First-time homebuyer hot spot: Atlanta-Sandy Springs-Marietta, Ga

Inman News

Editor's note: This report on the Atlanta-Sandy Springs-Marietta, Ga., market is an excerpt from a special report by Inman News reporter Andrea V. Brambila, "10 Prime Real Estate Markets for First-Time Buyers," identifying the 10 metro markets with the greatest share of first-time homebuyers relying on mortgages backed by the Federal Housing Administration (FHA) in 2011. 

The Atlanta metro area's median sales price peaked in third-quarter 2006 at $186,000. As of the first quarter, the median was down 34.4 percent, to $122,000, considerably lower than the national median.

"I think for the greater Atlanta area, the downturn was a market correction that needed to happen," said Stacy Carter, associate broker at Better Homes & Gardens Real Estate Metro Brokers in Roswell, Ga.

"Home prices were escalating at an unhealthy and unsustainable rate while at the same time, builders were building new homes from the $400,000s and up, leaving a huge gap in the $150,000 to $250,000 price point for new homes.

"As a result, property values have adjusted and home builders are now focusing on the starter-home neighborhoods again."

At that $122,000 price, some 85 percent of the metro's homes were affordable to families earning the area's median income of $69,300.

Atlanta-Sandy Springs-Marietta, Ga. metro area  
Population estimate (2011):  5,359,205
% of total sales to first-time buyers with FHA loans (2011) 27.0%
Median sales price for new and existing homes (Q1 2012): $122,000
Median sales price drop from peak: -34.4%
Total home sales (2011):     58,089
% chg. total sales (2011 vs. 2010) -5.6%
% of area homes sold affordable to median-income families (Q1 2012) 85.4%
Unemployment rate (March 2012) 8.7%
Walk Score: 46

The Atlanta metro had a jobless rate of 8.7 percent in March, just above the national rate, but its job market is expected to grow 2.1 percent between fourth-quarter 2011 and fourth-quarter 2012 -- faster than jobs are expected to increase nationwide.

The area's foreclosure rate was considerably higher than the national rate in the first quarter: 1 in 90 housing units received a foreclosure filing. Four in 10 homes sold were distressed in the fourth quarter.

"In spite of the difficult economic conditions for some, others are reaching the natural progression in their lives where buying a home is the next step," Carter said.

"Buying conditions are more favorable than ever and the first-time homebuyers are reaping the benefits."

Carter's first-time buyers tend to be young couples between their late 20s and early 30s either with children or thinking of having children, looking for "move-in ready" homes, she said.

"We've definitely seen an increase in the volume of transactions this year over last and I anticipate the momentum to continue to move in the right direction. As long as interest rates stay low, the first-time-homebuyer demand will remain at higher levels," Carter said.

first-time buyers report

Price ranges for first-time buyers in the area vary.

"The challenge with Atlanta is that metro Atlanta is about 22 counties, and right now you can find nice starter homes from about $40,000 to $300,000," said Jeanne Goldie, regional program manager for Georgia and Alabama at Wells Fargo Home Mortgage.

Even so, most first-time buyers end up buying homes costing somewhere around $100,000, she said.

At the beginning of this year, Wells Fargo rolled out My First Home, an interactive online guide to the homebuying and mortgage application process. (Chase has a similar online guide.)

"For most first-time homebuyers, it is such a big purchase. For most of them, it is more money than they make in a year or maybe two years," Goldie said.

"(This tool) takes them through the entire process of learning about home loans. It takes a lot of the complex issues and decisions and lays it out in very simple terms. 'What does escrow mean? What are special concerns if they're buying a condominium?'"

"For us it's really important that they get a home that they can stay in ... that they have the right mortgage product, the right advice and the right information right from the beginning," she added.

First-time buyers with FHA loans accounted for 27 percent of overall home sales in the Atlanta metro area in 2011; FHA buyers overall accounted for nearly 35 percent of sales.

"The reasons a lot of borrowers choose to use FHA is it has some flexibility. It tends to be a little more accessible for certain groups of buyers. For example, someone who doesn't have a traditional credit profile, (such as) someone who doesn't have a lot of credit cards and pays cash a lot," Goldie said.

Sally Hamby, a senior mortgage banker at Fidelity Bank Mortgage in Marietta, said about 85 percent or more of her first-time buyers choose FHA loans.

"FHA was set up to make homebuying possible for ... (imperfect) people. Just because you are not the CEO of Coke does not mean you are not capable of owning, maintaining and loving a home of your own," Hamby said.

"FHA and VA have been the vehicles to make that ownership possible and it is alive and well in Atlanta."

She anticipates there will be about the same share of first-time buyers with FHA loans this year, despite mortgage insurance premium increases.

"Although the federal government has attempted to slow down FHA with the extremely high fees, I do not see the percentage of FHA buyers (dropping) much," she said.

"FHA will have to totally restructure itself and its underwriting guidelines to drive their potential borrowers away."

Atlanta-Sandy Springs-Marietta, Ga. Metro U.S.
% of total sales to first-time buyers with FHA loans (2011) 27.0% 15.3%
% of total sales to overall buyers with FHA loans (2011) 34.8% 20.1%
% first-time FHA buyers receiving down payment assistance (2011) 25.0% 27.8%
Median sales price for new and existing homes (Q1 2012): $122,000 $162,000
Median sales price % change (Q1 '11-Q1 '12) -6.9% -1.8%
Time median sales price peaked: Q3 2006 Q4 2005
Peak median sales price: $186,000 $254,000
Median sales price drop from peak: -34.4% -36.2%
Total home sales (2011): 58,089 3.78 million
% chg. total sales (2011 vs. 2010) -5.6% -6.7%
Population estimate (2011) 5.36 million 311.6 million
Sales per population (2011) 92 82
Median family income (Q1 2012) $69,300 $65,000
% of area homes sold affordable to median-income families (Q1 2012) 85.4% 77.5%
% chg. affordability (Q1 2012 vs. Q1 2011)  0.7% 3.9%
Unemployment rate (March 2012) 8.7% 8.4%
1-yr forecast job growth (Q4 2012 vs. Q4 2011) 2.1% 1.7%
% foreclosure sales (Q4 2011) 40.8% 23.7%
Foreclosure activity rate (Q1 2012) 1 in 90 units 1 in 230 units

For access to the full report, see: "10 Prime Real Estate Markets for First-Time Buyers."

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