Atlanta Real Estate Housing Update
Paraphrased From a report by Lawrence Yun, Chief Economist, National Association of REALTORS®.
Good news in housing. Existing home sales rose 2.4 percent in May. Compared to the same month one year ago, existing home sales were down by 3.6 percent.
The national median existing home price in May was $173,000, which is a decline of 16.8 percent from one year ago. Lower prices are good news for potential buyer. Housing affordability is at the highest since 1970. A middle-income family now has more than sufficient income to buy a middle-priced home at current mortgage rates and stay well within family budget. From one year ago, inventory is lower by 15.3 percent.
The first-time buyers will be the key to help drive up sales. First-time home buyers accounted for 29 percent of all buyers based on a survey of REALTORS about their recent clients. It is a decline from the 40 to 50 percent range in recent prior months. With all the homebuyer tax credits in place on national and state levels, this is troubling.
On the bad side, eleventh hour fallout is occurring on contracts because appraisals are coming in with unrealistically low values. I have a buyer and a seller that made a deal at a mutually acceptable price, but the appraisal killed the deal. We challenged the appraiser as to the correctness of some of the data he used on one of his comparable property. We supplied our data, and his response was that the property we supplied data on didn’t qualify as a comparable. Alarming thing, he chose it as his first comparable, we only questioned the home square footage. I don’t even think he read his own report since he rejected his first comparable property.
More properties are being appraised by non-local specialists, being based on non-comparables. Appraisers are comparing normal homes against distressed homes that typically are in disrepair and many have significant damage. Lowball appraisals are opening up additional negotiations which is delaying the closing or leading to the cancellation of the contract. Lower appraisals also force the buyers to come up with extra cash to make up the difference between price and appraisal, which some buyers are unwilling to do, and again lead to a fallout. This issue is suddenly escalating.
