Recently, an Atlanta couple became frustrated with their search to purchase a home. They made several offers on homes they liked but kept losing out to higher bidders. One day, they found a home that had hit the market that very day. They were so determined to win that bid, they immediately submitted an offer — and then asked if they could see the house for the first time the next day. They just wanted to jump in line and be considered as a buyer early.
We are witnessing the beginning of a new boom in real estate. Realtors and mortgage lenders have never been busier, but it is certainly different in a number of ways than the one we all witnessed in the middle of the last decade that triggered the Great Recession. The last time we had a run-up in housing prices, it was based on buyers who had access to credit that should not have been available to them in the first place.
The government was pushing mortgage companies to allow more people into home ownership, so there were many products that allowed buyers to obtain 100 percent-financed mortgages without having to put any money down. They were able to sign a document stating how much income they earned without any verification, even if they had low credit scores. My company didn’t engage in that type of lending.
In this market, we will have a boom, but it will not be an uncontrolled boom similar to the last one. During the last five years, even though homeowners suffered through periods of price depreciation, many still invested in their homes — doing renovations and creating value. Now, they are putting their properties on the market and getting the price at which they list it or a higher one.
Much of our economy is tied to residential real estate, whether it is on the financial side, construction, landscaping, carpet, granite — you name it. There is nothing you can do to untie this economic driver from our metro area.
Atlanta will always be tied to the housing industry, but we won’t be as dependent this time on the ability to cash out or flip homes for cash. In the past decade, there was such a rapid appreciation, people used their homes as piggy banks.
Nevertheless, home ownership is popular again, and I predict it will be for a long time. The couple who recently bid on the house before they ever saw it didn’t win the bidding; they are still out there looking. They are persistent, and they will eventually be the highest bidder and be back in the housing game.
J.D. Crowe is senior vice president for Southeast Mortgage of Georgia.