9 Reasons Why You Shouldn't Plan Your Home Purchase Around a Lease Ending
One of the best parts about being a Real Estate Agent is learning about the key factors that are impacting the housing market in Atlanta. Based on all of the leading indicators, the prices in Atlanta are not going down any time soon - we have more people moving to Atlanta than ever before and we’re already experiencing a shortage of houses.
Given the competitive market that we’re in and the fact that Buckhead/ ITP homes are expected to appreciate +6% this year, the time to buy is now. As Realtors, we hear all the time that Buyers are waiting for ‘their lease to end’ or they ‘think prices will come down this fall’ will lose out on the influx of inventory we’re expecting in March 2020.
If you’re considering buying a home within the next 12 months, the time to start is now.
While it may sound counter-intuitive at first, here are 9 Reasons Why You Shouldn’t Plan Your Home Purchase Around a Lease Ending:
Market value in Buckhead / ITP neighborhoods is predicted to increase +6% this year (and OTP neighborhoods are expected to increase by +4%)
Buyers that wait will not be able to afford the same quality home that they would be able to in spring 2020
Interest rates are low
We’re seeing rates as low as 3.375% which will get you more ‘bang for your buck’ if you capitalize before the rates increase again!
Low (and unpredictable) inventory
It’s risky! Inventory in January 2020 was down 5.9% YOY for detached homes priced under $1 Million. There’s a chance that inventory will remain low the rest of the year. So, ask yourselves ‘is it worth it to miss out on a house we love today for the cost of breaking my lease?’ Keep in mind, you’ll likely spend 5+ years in your first home.
Mortgage loans and timeline for the first mortgage payment
Many of my first-time homebuyer clients are surprised (and delighted) to hear about when their first Mortgage Loan payment would be on a new home.
I’ll break it down for you here - let’s pretend that you find a home that you love in mid-March. You’d hopefully submit an offer and go under contract in a few days, with a closing in mid-April (closings are usually 30 days from the submitted offer date). In this scenario, your first mortgage payment would be on June 1st.
So, whatever your timeline is, it’s good to know that your first mortgage payment would be on the second 1st of the month after your closing date.
Leading indicators show March 2020 will be a strong month for inventory
Competition among Sellers means better value for buyers, wouldn’t you rather have more options to choose from and at lower prices?
Many buyers end up doing some work or small projects before moving in
The majority of my clients will tackle a project (or two) before they move into their new home - whether this be painting, re-staining the floors, removing carpet/ laying down hardwoods, a bathroom remodel, etc. Oftentimes, you’ll want 2-3 weeks after your closing date to get quotes for these projects and complete the work prior to moving in.
On top of this, most people want a week or two to get settled before they need to be out of their current place (particularly if you need to do any patching/cleaning in your rental home before officially moving out)- when my clients really start to think about it, most of them want about a month before they ‘must be out’ of their rental anyways.
Emotional decisions
As you get closer and closer to the end of your lease, the pressure (and emotions) become heightened to find your next place. This is when we see Buyers making irrational decisions about homes that either don’t meet their criteria, are outside of their budget, or are outside of the area(s) where they want to live.
Population boom in Atlanta
In 2020, Atlanta’s population is estimated to grow to 6.11 million and Metro Atlanta has the 4th fastest growing population in the nation. More people = more buyers and a more competitive real estate market. Over the next 5 years, Atlanta’s population is projected to grow more than any other US city, increasing by over 90,000 annual net migration.
Building equity vs renting
While it may cost you some money upfront to break your lease early, you’ll likely find that the amount of equity you’re building over the months before the expiration of your lease will balance out. Your investment in a home will increase in value over those months, while the money you’re spending on rent will not provide any ROI at all.
As a Realtor in Atlanta, I want to be sure that you’re well-informed and making smart long-term decisions. That’s why I think it’s so important for buyers to start looking for their first home well in advance of a lease ending. If you’re ready to get started, I’d love to chat!