This is the first post in my four-part series on metro Atlanta real estate appraisals in 2011. Please check back soon to see posts on: changing regulations, low appraisals on arm’s length purchases, and consultation appraisals.
Valuing real estate has never been an easy task for an appraiser. In the past it was difficult keeping up with steadily increasing value and today it is staying on top of every sale, dissecting it to determine if it is arms length, weeding through REO, Short Sales and other various distressed properties.
Since sales seem to be fewer than in the “glory days” of 2006 and 2007, (and so many sales are from homes in a “situation”) it is often impossible to arrive at a truly meaningful and supportable value. Adding to the current market conditions, federal appraisal guidelines have changed a lot and the appraisal process is more challenging than ever.
The good news is that we are seeing some stabilization in the Metro Atlanta real estate market. The inventory of homes for sale has dropped and the number of foreclosed properties has leveled off a bit. New home construction is happening again.
Atlanta’s real estate market stabilization is due to the huge drop in existing inventory of new homes and the unprecedented decline in the value of vacant land and developed lots. (It is not uncommon to see lots selling for $5,000-10,000 which just 2-3 years ago where selling for $60,000 – 80,000. This drop is just enough to allow a builder to be profitable when building a new home.)
The new homes we are seeing going up are somewhat more modest than those of recent past. Builders are reluctant to build enormous houses on speculation and buyers have had a dose of reality and are looking for smaller, less flashy homes. I feel this sector of the market, new home construction, will grow the quickest over the next 12 months. This should increase jobs which will bolster the economy as well as the real estate market.