What's Happening in the Housing Market

Is this the year you should buy your first home? Sell your home and buy another? Sell your home and rent for a while? Buy an investment property? 

With all the uncertainty of the past few years, the one thing that has remained a constant in the Athens’ area is housing prices going up & up & up. In fact, over the past 5 years, home values on average have gone up 75%! Does this mean we are about to crash like we did in the last recession? Are things stabilizing? Are prices going to keep going up?

First of all, this is not what happened in the Great Recession of 2008.  The last recession happened because of horrible lending practices that lead to unprecedented foreclosures and plummeting prices. Our current rise in prices is all about supply and demand, not poor lending practices. Millennials are buying homes in droves, accounting for over 50% of all new mortgages last year. Gen Z has also entered the housing market. The last crash stunted new home builds leading to short supply, while both Millennials & Gen Z are crowding the market in search of homes.

With the Fed set to raise interest rates over the next year to help stem inflation, mortgage interest rates are certainly an important factor on whether you should buy a home this year. It does not look like home prices are going to drop as I check our area sales daily and continue to see many homes closing at over list price even with listing prices significantly higher than even a year ago. Rents are also rising quickly, making a mortgage payment (even with a low down payment) often less than the rental price of an equivalent home. If you are currently renting, I would strongly encourage you to consider buying this year. And, I think it would be a poor idea to sell your home now to capitalize on the large profit from a home sale and rent a home instead - it might be hard to be a homeowner again if prices just keep going up. 

Should you sell your current home and buy your next home? That’s not as easy to answer. Your home is not just an investment. Your home is where you live. That’s always the balance I try to help clients see. Where you spend the majority of your time (especially now with so many people working remotely) is not just a financial decision. What you need to function best might be a lower monthly payment or it might mean more space. Some of that answer is also based on where you want your next home to be. The Athens’ area real estate market is not exactly the same in all areas. You might currently own in a location that is appreciating faster than the area you would like to go to next. If that’s the case, then it might be best for you to sit tight for a bit longer. The opposite can also be true. I think that one of the most important parts of my job is not just showing you a home. It’s helping you think through what you really want and need and helping that become a reality.

Is this a good time to invest? I always think real estate is a smart investment in our area. Unless the world comes to an end, Athens with our University and hospitals will always have a need for housing. Naturally many investors start with smaller, more affordable homes which are also in the most demand right now. With rising rent prices, you should be able to cover your expenses but I’m not sure you will see a substantial monthly income if you choose to do a traditional yearly rental. Buying a home and using it for an Airbnb or even a month-to-month rental can provide tremendous income but it is not passive income. As an owner of several Airbnb’s and a traditional rental, I am happy to help you look at the numbers and see if it makes sense for you. I’ve had a consultant develop a program that can help you think through all the aspects of investing in real estate, including tax benefits, maintenance costs, and appreciation. Contact me if you have more questions - I would love to help you think through what real estate steps are right for you!