I saw the first two months of 2011 as more or less a holiday hang over. While buyers are out there, most of them are waiting for not only the “perfect” home but also the “perfect deal”; those two merge infrequently. As always, the number of homes coming on the market in spring increases and the accurately priced, well presented homes are getting looks. In some cases, sellers of these homes will see strong demand for them – with so much garbage on the market, the properly presented homes draw attention. A few cautions are in order as I read the tea leaves for the next few months.
Increased Mortgage Costs
Fannie Mae and Freddie Mac, which provide liquidity to the mortgage market by buying mortgages and selling securities backed by them, are adding new fees to loans to people with the best credit and raising existing loan fees. Freddie’s new fees start March 1, while Fannie’s kick in April 1. The long anticipated rise in rates seems to be starting; moderate increases can take a bite out of affordability. I suggest that if you have a home in mind and are waiting for further drops or stuck at a negotiating impasse, consider that a rate increase will also cost you as well.
Continued Expectations of “Steals” by Buyers
While there are scattered “steals” that term needs to be kept in perspective. We have our share of trophies on the wall but they are the exception rather than the rule. FNMA, Freddie Mac, lenders and to some extent HUD are looking to get as much as possible out of each home. There are “steals” out there, just not where most folks want to be. If you haven’t already, have a “before” look at this foreclosure – I’m out there doing foreclosure appraisals weekly and this kind of stuff is completely “buyer beware”. The bottom line here is that losing feels worse than winning feels good; sellers are just not rolling over despite conditions – and that includes FNMA and banks in many areas.
Cash is King, Unless the Seller Doesn’t Care
As you have to be qualified to buy a home, does a seller care if you pay with cash or get a mortgage? I’m saying not really and so are many sellers including banks. The mortgage process is combative and adversarial, no doubt. Cash avoids that nonsense and most underwriting issues. But – that has to do with the buyer, not the seller. Of course issues may cause the deal to collapse but a good buyer’s agent and a competent lender will ride herd. Cash does however, matter when the home will not qualify for a mortgage due to condition, lack of a certificate of occupancy or other factors. Closings are typically faster which can be nice but at the end of the day, most sellers are concerned with net proceeds.
Areas of Atlanta are Holding Up
While stats from Case-Shiller attract attention, I don’t see them as very relevant. Mixing stats from devastated areas with those from the stable to slightly increasing areas is pointless. Atlanta is far too large an area to be viewed that way. Stats in general – and I’m a huge data hound and saying this – need to be kept in perspective. With the appraisal tools I have I can zero in on value several ways, by type of home, development, school district, age…….and the best analysis is one with multiple views. You can see the best and worst of the Atlanta area through ‘10 broken down by MLS area – with a map to lay it all out.