Some Metro home buyers moving up in a down market

Part 4 of 4

They don't share much in common.

Two couples -- Andy and Sarah Johnson and Shawn and Dawn Cole -- recently bought homes on opposite ends of metro Atlanta. Their household incomes don't come close. Neither do the prices they paid for the homes.

The Johnsons – Andy works for the Peachtree City Police department; Sarah is a stay-at-home mom -- bought a five-bedroom, three-bath home with a swimming pool on 3 1/2 acres overlooking a pond in a subdivision in rural Coweta County for $185,000.

The Coles – Shawn is an executive in the finance department of Delta Air Lines; Dawn is an executive in the finance department of the Coca-Cola Co. -- bought a two-story brick home with five bedrooms and three baths on a quarter-acre in Chamblee for $584,000.

What the Johnsons and the Coles do have in common is they moved up in a down housing market. They made the decision to take a hit selling their homes for less than what they were worth two years ago to buy a bigger homes in new neighborhoods they either couldn’t have afforded -- or would not have dared buy -- before the housing market crash. They’re known as “move-up buyers.”

A 20-county analysis of the metro real estate market found fewer properties were sold and at diminished prices last year compared to 2008, according to The Atlanta Journal-Constitution's annual Home Sales Report. But that does not mean there weren't success stories out there.

As real estate prices here continue to sink -- a report last week by the National Association of Realtors showed median prices for existing single family homes in metro Atlanta dropped again in the first three months of this year -- move-up buyers are growing in number, according to metro area real estate agents.

Shawn Cole said looking around the city and seeing the prices – and being in the financial position to make a move – he and Dawn decided late last year they could no longer afford to wait for an uptick in the market to sell their home in Walden Park in south Fulton County they bought eight years ago for $279,000.

“We wanted to make a move before everybody else does,” said Shawn Cole “We liked the house we lived in, but we wanted to move closer to the city. And we were at a point of either we move now and get something for a better price, or we wait five years and then maybe the price on that new house will be up another $100,000. So we decided we’re probably not going to make what we paid for selling our house, but we’ll make it up on the buying end.”

After shopping in Decatur, Morningside and Dunwoody, they found a home in Chamblee that had been lingering on the market for two years. The price was down to $584,000, some $200,000 less than when it was put on the market new in 2007.

“Two years ago, our house in Walden Park appraised for $90,000 more than we paid for it,” said Shawn Cole. “And no, we didn’t get that. We didn’t get anywhere near that. But we feel extremely lucky to have found this house for this price, new.”

Kevin Harden, the agent who represented the Coles in the purchase, said nine months ago few buyers in metro Atlanta were willing to take a hit selling their homes in order to buy something more expensive. Back then, “Most of my clients were first home buyers or distressed property buyers,” he said. “People that were buying weren't moving up. They were downgrading because their incomes had dropped.”

At the same time, sellers were still in shock from the overall drop in housing prices or under duress from mortgages that had their homes priced far above current market value.

“It took a while -- things had to change in the marketplace -- for things to fall in place and for [buyers] to get their heads around the idea of buying up,” said Harden.

The Johnson’s story is a little different. They had lived in their Peachtree City home in Fayette County since marrying five years ago and they had spent a lot of time and money upgrading the kitchen with granite countertops and new cabinets and landscaping the place.

“We loved that home,” said Andy Johnson. “We could sit on the back deck and hear the concerts at the city amphitheater. We really felt at home there.”

But a year and a half ago a friend at the police department told Andy about a home in the Meadows of Senoia subdivision that the owner was trying to unload to avoid foreclosure. So they drove out to the subdivision about six miles from Peachtree City and the attraction was immediate.

"We fell in love with it the first time we saw it," said Andy Johnson.

They had paid $139,000 for their Peachtree City home and knew, based on recent sales in the neighborhood, they wouldn’t get their money back selling it now.

“It was a trade-off, selling that and buying this. And it wasn’t an easy pill to swallow,” said Andy Johnson.

The couple bid $185,000 on the Meadows house – it had appraised at $271,000 -- in a short sale. The deal fell through when the bank wouldn’t agree to the price, said their agent, Stephen Walker. The bank foreclosed on the property, took the home off the market and, as far as Sarah Johnson was concerned, that was that. She was pregnant with their first child and wrung out by the emotional ordeal.

So when the house was put back on the market three months ago and Andy told Sarah he wanted to bid for it, “She told me, ‘You do whatever you want,’” he said. The couple's blind bid of $185,000 – “That was as much as we could afford,” he said – was $2,000 more than the other bidder. They closed on the home and plan to move in later this month.

They’ve got a contract on their Peachtree City home for $148,000; it closes June 24th.

“We’re not making anything on that, when you count all the money we put into it,” said Andy Johnson. “But we’re walking into a bigger home on a big piece of land with $90,000 in equity. It’s hard to beat that.”

AJC Home Sales Report

Our annual look into metro Atlanta real estate includes neighborhood-by-neighborhood breakdowns of the number of houses sold, their median price and how that changed from 2008 to 2009. Find real estate data on even more areas online at bit.ly/AJChomesales.