Georgia Short Sales in 2012
The real estate market in the north Atlanta area is showing some signs of balance. That being said, we have seen prices slide fairly consistently since our peak in the summer of 2007. The Case-Shiller Home Price index (all of metro Atlanta) shows our market has dropped more than 33% since the peak in July 2007. Even with the market showing signs of stabilization, or slight improvement, we on average have seen prices return to those not seen since the late 1990s. These market facts mean a high percentage of homeowners are underwater (owe more than their home is presently worth).
With such a high percentage of homes underwater, homeowners who find themselves needing to sell are left with only a few options. In many cases the dollar amounts needed to sell far exceed what most homeowners have available. This very fact is what I feel is actually going to help stabilize our market. Many are just opting not to sell at these price levels which is greatly reducing inventory in many local areas. The problem arises when a homeowner does not have this option available to them. Perhaps they are forced to relocate due to a job change, family change, or some other reason that leaves them no choice. One solution which many opt for are to lease their homes. While this may work for some, it may not for others. Many HOAs in our market place limitations on rental properties. That forces a seller/homeowner to find an alternative that will allow them to move on. The solution: “short sale”.
Since short sales have become so popular in the Atlanta market in recent years, most homeowners are aware of what they are. What they are not aware of are the many details that one involves. I just want to address one detail or issue that might have an impact on the number of short sales in our market in 2012.
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation was passed in 2007 and it generally allows taxpayers to exclude income from the discharge of debt on their principal residence. For full details on the Act please visit the IRS web page. Since we are not tax professionals, you must contact your CPA to find out more information and how it may apply to your specific situation. The point I would like to highlight is that without an extension on this act, short selling a primary residence after 2012 might have additional tax consequences that will have to be factored into a homeowners decision.
What this means for our market is that unless there is a move to extend this act by our government officials, we might see a flood of new short sale listings hit the market before the end of the year. If you find yourself in this position and would like more information, call us today at 678-250-4500.