Short Sales will dominate in 2010 and beyond across North Atlanta

Today’s release of the S & P Case-Shiller Index justifies that any recovery in the Atlanta housing market is only slight and that short sales will be the story for 2010 and beyond.  The numbers released today show an equivalent home price value to what we last saw in June of 2001.   Most homeowners that I come across in Roswell, Alpharetta, Cumming, Duluth and Johns Creek all purchased their homes well after 2001.  Many during the peak of 2004-2006.  What this translates to are many homeowners who will remain underwater (owe more than the home is worth) for many years to come.  Even if a homeowner purchased well before 2001 and would have had equity in their home, the mortgage/refi-boom led to many to pull the equity out of their homes at those inflated 2004-2006 levels.

While over the course of 2009 there were signs of hope that the market had bottomed and a recovery was underway, it will take years of sustained significant appreciation to reach price levels where most homeowners are no longer underwater.  While I am not all doom and gloom on the housing market, I do want to be realistic that short sales will continue to comprise a large percentage of sales for 2010 and most likely many years beyond.

The Mortgage Forgiveness Debt Relief Act covers short sales of primary residences through 2012.  Unless the federal government extends this act, any forgiven debt after 2012 will be subject to income tax.  My point is not to give tax advice (see your tax adviser for that) but to highlight the benefits of short selling your home now as opposed to waiting for the market to recover.   The price levels of 2004-2006 in the Atlanta market are not likely to be seen again for many years.