Market Conditions and Zero Down Payment Home Purchases in Alpharetta and North Fulton
categories: Alpharetta Real Estate, Buyers, Local Market Conditions, Sellers
Hello, Buyers: There are 1,004 homes for sales in North Fulton (Alpharetta, Roswell, Johns Creek and Milton) between $225,000 and $500,000. If I were personally looking to buy, I’d be in the market.
It’s a buyers market yet people tell me every day that they don’t think they can buy a house. Some buyers are scared by the recent mortgage industry trouble and don’t think they can get approved. Other buyers think that they should wait longer because prices will continue to fall. Let’s examine that thinking.
I’m not bankable after the sub-prime meltdown
The troubles in the mortgage industry have given some people the unwarranted impression that they can’t get a mortgage, particularly as a first time home buyer. The facts are that the bulk of the sub-prime mortgage crisis was caused by “low doc”, “no doc” or “stated income” loans failing. Basically there were loans available where all the borrower had to do was verbally tell the bank what their income was. The interest rate wasn’t as good as “full doc” loans but, heck, it was a loan and it was often used by investors to purchase investment property.
The problem was that it was abused; people misrepresented their income and ultimately defaulted, particularly as interest rates inched up, as many of these loans were variable rate. Most, if not all, major lenders are not offering the “no doc” loans like there were.
However, there are still many zero down payment loans available. Wells Fargo, for instance, has six different zero down loans to chose from depending on your specific situation with purchase price of up to $417,000. In North Fulton, there are 811 homes to chose from between $225,000 and $417,000. Do you think we could find one that would work for you?
If you have an income (documenting it would be nice) you can get a loan, regardless if you have any money to put down.
The market is still going down; let’s wait some more
The market is definitely slower than a year ago, but mostly just in terms of the number of homes sold. The average sales price is holding pretty steady and in North Fulton the Sales Price to List Price ratio is only down one percentage point to 96%.
The slowness in this market is notable in fewer homes being sold and the average time on the market going up. The table below shows sales data from August 2006 versus August 2007. The data is only for homes listed with a realtor, so it doesn’t include private sales. It is also for resale homes only and does NOT include new construction.
Compared to 2006, $45M less real estate was sold in North Fulton in 2007 and 125 fewer properties were sold. Interestingly, though, the average sales price is UP over $30,000.
| Year | Sales | Volume | Avg Sales Price | Avg List Final Price | Avg Original List Price | Avg Days on Market |
|---|---|---|---|---|---|---|
| 2006 | 398 | $166.5M | $418,432 | $428,984 | $436,687 | 70.3 |
| 2007 | 272 | $120.9M | $444,675 | $462,977 | $474,917 | 94.3 |
My opinion is that the “good houses” are selling and they are still selling for a decent price. Houses that are not in top condition or “challenged” in some other way are either not selling or dropping off the market. If you are a seller, you need to be aware that you have more competition – 1,004 homes on the market between $225k and $500k this year versus 832 the same time last year. This is where the price pressure that sellers are feeling is coming from.
The difference between the east side and west side of GA-400
The numbers above are aggregate for North Fulton. When you look at just the east side, the average sales price has actually dropped about 2% from $431k to $422k in the past year, but the days on market hasn’t gone up as much as on the west side. The average sales price on the west side has gone up from $403k to $478k. I attribute this difference mostly to the affect that new construction on the west side is having on resale values: you can barely find new construction under $700k and the resales are taking advantage of this by bumping their price and daring buyers to find something cheaper – even in this market!
What does all this mean?
If you are considering buying, I think that now is a good time. Prices aren’t going to go that much lower - and on the west side they are actually still going up significantly. Interest rates are at or below 6% in many cases and there are loan programs to help you with down payment.
If you do the math, a $300k loan at 6% for 30 years is roughly $1,800 per month. Throw in a little for taxes an insurance and you are at $2000/month. Compare that to your rent and then give me a call!
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I like your use of data, however, I thing the real barometer of this market will be shown when September’s data comes out. Most transactions for July and August were already under contract when this whole mortgage mess started to unravel. I was one of those buyers who went into contract in July and closed in August. Had I waited till September I truly believe I could have saved anywhere form 5 to 10% based on what I’m seeing today for comparable houses. Take it from a former GE Six Sigma data driven executive…In God we trust, all others show me the data.
Transplated from CT
Transplated: I’ll run the numbers again next month and report back. I think it may be optimistic to think that prices fell 5-10% in one month. My experience has been so often lately that buyers are electing to take their houses off the market rather than reduce the price if they really don’t have to sell. Find a really motivated sellers these days is the real test. People who may have sold a year or two ago really don’t NEED to sell today.
-Kevin
Do you have September and October sales data yet. Best to see the data as YOY by month vs YTD vs YTD to get the best picture of current market conditions. In the 5 mile radius around our area of JC (30022)I have seen no houses on the market go under contract in the past two months. Anecdotal, yes, but the same homes I saw for sale in May are still on the market today. That is why I still believe I would have had 5-10% leverage as highly qualified 70% down buyer had I only waited.