said, however, that the buying public has been scared away from buying homes right now. "The media has traumatized the buyers to the point where they are scared to look," Johnson said. "People don't know what to do, so they are doing nothing."
Both Barton and Johnson said buyers need to know the deals that are currently available are not likely to exist in 2009.
"All of these buyers who aren't out there looking for a home right now are going to wish they had been [searching], if they wait until the summer or the fall ,when everyone else is jumping on the bandwagon," Barton said.
Johnson had one piece of advice for people who want to sell their homes right now: Don't do it.
"There are enough houses on the market at this time," he said. "Wait a year, and then sell your home. You'll be able to get more money for it in a year, anyway."