Cheaper to buy than rent in metro Atlanta, and loans available for fixer-uppers

By David Pendered

Hard to believe by historic standards, but a recent report by Deutsche Bank shows it’s cheaper to buy a home than rent one in metro Atlanta.

In fact, metro Atlanta now is the cheapest city in the nation to buy as opposed to rent, according to a report by Deutsche Bank. The leading causes are plummeting home prices and low interest rates, the bank says.

The effort to help potential homebuyers benefit from this new reality is being led in our area by Atlanta Neighborhood Development Partnership, Inc.

On Wednesday, the Piece by Piece initiative that ANDP is coordinating will host a seminar titled, “Understanding Rehab Mortgages.”

The seminar’s purpose is to show the real estate industry how to help potential buyers get financing to purchase a particular type of residence – one that needs a small amount of rehabilitation before it can be called home.

There’s no telling how many homes now on the market in metro Atlanta fall into this category.

Some of these residences are bank-owned and missing items such as fixtures or appliances, plumbing or wiring. That is, anything of value that can be removed. Otherwise, the dwellings themselves often are in reasonable shape.

The Deutche Bank report does not mention the condition of the for-rent and for-sale homes in its report. And the geography the report encompasses is broad: The metro Atlanta Census area, defined as Atlanta-Sandy Springs-Marietta.

Nonetheless, the figures in the bank’s March 15 report are stunning.

The report says the cost of a rental unit in metro Atlanta is 151 percent the cost of a mortgage, based on the after-tax mortgage payment. A score of 100 percent represents an equal cost to rent or buy.

Metro Atlanta is one of just 28 markets, out of the 54 U.S markets the bank tracks, where is it less expensive to buy than rent a home, according to the global investment bank that has a Buckhead office to provide private client services.

Here are the four markets that trail metro Atlanta, in terms of regions where rent is more expensive than a mortgage payment, after taxes:

• Orlando – 137 percent;

• Rochester, N.Y. – 136 percent;

• Cleveland – 133 percent;

• Tampa/St. Petersburg – 132 percent.

The rent-versus-buy figures in the report show that renting remains cheaper than buying in some other southern cities. Again, a score of below 100 percent means it’s more affordable to rent than to buy:

• Washington/Arlington/Alexandria – 95 percent;

• Austin/Round Rock – 92 percent;

• Charlotte/Gastonia/Concord – 85 percent;

• Raleigh/Cary – 73 percent.

The Piece by Piece seminar Wednesday is designed for real estate professionals such as lenders, agents and builders. It’s free but registration is required. (See below).

The event is part of the Piece by Piece initiative, a consortium of more than 140 partners that ANDP is coordinating.

Earlier this month, HUD Secretary Shawn Donovan said in a speech at the Carter Center that Piece by Piece is the kind of partner the federal government wants in the foreclosure battle. That’s because it is a regional effort against foreclosure and destabilized neighborhoods.

The two-hour seminar will address a particular type of residence that is increasingly common in metro Atlanta – one that is in generally good repair but does need work before it is suitable as a home.

Homes in these conditions historically have not qualified for a long-term mortgage, according to HUD. Lenders typically required the homes be repaired before permanent financing was made available, and the short-term interest rates were too high for most buyers, according to HUD.

The Piece by Piece seminar will focus on programs that address this financing situation:

• HUD’s 203 (k) program, a program that’s been rediscovered in this economy that was created in 1978 and is administered by the Federal Housing Administration;

• Fannie Mae’s comparatively new HomePath Renovation and HomeStyle Mortgage products.

For more information about the seminar go to the Piece by Piece initiative.