A new special report by Inman News reporter Andrea Brambila, “10 Prime Real Estate Markets for First-Time Buyers,” identifies the 10 metro markets with the greatest share of first-time homebuyers relying on mortgages backed by the Federal Housing Administration (FHA) in 2011.
As might be expected, the markets were more affordable than average — eight out of 10 boasted median sales prices that were less than the national median of $162,000 during the first quarter of 2012.
Click here to view the list and a market snapshot of each metro area.
Included at number 9 is this report on the Atlanta-Sandy Springs-Marietta, Ga., market.
The Atlanta metro area’s median sales price peaked in third-quarter 2006 at $186,000. As of the first quarter, the median was down 34.4 percent, to $122,000, considerably lower than the national median.
“I think for the greater Atlanta area, the downturn was a market correction that needed to happen,” said Stacy Carter, a real estate professional in Roswell, Ga.
“Home prices were escalating at an unhealthy and unsustainable rate while at the same time, builders were building new homes from the $400,000s and up, leaving a huge gap in the $150,000 to $250,000 price point for new homes.
“As a result, property values have adjusted and homebuilders are now focusing on the starter-home neighborhoods again.”
At that $122,000 price, some 85 percent of the metro’s homes were affordable to families earning the area’s median income of $69,300. The Atlanta metro had a jobless rate of 8.7 percent in March, just above the national rate, but its job market is expected to grow 2.1 percent between fourth-quarter 2011 and fourth-quarter 2012 — faster than jobs are expected to increase nationwide.
The area’s foreclosure rate was considerably higher than the national rate in the first quarter: 1 in 90 housing units received a foreclosure filing. Four in 10 homes sold were distressed in the fourth quarter.
“In spite of the difficult economic conditions for some, others are reaching the natural progression in their lives where buying a home is the next step,” Carter said.
“Buying conditions are more favorable than ever and the first-time homebuyers are reaping the benefits.”
“We’ve definitely seen an increase in the volume of transactions this year over last and I anticipate the momentum to continue to move in the right direction. As long as interest rates stay low, the first-time-homebuyer demand will remain at higher levels,” Carter said.
First-time buyers with FHA loans accounted for 27 percent of overall home sales in the Atlanta metro area in 2011; FHA buyers overall accounted for nearly 35 percent of sales.
“The reason a lot of borrowers choose to use FHA is it has some flexibility. It tends to be a little more accessible for certain groups of buyers. For example, someone who doesn’t have a traditional credit profile, (such as) someone who doesn’t have a lot of credit cards and pays cash a lot,” Goldie said.
Sally Hamby, a senior mortgage banker at Fidelity Bank Mortgage in Marietta, said about 85 percent or more of her first-time buyers choose FHA loans.
“FHA was set up to make homebuying possible for … (imperfect) people. Just because you are not the CEO of Coke does not mean you are not capable of owning, maintaining and loving a home of your own,” Hamby said.
“FHA and VA have been the vehicles to make that ownership possible and it is alive and well in Atlanta.”
She anticipates there will be about the same share of first-time buyers with FHA loans this year, despite mortgage insurance premium increases.
“Although the federal government has attempted to slow down FHA with the extremely high fees, I do not see the percentage of FHA buyers (dropping) much,” she said.
“FHA will have to totally restructure itself and its underwriting guidelines to drive their potential borrowers away.”
Click here to view the full snapshot and comparison of the Atlanta market.