5 Atlanta Zip Codes Driving Today’s Market Momentum

 

Data Translates to Dominance

In Atlanta’s highly competitive luxury and high-demand market, success is no longer about simply touring properties—it’s about having a precise, data-backed strategy. This analysis is designed to provide transparent insight into where the true value and momentum lie.

We've analyzed the current market to identify five strategic zip codes shaping the landscape of Metro Atlanta. This isn't just data; it is your blueprint for wealth creation and strategic homeownership.

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The Apex of Luxury and Investment

1. 30327: Paces / Tuxedo Park

This area remains the gold standard of Southern luxury. It is defined by its legacy, privacy, and expansive lots, but it is also a highly strategic investment. 30327 confirms its status as a legacy asset where space and location manage both effortlessly. Securing these generational properties demands high-level efficiency in the transaction process.

2. 30305: Buckhead Village

Demand in this central hub is often cited as being cyclical, not seasonal. The median home value of $1.2M reflects the premium paid for sophisticated, walkable living near the city's finest retail and dining. Market intelligence focuses on opportunities driven by density, ensuring purchases maximize appeal and financial longevity within Atlanta's core.

3. 30342: North Buckhead / Chastain Park

This zip code is recognized as the "everyday luxury champion." It offers superior market value for square footage, leveraging the vast green space of Chastain Park combined with easy access to major retail hubs. Buyer confidence is strong, resulting in fast sales and securing enduring appeal for families. Value is maximized here by balancing lifestyle, location, and the efficient deployment of capital.

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The Northern Momentum—Strategy for the Future

4. 30328: Sandy Springs

The 30328 area delivers a perfect balance: close enough to Buckhead for convenience, yet far enough for a protected calm. This region performs without pretense, showing high buyer confidence. Low days on market demonstrates strong market stability. Clients gain an advantage when market knowledge targets value where high quality intersects with secure financial positioning.

5. 30009: Alpharetta / Avalon District

This northern market proves that "suburban" can be anything but sleepy. The area has captured tremendous momentum driven by the highly desirable live-work-play environment of the Avalon district. This area' appeals to the modern, busy luxury buyer and investor seeking quality new construction and amenities.

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Certainty is the Final Strategy

After two decades of serving Metro Atlanta, C&R Innovations Inc. has established its reputation on one principle: precision. We don't chase trends; we use data and market history to secure your future.

The closing table is not the end of the journey—it is the final step of a precise plan.

Ready to move from market curiosity to strategic ownership?

Tap the Link in Bio to connect with Dwayne today.

Days on Market.....Does it Matter???

      Days on market can be a good indicator of what's going on with a property before you even see it. With street views, interior photos, public records and access to comparable sales a savvy agent can tell you exactly why a house has been on the market for an extended amount of time.  The myth is that the longer a home has been on the market, the better the deal is that you can get on it.  While that may be true on an overpriced house, it's not very common. Truth is, there are NUMEROUS reasons a home stays on the market for an extended amount of time. I'll discuss the top reasons:

OVERPRICED
      If a home is overpriced, unless someone is paying cash for it, it will have a hard time selling if the sales price is over the appraised value.  More important than the appraised value is what the market value is of the property. A home is only worth what buyers are willing to pay for it even if it will appraise for a higher amount. Sellers don't overprice their homes just because! Here are some common factors:

• Current mortgage amount
• Improvements / upgrades cost
• Meeting short sale requirements
• Testing market demand
• Seller/Agent unaware of comparable sales
• Title Issues / Liens on the property

CONDITION / FLOOR PLAN

      The more work a property needs the smaller the number of buyers there are for it. Homes with more than $5K in repairs eliminate all FHA buyers. Rehab loans are available, but not very popular. Once a home needs more than $25K in repairs, most buyers are not only paying with cash but are (or are aspiring to become) familiar with construction.  No matter the condition of a property, fire damage or even a tear down, if it's priced right there is a buyer for it.  The actual style of the property can play into this as well. Homes with 1 bathroom that are OTP are difficult to sell in the suburbs which are (larger) family-oriented.  Homes with no master bathroom or a shared master bath are obsolete floor plans which can be a hard sell. More recently, split foyer floor plans are not as popular ---especially those with only one bedroom on the upper level.  The same goes for two-story homes where the master bedroom is the only bedroom on the main floor. Homes with a small master bedroom also have a VERY difficult time selling especially when they are in a higher price point.

EXTERNAL FACTORS

      You may think a bad neighborhood is an automatic deterrent but not all the time. The vicinity from the less desirable things is the key. Having a crack house in the area isn't the issue but it being across the street or NEXT DOOR is.  Being the 1st house in a neighborhood is usually a turn-off for most buyers inside a subdivision.  Here are some common external factors that will affect how fast a house sells:

• Power lines / cell towers
• Main roads or highways with high road noise
• Retention ponds, water runoffs, sewer access drains
• Steep driveways or sloped backyards
• Surface street traffic during rush hour / weekends
• No similar properties around or near the property; house stands out too much

Luckily with the use of satellite views and even street view technology, you can identify these things without even visiting the property. Interior photos can also reveal a homes flaws even if there are no pics of the flaws.  Some agents won't photograph the issues with the property--have you ever seen a listing with only exterior photos???

Larger Tax Refund or Larger House? Pick one.

      It's tax season. Many people are looking for the fastest way to file and get their money back so they can use that money for large purchases---like a down payment on a home.  In order to get a larger refund, you will usually identify expenses that will allow you to lower your taxable income. Many tax preparation companies advertise that they can get you the maximum refund but is that in your best interest when you're planning on purchasing a home?
      One common misconception about tax refunds is that they are a 'good' thing. A refund simply means you've overpaid in taxes the previous year and are being refunded.  While this annual check is good for some, many could do more with that money during the year.  Instead of the making the IRS a savings account, you can save that money yourself throughout the year and put it towards things you need.  The self-employed understand this and their main goal is to either break even or owe as little as possible.  Running a business requires you to use all available funds for expenses that must be paid in order for your business to sustain and grow.  However, when those that are self-employed go to purchase cars or properties, they soon learn that claiming all of those expenses and/or taking losses will decrease their taxable income which is what lenders use to qualify you for a mortgage.  It's common for some one with a million dollar income to only show themselves making $25k-$30K annually! As much as it hurts, you must show your true expenses in order to increase that number in order for a bank to lend you an mortgage that reflects your income.
      Another popular misconception is that this only affects the self-employed since a W-2 employee has taxes taken out automatically. Not the case. There are a LOT of W-2 employees that claim additional dependents, write off expenses from side businesses, rental properties, and will even claim losses in order to get a bigger tax refund.  Unnecessary expenses will lower your taxable income and decrease the amount of your potential mortgage.  In both self-employed & W-2 employee cases, your tax returns cannot be immediately amended and then reconsidered AND they have to reflect these numbers for two years.
      If you plan on purchasing a home in the next few years, be sure to connect with a loan officer before you file your taxes. They know more than just credit scores!!! They will show you what banks are looking for on a tax return and can provide tips on how to increase your chances to get not only approved, but increasing the amount you can get approved for.

Why should I get pre-qualified now?

So you've seen that the real estate market is 'back' and it seems like everyone is thinking about purchasing a new or another home.  With prices increasing, it is the time to start the process if you want to purchase in the next year or so.  Many people don't realize that while you may not be ready to purchase right now, this is the time when you need to start the process so when you are ready, you will have a smooth process without surprises.  Here are six reasons why you should apply for a mortgage even if you don't plan on buying until 2015:

1. MAX SALES PRICE.  You need to determine your maximum sales price based on your income and current debt payments.  This number will tell you how much house you can buy.  This gives you a cap to use when you are online browsing homes and neighborhoods and to set realistic expectations. If your max is near the minimum sales price for an area and prices are increasing, you will likely be priced out of that area so you'll need to focus on some backup areas to move to in 2015.

2. HOA FEES.  Annual association dues are not as big of a concern on single family homes as they impact you more on townhomes/condos with monthly HOA dues.  Even though these fees are not a part of your mortgage payment, you lender treats them like they are and count them against your debt-to-income ratio.  So you may find the right property in the sales price range you want BUT if the monthly HOA fees are too high, you will not be able to qualify even though you qualify on the mortgage alone.

3. PROPERTY TAXES.  These affect single family homes more than they do condos and are more of a factor in Dekalb and Fulton County.  Your annual tax bill is amortized into your mortgage payment so it can greatly increase the payment and cause you not to qualify. A good loan officer will recognize this and give you a cap on where the taxes need to be assuming you stay within the sales price range and have a decent price on hazard insurance--which is also amortized into the mortgage payment.

4.TYPE OF LOAN.  Your basic loan types are FHA and Conventional loans.  FHA loans require 3.5% down and Conventional 5% or more (usually 10%).  FHA loans have standards that the property must pass in order to qualify for financing.  Mainly, the home cannot exceed $5,000 in lender required repairs.  This is crucial to know when assessing properties that need repairs in order to be occupied.  With condos, you must ensure the community is FHA approved which many are not due to a multitude of reasons.  Knowing if you're using an FHA loan up front will allow you to filter out homes that cannot qualify and save you time, money, and headache!

5. LOCATION.  Based on the results of your pre-qualification, you will be able to determine what areas of town you can move to.  Your ideal areas may be out of your price range or may not have enough inventory of homes that qualify for your financing criteria.  While it is important to know where you want to move to, getting pre-qualified will determine where you can move to.  If you require down payment assistance, you'll want to know what areas are eligible and/or what counties offer programs that you can qualify for.

6. TASTE FITS THE BUDGET.  Once you've analyzed where you are loan wise, you can determine if your wish list matches up with your budget.  In other words, if you can afford what you want.  The best process of elimination is to select your top 3 areas, minimum number of bedrooms, and size/style requirements. These are items that cannot be changed.  Other aesthetic items like wood floors, stainless appliances, kitchen islands, etc. are things that can be added later to make the home your own.

I have a full list of the lenders I close loans with; any of them can assist you with starting the process now so you can purchase later!

Home Inspection Top 5

One of the biggest myths about home inspections is that they are required. Home inspections are actually optional but usually recommended for peace of mind for the buyer.  There is a saying among agents (or maybe it's just me) that you can send three inspectors into a house and come back with three totally different reports.  While items each inspector chooses note or omit, there are some basic items that should be unanimous like code violations and safety hazards.  When it comes to cosmetic repairs and maintenance items, some inspectors can create a phone book of 'repairs' that can intimidate some buyers. But no worries, here are the top five things you need to look for in a home inspection

ROOF
   Starting from the top to the bottom a leaking roof can cause immediate damage to studs, rafters, and drywall. That moisture can then breed mold if not remedied.  Roof repairs can be reasonable, but replacing a roof can be extremely expensive.  If a house needs a new roof it is an expense that can be worth walking away from. When a roof has existing issues, there is no guarantee that your hazard insurance company will cover a new roof.

ELECTRICAL
   Outdated electrical systems or those with missing components can become a headache quickly. Older systems may require new breaker boxes & outlets.  Damaged or missing systems could add up to a ton of labor hours for an electrician to troubleshoot and remedy the issue. On top of that, it's an immediate fire hazard so any system with faulty components should be avoided if the owner is not willing to make the necessary repairs.

PLUMBING
   Plumbing issues can be very deceptive as they seem like very simple fixes, but the labor to repair them can get pricey. Broken, buried water lines & septic tanks are the more well-known issues to avoid but not many people know about things like polybutelene pipes which can be a nightmare if they begin to leak. There are home warranty companies like Old Republic & 2-10 Home Warranty that actually cover these systems and companies like Delta Mechanical in Lawrenceville that specialize in overhauls of these systems.  The labor for plumbing is two-sided since you pay for the parts & labor PLUS the expense of a separate contractor to repair the drywall & repaint walls that have to be opened to access the plumbing.

STRUCTURAL
   In my almost 12 years of real estate I haven't seen many homes with a structural problem, but when I did they were immediately evident. In some cases, the entire sections of the house will need to be rebuilt in order to preserve the structural integrity of the home. Sadly, some damage can be irreversible and the only options are to rebuild or temporarily brace the structure as there are not many long term solutions.

FOUNDATION
    While basements are the most popular location of a foundation issue, homes built on a crawl space and even homes on a slab can have foundation problems.  Crawl spaces can uncover an inadequate number of pillars and peeling back the carpet on a ranch may reveal a crack in the slab of the home. Most basement repairs can be done, but the prices can range from $4K to $60K+!!!

Mostly a home inspecting is to give you an unbiased assessment of a properties condition before you purchase it.  It also educates you on the numerous maintenance requirements a house demands along with the consequences if those items are not maintained. You should use your home inspection as a tool to negotiate repairs to be done prior to closing as well as a blueprint to items you need to address once you purchase a home and assume the responsibility for maintaining it.

HOW REAL ESTATE AFFECTS TRAFFIC

     

Metro Atlanta experienced 3"- 4" of snow followed by below freezing temperatures leaving icy roads and combined with a mass exodus of commuters caused a traffic nightmare causing stranded motorists. There was a similar occurrence in 2011 when the area experienced 5"-8" of snow but since it happened on a Sunday night, there were not as many people on the roads and traffic was not as bad.  Metro Atlanta is one of the only metropolitan areas that even if you live in the city, you'll still need a car due to the lack of extensive public bus/rail systems like you would find in Chicago or New York---even though Atlanta is the ninth-largest metro area with a population of about 5.3 million people. This recent turn of events will have some people rethinking where they live as it pertains to their commute and go about their daily activities.  Commercial real estate (mainly retail & office/industrial) and residential real estate are a factor in how these people will assess whether or not to move to a certain area. Let's look at how residential real estate affects infrastructure.
      To make it simple, when people inhabit a new area, as more people move, there roads are built to accommodate traffic & retail shopping built to service them. When new homes, condos, and apartments go up, the impact on traffic in the immediate area is obvious. New lights, turning lanes, or even streets are installed to help ease traffic.  As that area grows, the on-ramps and interstates themselves grow to accommodate the new commuters.  The money to fund these projects come, in part, from property taxes.  When legislation or new taxes are proposed for road projects, voters have the opportunity to vote to have their property taxes increase to pay for these projects. The residents directly influence the traffic by funding or declining taxes/legislation for new infrastructure.
      The Untie Atlanta campaign that was shot down in 2012 which proposed more mass transit and road projects in Fulton County. The recent shutdown of the city is an example of why proposals like this which will increase mass transit are needed.  Improved mass transit (mainly railways) provides an alternate form of transportation in/out of the city as well as means to evacuate when roads are not an option.  The same way the taxes are proposed and can be voted for/against, residents can also attend public hearings to approve/oppose new construction in their area. Enough opposition to a project from residents can deter the construction or allow it to move forward. An example of this is in Dekalb County when in a 5-year period a Wal Mart, a hotel, and a 400+ unit apartment complex were added---all within a 2 mile radius! This caused horrendous conditions to an already heavy commute between Panola and Evans Mill Road.  The most prevalent example of this working was the Gwinnett County SPLOST. It was recently renewed; it's most noticeable projects are the Sugarloaf Parkway extension, the revamping of the I85 / SR-316 junction, and the overpasses on SR-316 which are still under construction. Residents have the power to approve projects that will improve conditions.  If there is no opposition from the residents on negative impact projects, unfavorable commutes can be a reality almost overnight.
      The extension of public transportation systems (especially bus lines) have had tough times getting approval when up for a vote for various reasons.  This appears to the be the only solution to Atlanta's traffic woes; it is one of the ONLY cities where (as a native Bostonian brought to my attention) two major interstates actually MERGE TOGETHER THROUGH THE HEART OF THE CITY!!!  Expressway additions like the outer perimeter and Northern Arc were both snubbed by budgetary constraints, political pressure, and public opposition. The fact that some of the land originally designated for it was sold to housing developers during the real estate boom that peaked & crashed didn't help either.  New express lanes are being used but the fact that they do not have their own on-ramps/exits seem to defeat the purpose if you have to get back into traffic to access/exit them.
      When assessing an area to relocate to you want to take into account and satisfy your 3 main reasons for moving---whatever they may be. You then need to take into account your commute, access to retail, school systems, and taxes (i.e. what you get for your money) if they are not already in your top three!

2014 METRO ATLANTA REAL ESTATE FORECAST PART ONE

   2013 was a huge year in real estate for Metro Atlanta. Not only did we see sales increase all across the board, but the low inventory of homes pushed prices up.  There are three areas that you will see all around you this year as signs that the housing market is growing stronger.  I wouldn't say it's 'back' simply because it's been back for over two years now. News flash, the market rebounded in 2011! Let's look at 3 key areas: new construction, traditional sales, and foreclosures/short sales.
   The low inventory of homes in high-demand areas spawned a new construction boom that will catapult 2014.  All through Gwinnett, Cobb, and Fulton County builders were able to get back to good ol' days of new construction. Decorated model homes, on-site agents, standing inventory with incentives and pre-construction contracts. Extremely high-demand school districts with low resale inventory saw new communities pop up in the $300K+ range. Communities with vacant lots now new have builders constructing comparable homes. In-town areas are seeing undeveloped lots being sold and homes going up starting at $600K.  The benefit?  Everyone likes NEW! The downside?  Well, there are many. In most cases the aesthetics are inferior in quality compared to the original homes in the first phase(s). In the entry level in-town homes, the kitchens and master bedrooms are more grand but the secondary bedrooms/bathrooms and living spaces have suffered.  In the suburban homes, the interior floor plans have grown, kitchens have become more open, maintenance is also more economical with the removal of the two-story family and some builder moving away from gas utilities.  The short comings are in the appliance packages, standard flooring & fixtures, the exterior brick-front construction, smaller lot sizes, and backyard shrinkage.  Builders have continued the cut backs on items like refrigerators, garage door openers, window screens, alarm systems, shower doors, closet racks, architectural shingle roofing & gutters.  But overall, the trade-offs what what you get for your money being worth it or not, is in the eye of the buyer.  Granted, the housing market in 2014 is very similar to the market 6-8 years ago sparked by the current demand so skimping on those items is still justifiable.  What is not the same is no more shady builders.  With tight reigns still on commercial and builder financing, the only builders you see now are reputable ones who are solid financially; John Weiland, D.R. Horton, Ashton Woods are some names you'll recognize but others like Paran Homes & Almont Homes have numerous communities going up throughout the Metro Atlanta area.
   If you're looking at traditional resale homes, the most important thing (which hasn't changed with the new year) is to determine what the home is worth. Getting a quick Zestimate never hurt anyone, but it's what it says it is, an estimate! The good folks at Zillow actually confirmed this on my fan page a year ago (has it been that long?!?!)  To get the true retail value you need to look at homes that have sold within a 3-6 month period, within a 1-mile radius, similar square footage, age, and interior characteristics as ALL of these play a big part in the value of a home. A zip code change or a school district can drastically affect the value of a home even though it's less than a mile away! Finished basements, square footage, and number of bedrooms/bathrooms are also key so you need access to all of this information to compare, adjust cost, and determine the true value of a property. With that you'll then need to analyze the seller's mortgage position to determine the seller's bottom line and formulate an offer than gets you the best deal that a seller will accept! Sounds easy right? Well it AIN'T!!!! That is what great agents are for!
    Foreclosures and short sales are still big buzz words but both lost steam in 2013. Foreclosures because of the lack of them and short sales because the unemployment rate went down and more people were able to stay in their homes! Good for people, bad for inventory. Fannie Mae, Freddie Mac, and HUD foreclosures are still entering the market consistently, but the bank foreclosures are few and far between.  The trick now is getting your hands on one!  Short sales (sadly) haven't gotten any shorter and they can still take 3-9 months to close. My personal short sale listings average a 4-month turn-around from list to close. I still have some that drag out up to 6 months and hell, I know what I'm doing!
  Purchasing in a sellers market can be a real drag with all of the competition and low selection, but doing your homework up front and creating a strategy makes the difference between you either finding a home and keeping your sanity or driving you crazy and driving you around Atlanta!

New construction is back!

      New construction is (finally) back in full swing. It started only in the $500K+ price points in 2012 and mostly in the highest appreciating / highly sought after areas in Metro Atlanta Johns like Creek, Sandy Springs, Suwanee.  But within the last 6 months builders have now entered the $200K+ price point in some counties along with builders going into previously incomplete neighborhoods and finishing them out.  Communities in any price point, and in just about any county, are seeing these previously abandoned communities now under full-blown construction with houses selling as fast as the builders can complete them!  The low inventory has opened a window of opportunity for builders to re-enter and set the market pricing.  Bank-owned sales in September 2013 are now at 2%, down from 13% of total sales in September 2012.  This is great for homeowners that wanted new construction but had nothing to choose from and  also giving hopes to nearby homeowners looking for a property value boost to enable them to sell their homes.  New construction, as exciting as it is, does have it's pitfalls.

      The first thing you need to know about new construction in this market is that you don't have much leverage as a buyer. With all of the buyer competition you have little room for negotiation on pricing. Your best area to get a 'deal' is getting the builder to either add additional upgrades or complete unfinished spaces versus haggling on the price.  Closing costs are pretty much off the table as far as negotiation so you'll need to be prepared to pay for some closing costs even if you use the builder's lender.  Your best opportunity to get a price reduction in new construction is on a standing, completed homes since the builders want to sell those properties before they have to begin paying mortgages on them.

     The agents at new construction communities represent the BUILDER and not you!  Whether you use a real estate agent or not, the listing broker makes the same amount of commission (unlike traditional sales & foreclosures). You do not get a better deal by not using an agent since the builder has already equated paying a 6% or more commission into their bottom line.  Furthermore, builders don't use standard real estate forms. Their contracts are written up by their attorneys so you definitely need to have a good understanding of what you're getting into (especially when in comes to 'up-front' money) before you enter into an agreement.  Having an agent represent you doesn't cost you anything and is well worth it.

      When it comes to financing a new home, builders will usually offer an incentive or set contribution towards closing costs (or both) if you use their lender.  Even if you use their lender, most builders will not pay ALL of your closing costs.  You want to secure an outside lender first in order to have an idea of what loan product you qualify for in the free market. You can use this as leverage for the builder's lender to either match or beat what your current lender is offering and still get the incentive.  In some cases, the on-site lender cannot compete or are partially owned by the builder. In these situations, you want to present your lender's offerings and inquire if they've closed loans with the builder before. Builders are more likely to use an outside lender that they've had previous experiences with and may even give you the same incentives.

     Buying new construction can be a very exciting process.  Being able to customize a home and see it being built is definitely an experience that some people dream to have. However, the financing, contracts, and construction disputes can make it a nightmare so you need to educate yourself on the process before going in!

FHA Loan Buyers Facing Obstacles in the Current Market

Last May, I wrote a blog "Bidding Wars are Back" and since then, the competition has only gotten more fierce.  Not only are there other home buyers to compete with, but now out-of-state and international investors have hit the Metro Atlanta Market and are literally devouring the inventory. At the time of this blog, there is roughly a four-month supply of homes on the market by my estimation.  This is GREAT news for property values and upside-down sellers looking for a way to get out of their current homes to take advantage of the market.  This is troubling news to home buyers that are using FHA financing to obtain a home because the requirements that come along with an FHA loan are a major turn off to sellers and their agents alike. Here are the three biggest hurdles you face when using an FHA loan.
      The first hurdle with FHA loans is that the house must meet a certain condition requirement in order to pass an FHA appraisal be deemed eligible.  Most banks only sell properties "AS-IS" with no repairs and cash strapped sellers are not looking to do any repairs on a money pit. Most sellers would rather take an all cash offer for less money if it means they can unload the home in it's current condition.
      The second hurdle is the time it takes the loan to close. With the average lender quoting 30-45 days, this is not attractive to a seller. A cash deal can close in as fast as a week and conventional loans in under 30 days.  The bright spot here is that the time it takes an FHA loan to close does vary from lender to lender. All of the lenders I close loans with have the ability to (and actually have and still can) close an FHA loan in 18-21 days.  I have a list of the lenders I work with on my website.
      The third hurdle is the FHA appraisal. This appraisal is a double-edged sword. On one side, the appraiser is allowed to morph into a home inspector and note repairs that they feel are necessary to make the home liveable. On the other side, whatever the home appraises at (whether higher or lower than the list price of the home) the home is stuck with that value for 6 months. So let's say the house appraises for less than the contract price, the seller isn't willing to reduce the price and the deal falls through.  Even if another FHA buyer comes along and is willing to pay more, their lender will not allow them to obtain a loan for more than the current FHA appraisal.  So now the seller can only sell the property to a cash buyer or a buyer using conventional financing.
      If you are unable to save up more down payment to go conventional and you must use an FHA loan, all is not lost!  You must be EXTREMELY aggressive when making bids and willing to hunt alongside your real estate agent for listings, and be prepared to see homes the same day you find them.  Put out multiple offers and hope one sticks; even put in a blind bid if that's what the situation calls for.  The current Metro Atlanta real estate market will not wait on you to make a decision, you need to already have your mind made up before you start looking for a property!
     

To upgrade or not to upgrade? That is the question.

Most improvements made to a home are to add value when it's time to sell it FIRST and for personal enjoyment second. But since the housing bubble popped in 2007, the return on investment (ROI) on home improvements is not what it used to be.  Which brings us to the question, when you're buying a home, should you look for outdated homes that need upgrading to get a better deal OR look for homes that have already been remodeled with a higher price tag?

When you're purchasing a home, whether it's your first or third, you will usually have some ideas of what you want the house to have.  Taking on a construction project can be daunting, especially if it's one that involves contractors--which is pretty much ALL of them! Ever since the 'housing boom' of the 2000's, channels like HGTV or have been full of do-it-yourself home projects, design ideas, & dream (and nightmare) remodel shows. These shows spark the inner interior designer in all of us and cause consumers to entertain the idea of either wanting to upgrade a home they're looking to by or expanding their contractor vocabulary when identifying features in a home they're looking to purchase. Buying a property that needs upgrading is always less attractive than an upgraded property to new buyers but even more so now with low home prices.  In my recent experiences, you are better off purchasing a home already upgraded and paying the slight increase in price.  You'll end up spending less overall than buying the same home at discount and doing the same upgrades after purchasing it. So in other words, if you're looking at two comparable homes, paying $20K more for the home with the updated kitchen and bathrooms is a better move than buying the fixer-upper, which may cost you $30K or more to duplicate the kitchen alone.  Even if you look at this route as simply financing the upgrades, you're paying less overall for the upgrades so you still come out on top---assuming that you don't have a team of contractors at your disposal and are able to pay cash.  In the Metro Atlanta market,  finding a $250K home with features usually found in $400K homes was almost common place in 2009-2011 and are still found in foreclosures entering the market today.

If you're looking to do some updates before you sell you home consider this.  Over the last 5 years, home buyers have enjoyed amazing home prices and selection. As inventory has shrunk over the last 18 months, we're beginning to see investor flips entering the market for sale as well as traditional sellers (like you)  that are not underwater and are finally able to sell. The ROI on upgrades has not been what it used to be. Lately, adding heated, square footage has been the only guarantee to add instant value to a home. Kitchen and bathroom upgrades used to be automatic value boosters, but a lot of recent sellers will tell you that the $40K kitchen upgrade didn't do much to boost the price of their home in our current market. We are currently in a seller's market and I suggest sellers leave the property as-is. If you're going to take a hit on the sale of your home, it should be from the proceeds of the sale of your home (potential revenue) versus losing money on upgrades you do to potentially increase the value (out-of-pocket funds).  Only do actual repairs that a new home buyer would likely request to be done after having a home.  Most of your competition that upgrades properties before selling them are investors using their regular team of contractors; they can complete projects for 30-50% less than you could as a novice hiring new contractors that you have no relationships with.  Since those investors likely paid less for their property as a foreclosure or short sale than you you did as a retail consumer, it make is worthwhile for investors to upgrade the properties they flip. inspection.

Looking to Buy or Rent? Be Ready For a Surprise!!!

The metro Atlanta real estate market is now on the rise. The market hit bottom in 2011 and began it's climb in 2012.  A low supply of homes has now started a wave of new construction that has not been seen since 2006.  Banks are now favoring short sales over foreclosing on homeowners. Some previously upside down homeowners are now able to sell their homes and with rates below 3%, they are able to upgrade the house without upping the mortgage. Investors who purchased within the last 3 years with plans of buying and holding are now unloading properties.  So what does all of this mean for someone looking to buy or renting for the next few years before purchasing?

If you are looking to purchase the market is not a friendly one. There are not as many deals as you may have seen over the last 18 months.  The overall number of homes on the market it down and prices across the board are up.  With an influx of larger investors and second-time home buyers, competition is at an all time high.  This will require diligent efforts of your real estate agent to locate properties within your criteria and you making a QUICK and informed decision on how to bid the most aggressively to beat out the competition.  HUD, Fannie Mae, and Freddie Mac properties are the most favorable route since they offer periods that they will only look at offers from owner occupants. This gives everyone a fair shot at getting their offer submitted, reviewed, and hopefully accepted.  Unapproved short sales still are not favorable route for a buyer looking to move in 90 days or less. Buyers using loans will need to work on saving up more money to cover their down payment along with closing costs in order to make a more favorable offer to a seller. There are a lot of cash buyers so if you're using a loan the competition is fierce.

If you are looking to rent, you will notice that there is an abundance of rental properties now available.  You will see a lot of property management companies with numerous properties and stricter application processes. What you will also notice is that rent rates have become very negotiable since there is a glut of rental properties on the market as a result of the 2008-2011 foreclosure purchases.  As a renter, you will see  properties in better condition and with incentives all in an attempt to steer you into renting.  Always evaluate the fair market rent in an area before looking at properties so you are able to negotiate on the spot when you are viewing potential rentals. If you are a strong applicant (good credit, good rental history, solid employment) or are looking for a long-term lease you definitely have the upper hand in negotiating rental rates. Be sure to include provisions in the lease regarding if the landlord sells the property and that the landlord provide monthly proof that the mortgage(s) on the property are current.

That's What Buyers DON'T Like

As spring approaches, the Metro Atlanta real estate market is seeing low inventory and rising property values. This is opening the door for regular resales to enter the market to compete with the short sales and foreclosures.  With multiple offers on foreclosures and lengthy approvals short sales being common place, this has made a 'normal' sale much more attractive; dealing with a person and not a bank, quick closings,and quick response times to offers.  This has set the stage for homeowners to list their properties in order to break even and possibly (dare I say) make a profit! However, some features of your home, that you think are special, may prove to be an obstacle in getting max dollar for your home.

CARPETED BATHROOMS
NO ONE wants this!!! Get rid of it....


VAULTED CEILINGS
Two story foyers and family rooms make a statement. What you don't want them to say is high energy bills. Provide a copy of your utilities for buyers to see in winter and summer months so they won't overestimate what their potential bills will be.


CORNER LOT
Some look at it as a 'premium' lot with great curb appeal. Most look at it as a lot with typically higher property taxes and an unfavorable backyard.  The best way to combat this is to fence in your backyard to eliminate the guesswork of the property line and to define the space. Planting leyland cypress bushes or trees to create a barrier can sell the idea of more privacy and a better view.

MASTER ON MAIN AND SPLIT-FOYER FLOOR PLANS
Master bedrooms on the main floor are appealing to older buyers or those with health issues.  They do not appeal to young families or those planning to have children because the secondary bedrooms are upstairs and not quickly accessible.  The split-foyer plan gives you additional living spaces & bedrooms like a home with a basement but feels more like a part of the the house. Most buyers don't like opening the front door, being confronted with stairs and having to go up or down. Unfortunately for these two floor plans, buyers will  eliminate them all together from their search so for the buyers who will consider them you will need to play to the strengths of each floor plan. For a master on main, make the master bedroom feel large and the other bedrooms functional an office, gym, or media room. On split foyer floor plan, make the lower level more attractive than the main level.

POOL
A pool can be a gift for parties and gatherings and a curse if you have the pleasure of maintaining it yourself.  The best way to overcome the negative aspects of a pool is to spruce it up and make it look new and well-maintained. Make it appear as all you do is turn it on and swim, little to no maintenance.  Be sure to have extra chemicals and all the necessary equipment (in working order) to pass on to the buyer making them confident that they can maintain it with ease.  You also want to use furniture and accessories to sell it as an additional entertaining space even when you're not swimming.

HOMEOWNERS ASSOCIATION
A homeowner association (HOA) should represent a stable, maintained community, with responsible homeowners that want everyone to be accountable for the neighborhoods condition. The reality is that some HOA's are bankrupt, don't do much to improve the community, and are ran by management companies and not the residents. A large perception of HOA's is that they are overly strict and can become a nuisance as they enforce the bylaws. The best way to overcome this apprehension is to offer a copy of the covenants and bylaws to potential buyers and if you are in a community with rather high HOA fees, consider paying a year's worth of fees as a buyer incentive.

2013 Metro Atlanta Housing Market

SHIFT IN THE ATLANTA MARKET

The last quarter of 2012 saw inventory across the board drop and prices begin to increase.  In 2013 that trend will continue.The first segment that will continue to see decline are the foreclosure/REO properties.  Lenders are looking to push bulk sales to investors and increase the number of short sales on their current borrowers.  Some lenders prefer to do a short sale over a loan modification.  In 2012 we saw lenders who actually solicited mortgagees to do a short sale and receive up to $30,000 in relocation assistance. With less foreclosures and more resales, prices across the board will begin to increase.  This will allow stale listings to finally be absorbed making way for new inventory.

HOW THIS AFFECTS YOU AS A HOMEOWNER

If you have a property that you would like to do a short sale on, you may see more favorable terms given by lenders to expedite the process.  If you have a home that is right on the borderline of being underwater, you may see property values in your area increase to whereas you can do a refinance or a traditional sale and either break even or (dare I say) make a profit!  If you are not planning on buying or selling and currently own a home, this is the market you've been waiting for!  Inventory gets low and prices increase. Less foreclosure comps on appraisals allow property values to rise.  In the Metro Atlanta area, I believe you'll see a noticeable increase in the next two years.  Until unemployment rates decrease, we will not see a dramatic change across the board since you will still have mortgagees that are in danger of foreclosure.

HOW THIS AFFECTS YOU AS A RENTER OR LANDLORD

As a potential renter, you will find a lot more rehabbed properties available with slightly less restrictive application processes.  As a landlord, you will see fair market rent go down slightly due to the influx of investment properties that have been rehabbed and put on the market for rent.  You will definitely need to do some cosmetic repairs to get fair market rent and some upgrades if you're looking to get top dollar.

Size Matters: Little Bank beats Big Bank

In the last 9 months or so I've been watching a disturbing trend become a stark reality.  Larger banks are actively pursuing new purchases and do not seem to have the manpower to process them all.  Three of my last five transactions were with smaller lenders who ended up with the loan when the larger bank could not execute. How is this possible? Let's look at some factors.

Loyalty
Giant, monster mega banks (as Clark Howard calls them) originate the bulk of their loan refinances and new purchases from their current account holders.  People automatically feel comfortable dealing with their current financial institution because they figure that since their lender has all of their personal info already, they can trust them.  Also, another VERY common misconception is that since you bank with a financial institution for a number of years, you have a better chance of being approved or it makes the underwriting process simple. Sadly, both of these couldn't be further from the truth.  Large banks show no special treatment nor do they take into account the banking history you have with them when it comes to processing and approving a loan.  I've found this treatment to be exclusive to small, community banks and credit unions where you actually get perks for being a member and not just a customer.

Size Matters
Since the housing market crash and the new banking regulations were passed in 2009, larger banks began to put smaller players out of business and purchased some of the smaller competitors, and hired their loan officers, in the process.  The big banks became more powerful, but when as the housing market roared back, they were unable to provide the processing efficiency needed to accommodate of the influx of loans.  Since larger banks are always more strict, they used to broker out less attractive loans (sub 680 credit scores) to other banks/mortgage brokers to get them done.  Without those smaller banks/brokers being there to field those deals, the banks now have way more than they can handle.  Instead of hiring more employees, they seem to prefer to hold loans hostage for 45-90 days while smaller bank's and mortgage brokers are able to close loans in 8-18 days!!! This is fact, not fiction. I have a list of them that I use daily on my website. Don't let a giant, monster mega bank tell you that you cannot do a loan (FHA/VA included) elsewhere with competitive rates & pricing in under 30 days because it is simply not true.

Times Have Changed---AGAIN!
In the past mortgage brokers were synonymous with mortgage fraud, high yield spreads, higher closing costs, and higher interest rates. There was a time that mortgage brokers couldn't compete with a direct lender's rates/closing costs. But since the banking regulations of 2009 helped weed out all of the bad seeds, the mortgage brokers that survived are now reaping the harvest of stalled and even declined loans from larger banks and closing them in a week or two.  Sadly, I don't see this trend ending anytime soon unless the larger banks hire more processors/underwriters to handle the growing load of purchases, refi's, short sales, and loan modifications that they have on their plates. Larger banks also need to loosen the restrictions a tad to help get loans approved.  Large banks have become overly strict, since these regulations were passed, and seemed to have now lost the little common sense they had left.

RENT--A four-letter word in Real Estate

"I'm looking to rent" are usually not the words the average real estate agent likes to hear. While renting means little commission for an agent, it can be a source of solid leads and annual income if done correctly.  Renting can actually be a good thing for all parties involved and even a community.  Everyone knows the cons and horror stories of renters and renting- the noisy neighbors, the unkempt exteriors, tenants not paying rent, landlords not fixing major repairs, etc. But, let's look at the PROS of renting from all sides.

FROM THE TENANT SIDE
-When relocating, renting is usually the best option in order to get familiar with the surrounding areas, amenities, retail, and commute to work.
-Renting in an overpriced/spiking market is a great idea (refer to 2007-early 2008).
-Less at stake if you move or travel frequently
-Establishing a solid rental history is key when purchasing a home.
-The opportunity to live in more desirable communities that you couldn't normally afford to purchase and live in

FROM THE LANDLORD SIDE
-Great tax write off
-Having mortgage being paid in part (preferably in full!) by someone else
-Home secure from vandalism versus being vacant
- Potential for residual income

FOR REALTORS
-Create a database of potential buyers
-Database of sellers who may potentially sell or buy new investment properties
-Property management opportunities

FOR THE COMMUNITY
-Less eyesores of vacant/neglected homes
-Contributes to a diversity in the local community, which is important in my opinion
-Decreased crime activity from vacant homes being vandalized or occupied illegally
-Less potential foreclosures with landlords having ability to stay current on mortgage

LOCATION, LOCATION, LOCATION

You always hear the cliche' when it comes to real estate it's all about location, location, location.  That's easy to comprehend in California, Florida, or New York, but how does that translate to the Metro Atlanta area? The main thing you have to remember is inside the perimeter of I-285 the rules are different than when you're dealing with properties located outside the perimeter.

Inside the perimeter, you're either trying to get as close to Buckhead, Midtown, or Downtown as possible. You want to be in an area with a nice surrounding area and low(er) crime rates.  Retail then comes into play especially when you're factoring condos. Can you walk to the grocery store, retail shops, or entertainment? These are things you don't usually get outside the perimeter in the suburban areas, however, an in-town area (Buckhead, Virginia Highlands, Brookhaven, etc.) with a suburb feel are highly in demand. School districts don't play as big of a role in property values since private/charter schools are the preference here.  Areas along public transportation lines are not the most desirable as you'd find in other areas of the country.

Outside the perimeter, the closer you are to an expressway is one of the leading property value boosters.  Commute times in Atlanta are some of the worst in the country so this is becoming a more popular requirement. Retail is the next property value indicator. The closer you can be to malls, retail stores, shopping centers, and grocery stores ensures that your area is desirable. I would say high school districts are just as important as retail since this is what drives most people to move into the suburbs or from a neighboring county.  The only exception to these rules are when you're assessing country club communities.  Country Clubs can be very isolated and still command a heftier price tag than a comparable home that fits all the other criteria I used to assess home values outside the perimeter.

When purchasing a home location is important, but only you know what YOU need to be located close to you when you are living in the property.  For investment properties, you want the property to encompass as many of these value indicators as possible in order to cater to as many potential buyers as possible.

Downpayment Assistance Programs

      Down payment assistance programs have sustained during the housing market roller coaster. Some of the more popular programs went away but some very attractive ones are available through various counties. They all have income limits and restrictions on selling the property within a time frame, but the question is---can you qualify? The answer may surprise you.

      The Georgia Dream Program is probably the most popular down payment assistance program in Metro Atlanta. It ranges from $5,000 to $7,500. It requires that the home be your primary residence, you haven't owned a home in 3 years, and that you attend home buyer classes. It is in the form of a second mortgage that is repaid when you sell or refinance the home. Income requirements for a couple are $69,000 in the Atlanta MSA with a max home price of $250,000 and $59,500 in the rest of the state with a max home price of $200,000.

     The HomeStretch Down Payment Assistance Program is unique to Gwinnett County. It is $7,500 and is only repayable in the first five years; after five years, the loan is satisfied and doesn't have to be repaid.  It has a $40,150 income cap on a single person and $45,900 for a couple. Gwinnett County also offers a Neighborhood Stabilzation Program (NSP) that gives up to $22,500 towards the purchase of specially designated homes up to $200,000.  I have a list of county-specific down payment assistance programs on my website.

     HUD still has one of the most attractive 'down payment assistance' programs it reduces your required down payment on an FHA insured loan from 3.5% of the sales price to $100. You have to pay full price for the home, but HUD homes are usually 10-15% less and competing homes in the area in my experience. Your lender can use the HUD appraisal on file if it's less than 90 days old, saving you another $400. HUD also does a BASIC inspection and list of escrowed repairs so if cash is tight, you can skip a home inspection, and have some BASIC insight of the home's condition saving you another $250-$400.

      So on top of the sub 4% interest rates & record low home prices, you can still get down payment assistance.  The down payment was usually the main inhibitor (along with credit scores) delaying people from buying homes.  While putting down 20%  is more favorable in the long run, it can be a staggering number once you add it up on the home of your dreams but now, it doesn't have to be.

Bidding Wars Are Back

Over the last 12 months, the Metro Atlanta real estate market has seen competition on homes increase. Is it because there are less homes available? Are there more buyers entering the market? It's a little of both but there are other factors at play here. Let's look at why buyers are seeing bidding wars in the current market.

Short sale backlash. Buyers have heard the horror stories of short sale sales taking months and not getting approved or worse, the house foreclosing while they're under contract.  Because of this, buyers are avoiding these homes if they are looking to move within 60 days. Some agents avoid them all together even when the listing agent advertises being a 'distressed property expert' or designations insinuating so.  Truth is no one can force a bank to approve a price no matter how good the file is put together. The bank has the final say so and while an experienced agent and speed up the process, they cannot make a decision for the seller's lender.

First look periods. Fannie Mae, Freddie Mac, HUD as well as banks now have initial periods where they will only look at offers from owner occupants.  Some banks have implemented a similar process and even have the 1st 3-7 days designated as marketing only and will not look at any offers from anyone. While these owner occupant only periods fend off investors to give buyers a chance it causes a frenzy and almost always causes a multiple offer situation before the bidding period is up. Fannie Mae and HUD both utilize online bidding so it enables them to track (multiple) offers more efficiently rather than waiting on listing agents to upload offers to them manually.

FHA loans.  Most home buyers are utilizing FHA loans to finance their home purchases rather than conventional loans or paying cash.  This means the homes must pass an FHA appraisal / criteria and be inhabitable.  Buyers with FHA loans have to pass up on homes with excessive repairs needed, town homes/condos with HOA's that aren't FHA approved, and incomplete homes. This automatically narrows the field and concentrates these buyers to homes that are move-in ready.  If a home is FHA ready, you can bet the attention and number offers will reflect it's condition.

Savvy Buyers & Investors. Savvy buyers and investors who have little or no emotional attachment to their upcoming home purchase will usually submit offers on multiple properties and negotiate multiple offers until they secure one at the desired price.  Because of this, you will see homes that have been on the market less than 24 hours with offers. Some of these types of buyers will submit a 'blind' offer on a home where they've only assessed the value and not the home's condition since they bid on them sight unseen.

So with all of the homes with multiple offers and bidding wars causing sale prices to exceed the list price, is it still good time to buy? A resounding YES! With the right strategy, you can bid and win and secure the house you really want no matter how many offers are at play.  How you ask? That's at least a 3 part series blog.........

Property Value Insurance & Reverse Mortgages

You may begin to get offers in the mail for home value insurance coverage. It sounds great: Purchase this policy and if your home value drops within 10 years, you can sell it for whatever the current market value is and get an insurance check for the difference.  At first glance this appears that you would not have to entertain a short sale because for $40-$50/mo. you can cover any deficiency.  However, with most housing markets being in the valley and flat, it's unlikely that you would have a substantial drop in value in the next 10 years that would make this a good idea.  Purchasing this type of insurance in say 2006-2008 would have been a great choice, but of course, there are no conversations about insuring losses in booming market.  The housing 'bubble' was always a looming topic, but with the meteoric rise of housing prices year after year since 2002, most thought it would last....well, forever!

Reverse Mortgages are probably not even a thought if you are under 50 yrs old, but they become as common as offers for free dinners to attend a sales seminar as you enter old age. In short, a reverse mortgage is when you take a mortgage out on your primary residence in order to be paid a monthly amount until you die.  In most cases, it is a bad idea to take a mortgage out on a property you own free and clear.  The few people who it makes sense for have no relatives, no income, and need money to survive. Outside of that, there are usually many other options that don't put your home at risk. As with any financial decision, do as much homework as possible before considering any decision/expense that will affect your long term financial well-being.

Using Your 401K to Invest in Real Estate?

Would you empty your 401k to buy real estate in hopes of a better return on your money? Depending on the amount you have saved, your current rate of return, and your appetite for adventure (aka becoming a landlord) this could be a viable option.  Initially most people would cringe at taking 'secure' money and using it to purchase 'volatile' real estate in the Atlanta market, with an election year upcoming.  However, if you do your homework, you may wonder, "Why didn't I do this LAST year?"

A conversation I had last week with a savvy investor & his contractor peaked my interest as they discussed bidding on an auction property in Dallas. He's pulled out $45K to purchase two homes totalling $50K. The first home was $23,000 and is already rented at $1200/mo. and he's in the process of purchasing the second. He has enough to cover the tax implications at years end.  He explained how his gains were 36-40% higher than what he was currently getting through the investments in his 401k.  The basic math on the first property is that outside of what was spent to get the home rent ready, at $1,200/mo barring no major repairs, he stands to have repaid his 401K in under 22 months. So after the break even, he's looking at a 'free & clear' positive cash flow property after repaying himself the initial investment. But with the prices of some homes that I've sold in the last 36 months (the cheapest $8,900), I know that these numbers are not only realistic, but can be even better!

Right now there are 178 homes listed for sale under $15,000 in Gwinnett, Cobb, Fulton, Dekalb, Clayton, Henry, Douglas combined. These are all metro area counties within a 40 minute or less drive to Atlanta.  Even with $850 in monthly rent you can pay off one of these properties in 18 months.  Now before you empty your nest egg, there is a LOT of homework you need to do regarding your 401k plan. Talk to your 401k administrator to find out what types of investments are permitted in the plan. If your plan allows you to buy real estate, examine whether it would be easier to buy the property outside of your 401k. The IRS imposes numerous restrictions on real estate purchases in a retirement account. Most 401k plans allow loans, which you can use for any purpose. The IRS limits 401k plan loans to the lesser of 50 percent of your account value or $50,000. After the 401k homework you'll need to create a strategy to pursue properties in a certain area, within your price point, and condition requirements--don't want to put $20,000 into a $20,000 house! You'll also need to prepare to be aggressive as the competition on $30,000 & under properties is fierce as you would expect, but someone has to win the bid.  With the right price, the right terms, some timing, and a little luck, that someone could be you!