When a young couple set out to buy a home in the $70,000-to-$90,000 range recently in Clayton County, they found the pickings somewhat slim.
There are plenty of competing buyers but fewer homes on the market than a year ago. Many potential sellers are holding on to their homes because they owe more on them than the homes are appraised.
“The challenge is a lot of sellers are underwater because prices have not risen since the declines of 2006 and 2007,” said Ennis Antoine, associate broker at Better Homes and Garden Real Estate Metro Brokers. And that has led to a drop in the number of homes being listed for sale, according to Zillow.com.
Listings in metro Atlanta were down 32 percent in February, compared with the same month in 2012, according to the real estate website. The decline in listings was greatest for homes at the lower end of the market, down 44 percent, followed by a 34 percent drop for mid-range-priced homes and down 23 percent for high-end homes.
On the upside, the drop in inventory eventually will drive up home values in many markets, Zillow chief economist Stan Humphries said. “As home values rise, some homeowners will be freed from negative equity and able to list their homes, which will contribute to an easing of the inventory crunch.”
Rising demand combined with fewer available homes is pushing prices higher, according to researchers at CoreLogic, which reported earlier this week that home prices rose 9.7 percent nationally in January from a year ago, the biggest annual gain since April 2006.
The rise in prices in metro Atlanta, however, has not been as dramatic. Prices are up nearly 7 percent in Gwinnett County from a year ago, according to Zillow, but only 4 percent in Cobb, nearly 3 percent in Clayton and 2 percent in Fulton. Prices are down 1 percent in DeKalb, nearly 2 percent in Douglas and 3 percent in Fayette.
It’s still a buyer’s market, according to Antoine, who said he put in 24 offers on properties for the Clayton couple but competition was so fierce that each offer was outbidded.
“Buyers win if they can find a property because current low prices and low interest rates are a win-win for the buyer,” the broker said. “Eventually, the seller will benefit once the prices start to increase.”
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