If you’re considering purchasing a home this summer but are concerned about the macroeconomic environment’s impact on prices and interest rates, consider the argument below. It explains why buying a home in Atlanta now might be better than waiting.
Two main concerns for home buyers this year are home prices and interest rates. In Atlanta, home prices have remained steady while interest rates have slightly increased, causing some buyers to hesitate. However, if you’re in the market for a new home, it may be worth considering that this summer could be a favorable time to make a purchase in Atlanta.
In Atlanta, we are severely undersupplied with housing. Even more concerning is that supply is declining into the summer. We started the year at two months of supply. We are now at 1.8 months of supply. Fortunately, demand has slowed, preventing home prices from rocketing back up to the highs in 2022.
These current prices are an opportunity for buyers. Buyers should consider purchasing a home sooner rather than later due to the current slower-than-usual demand. Atlanta is a rapidly growing city, and once demand returns to normal, home prices will likely increase significantly due to limited supply, barring any unforeseen financial crisis.
In fact, Atlanta home prices have already increased 8% since the beginning of the year. I expect prices to tick back up toward 2022 highs this year. There is a real risk of paying higher home prices by waiting.
We are in a buyer’s market for the first time in the last several years. This means that buyers finally have some room to negotiate and, in general, aren’t having to pay over the asking price with fewer concessions.
However, this buyer’s market won’t last once demand picks back up, and I anticipate us getting right back into the competitive seller’s markets we were in the past several years.
More importantly, getting an appropriately priced home today means that you can build equity faster as prices increase into 2024.
Yes, Interest rates are higher than they have been in the past decade, yet they are still below the historical average. The average of a 30-year fixed rate mortgage from 1971 to the present is 7.75%. So consider that the 3-4% rates we have seen in the last decade are the anomaly, not the norm.
Therefore, postponing buying a home in hopes that rates will return to the 3-4% level is a risk. The risk is that home prices continue to rise, and we could return to 2022 prices sooner than later, which would be about a 7% increase from the April median price of $405,000. Paying higher prices is a greater risk than missing a lower future rate.
Why is it a more significant risk? Because if you purchase a home and rates go back down, you can have a “do-over” and refinance. You don’t get a “do-over” with the price.
Of course, refinancing is not without cost. Refinancing typically involves closing costs, which can include fees for application, appraisal, title search, and other expenses. It’s crucial to factor in these costs and evaluate whether the potential savings from refinancing outweigh the expenses involved.
Now is a good time to buy a home in Atlanta. The home prices are favorable to buyers. Waiting to buy in hopes that interest rates return to 3-4% is a risk. The risk is that Atlanta home prices could increase quickly if demand continues to pick back up and supply remains limited.
As your realtor, I take all the aforementioned opportunities and risks when helping you find the right home at the right price for your needs. If you want to buy or sell a home this summer, please do not hesitate to contact me.