Report: In tight real estate market, fixer uppers may be good choice

Faced with soaring home prices, high interest rates, and a shortage of available residential real estate, many seeking to become homeowners are considering purchasing what the industry refers to as “fixer-uppers,” according to StorageCafe, which recently released a nationwide study that ranked Atlanta 14th among cities compared based on desirability as places to find homes that are good candidates for renovation.

Fixer-uppers “do require a consistent amount of work—and time—before they are ready to be called ‘home,’ but they can be a real solution for the budget minded,” states StoreageCafe, a nationwide self-storage website and a division of Yardi, a real estate management software company.

“If Atlanta is on your radar for a more affordable home, you’re in the right place as there’s plenty of fixer-upper material on the local market,” the report states.

Shoppers in the fixer-upper market would do well to look for houses with “good bones,” according to realtor.com, which explains that the term “good bones” refers to a desirable floor plan and a sound infrastructure—foundation, plumbing and electricity—in houses that may be in need of repairs and cosmetic improvements.

“First-time and experienced buyers alike may find that the effort of fixing up a home can certainly pay off. Buying a home that needs extensive remodeling can in fact fetch a handsome discount, but it depends a lot on where you’re looking to buy,” according to the StorageCafe report, which noted that fixer-uppers in Atlanta represent 8 percent of the existing homes for sale; the fixer-upper discount represents about 55 percent of the listing price— “a more than hefty saving.”

The report estimates that in the Atlanta market, buying a fixer-upper shaves approximately $300,000 off the price of a turnkey home. In line with national trends, Atlanta area fixer-uppers are smaller than standard homes—1,356 square feet on average compared with 2,178 square feet on average in standard homes. Some homebuyers, however, may be in the market for a smaller home.

Turning to a fixer-upper can be a viable way to access homeownership in DeKalb County, StorageCafe reports. Buying a home in DeKalb County “that needs some TLC” could shave almost 30 percent off the median listing price of a turnkey home—on average $425,000. “That translates to savings of $126,000 for this transaction,” according to StorageCafe, which reports that approximately 12 percent of DeKalb listings are in need of repairs.

While StorageCafe found that fixer-uppers in the city of Atlanta overall are about 20 percent cheaper than their counterparts in DeKalb County, “if you decide to go for a standard home, it turns out they’re 23 percent cheaper in DeKalb County compared to Atlanta.”

Following the national trend, fixer-uppers in DeKalb County come with a little less room than a standard home, offering prospective homebuyers about 1,690 square feet of space on average, or 18 percent less than a turnkey home, StoreageCafe states. “However, DeKalb County does fare better than Atlanta in this respect, as homes in need of repair in Atlanta are smaller than in DeKalb County overall, offering about 1,360 square feet on average.”

 StorageCafe points out that while price is the main incentive for buying a fixer-upper, other advantages include the likelihood that such homes will be in well-established neighborhoods and buyers have the freedom to renovate based on their needs, preferences, and tastes.

Explaining the methodology used in its study, StorageCafe states: “To determine the best cities for fixer-uppers, we turned to Point2, our sister division and real estate platform. We sifted through their ‘for sale’ listings inventory in the 50 biggest U.S. cities. To identify listings that qualified as ‘fixer-uppers,’ we used listing ‘tag’ filters such as ‘TLC,’ ‘good bones,’ ‘as is,’ ‘in need of repairs,’ and others.” The study then used 11 key indicators of fixer-upper market potential in determining its rankings.

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