2019 to date for our family business has been among the more challenging of recent years in certain segments of our market, and some of the most gratifying in other segments.
Because we work by personal referral, both my son David Shapiro, and I are available wherever our clients need us. Our goal is to be well-versed on many different parts of our Atlanta marketplace, especially as our clients move from one part of town to another. One of the amazing segments of our market again this year is the inside the Perimeter first-time homebuyer market under $500,000.
Intown rents can be north of $2,000 a month for a 600-square-foot studio in high demand areas. With interest rates back down to under 4 percent, buying a home can be a very good idea versus renting.
What continues to remain a strong investment is a house or condominium that has good walkability, access to public transportation and green space. Six to 7 percent appreciation per year is not uncommon. As hot as Intown living can be, even with the ongoing lack of inventory, there has been some pushback from buyers on the pricing. Neighborhoods like Ansley Park (average sale price over $1 million) saw a decline of 6 percent from 2018 to 2019. There has been some year-over-year decline in pricing in other parts of the city as well, but overall more in the 1 to 2 percent range. With all this said, each home is its own market and with good preparation of the home for sale and correct positioning on the market, we are still achieving record-breaking sales in a reasonable time frame. Among the biggest changes we are seeing in the past few years is what I call the Chip and Joanna Gaines HGTV factor to what people are expecting a resale home to look like. This is prevalent in all areas but can be more so outside the Perimeter as there is more new construction competition and consumer expectation is higher. The consumer (especially the younger consumer) is not responding well to a dated appearance and they are liking that Pottery Barn/Restoration Hardware updated, more minimalistic look. Throw in some shiplap and a barn door and they’re delighted!
With the low interest rates, consumers will pay more for the home that needs little or no updating, but many don’t have the desire, financial ability or interest to take on a project and will wait on the home that fits their needs.
There are companies out there that will do the work to update the home and get paid at closing. Some consumers will take on the work but are typically wanting a concession well beyond the actual cost. It is prudent over the years of ownership to keep a home well-maintained, updated and as freshened up as possible.
The other thing we are seeing more and more is the changing look of kitchens and baths, evolving and updating at a much quicker pace than in prior times. Lighter more neutral colors always seem to age better. Highly personalized, over-decorated and bold does not wear as well. There is also a trend toward less excess. As in prior generations, families are making do with smaller homes that are better laid out and comfortably affordable.
Consumers are now more than ever wanting to make sure home ownership does not impede their quality of life. They still want to travel, etc. There is a real analysis in play toward total cost of ownership in regard to maintenance costs, utilities, insurance, etc. With recent tax changes over the past couple of years there can less deductibility with mortgages over $750,000. Property taxes as well as home equity lines have less deductibility as well. This has raised the cost of home ownership so that all goes into play in what is in demand. This cost of ownership has played into slowing sales in the over $1 million market where often more seller concessions are needed to get the home sold. With all this said, our Atlanta market is sustainably hot. There are great real estate opportunities here. There is a 29 percent projected population growth over the next 30 years so our real estate should continue to do well. For most of us, real estate ownership over a period of time has been our single best investment. I believe the trend will continue. I am counting on it!
Jon Shapiro is with RE/MAX Around Atlanta and can be reached at JonShapiro@mindspring.com or www.jonshapiro.com.