There was a recent article by Bloomberg that discusses the recent surge of private equity firms purchasing houses in Atlanta at monthly foreclosure sales. The article compares the activity to what was going on in Phoenix just one year ago which drove prices up 34 percent. Epic Development has seen the influx of hedge fund money over the past 4 months as we actively buy at the courthouse steps. The increased liquidity from investor equity and increased availability of mortgage debt are large components required to bring the market back into equilibrium. These factors affect the demand for homes, and combined with supply constraints that have resulted from national new home production that has been 400,000-500,000 units below the long term demand for more than 4 years, the stage is set for significant price appreciation. We have blogged about the coming recovery for the past year. The national press has begun to take notice and the media now focuses its attention on the recovery in housing vs. the poor investment that housing represents.
Epic Development still believes the local market is going to go thru an 18-24 month window where prices move significantly in Atlanta. For the past few years we have expressed this belief at the Greater Atlanta Home Builders Association meetings. Most of the attendees eyes would roll at the proposition that the market prices would move quickly at some point in the future. However based on the 34% increase in prices in the Phoenix market, I believe it is safe to say “not if, but when the market tightens there will be rapid price appreciation.” We are seeing significant competition from buyers in the new home market, primarily in the in-town markets and in the best school districts outside of the perimeter. I have been asked why haven’t prices started moving yet. My belief is it’s a confidence issue now as supply and demand have moved into equilibrium and are headed for shortages at the current price points. The reason we have not seen more appreciation yet is that buyers and their agents were so beat down and conditioned by the media to the doom and gloom in housing, that they do not have the confidence to assess the changing dynamics in the market. However, this condition will not last forever, and when seller confidence returns the rapid appreciation will happen. If you are a seller, try asking for more and if you’re a buyer you need to move quickly because the low price and low rate party will be over soon. People will look back in ten years and say that was one of the best buying opportunities in a life time.
For more information about homeownership or real estate investment in Atlanta call Jim LaVallee at 404-847-9080 or write Jim@EpicDevelopment.com. View all the details of our current listings here. For more information about commercial real estate operations or investment visit EpiCity.com.