Bigger is Still Better – #AREFchat Recap

Being Wednesday morning, Atlanta real estate professionals began the day with a industry-related discussion on Twitter. The December 16th installment of the weekly #AREFchat focused on whether or not large houses are a thing of the past. Reports over the past year have indicated that almost all home sales are for more modest-sized houses and larger, luxury homes have not seen hardly any movement. Well, since the Atlanta real estate industry is filled with intelligent individuals, none of us were fooled by these numbers. These reports reflect that first-time home buyers make up most of the current market, and they are buying the smaller houses because it is what they can afford.

Tania Macleod (@taniamacleod) basically stated what we are all thinking – “Maybe in the increase in smaller home sales is more a HAVE to, not a WANT to.”

After many comments back and forth, it was decided that people love the large homes and once the economy stabilizes, the over $300,000 price point will once again be selling homes. And, unfortunately for the builders and agents that specialize in this product, that is going to take quite some time. It is the move-up buyers who purchase homes in this price point, and they don’t want to sell their current home until they know they can make a profit. Basically, once buyer confidence rises and everyone feels more economically comfortable, we’ll see a return in the larger home market.

When asked if the $6,500 tax credit for move up buyers would have any affect on the movement of these homes, everyone pretty much agreed that it won’t. An #AREFchat regular, Kevin B. Morrow (@KBMRG), responded with “The expanded tax credit won’t hurt, but don’t think it will help. Move-up buyers still want to sell their house for a profit.”

We then touched on whether or not these larger homes would be as popular as before. Yes, people want a big home, but many of these homes were purchased with interest only loans and other easy financing options, when, in reality, the buyer could not afford such a large mortgage. When asked if lenders will have learned from their mistakes and make sure buyers are financially able to purchase a home priced over $300,000, we got some scary responses from @KBMRG: “Wait five to 10 years and we will see some new form of easy financing.”

We would hope that lenders and buyers would have learned their lesson, but, unfortunately, Kevin B. Morrow isn’t so confident that they will. He has more years of experience and has seen the cycle too many times to think we won’t fall back into the same pattern yet again.

Want to voice your opinion about the real estate industry? Join us every  Wednesday at 9:30 a.m. EST on Twitter with the hashtag #AREFchat. And if you have any ideas for a topic for next week’s discussion, let us know.