How’s the market? An inside look at the Atlanta Real Estate Market

Prices are rising, rates are lower than ever, the market is HOT! From an outsiders perspective the Atlanta housing market is thriving, but where is it headed in the future? Is it smooth sailing ahead or are we bound for another housing crash? The question everyone wants the answer to, but depending on who you ask, you are likely to get varying responses. In an effort to cut through all the muck and hearsay I attended a conference hosted by the Economic Forecasting Center at Georgia State University. Below I highlight a few key factors that will affect us going forward

Are we headed for another housing bubble?

Breakdown of Mortgage availabilityYes, home prices have been on the rise for some time now, are we headed for another bubble? The numbers suggest NO! Right now the current rise in home prices is primarily linked to supply and demand. There are simply more people looking to purchase than there are homes on the market. This is different from the early 2000’s when “demand for housing was artificially boosted by lending standards that were far too lenient”. Look at the mortgage availability chart on the right and see how the mortgage industry is in check this time around. (the higher the number the easier it is to get a mortgage).

Housing Permits
If you spend 5 minutes driving around Atlanta you are bound to see cranes, scaffolding, and new construction signs everywhere. Many people are asking how this can possibly be sustainable. Have builders forgotten what happened in ’08? Who is going to buy all these new homes? That is a valid concern, until you actually compare the numbers of new housing permits with pre-recession numbers. In comparison, the amount of recent new housing permits is only 40% of the peak pre-recession levels. See chart on the left.

Inventory levels vary by price range – A Tale of Two Markets

Inventory Absorbtion - Beacham InsiderThe National Association of Realtors believes that a healthy market (supply and demand are in balance) is one with 6 months of housing inventory. This means that if nothing else came on the market, it would take 6 months to sell all currently listed homes. When the supply of homes is less than 6 months (less homes for sale) this creates a Seller’s market. When the supply of homes is greater than 6 months (more homes for sale) that creates a Buyer’s market. 

Tale of Two Markets – Homes priced below $750,000 have between a 3 and 4.8 months supply, while homes priced above $750,000 have between an 8 and 37 month supply. The months of supply goes up dramatically over $1.5 Million mark. Part of this has to do with demographics. “The baby boomer generation wants to downsize’ from their statement homes, ‘but the generation behind them is not large enough to absorb the number of big homes coming on the market… what we really need are new homes for the first-time homebuyer and move-up markets. For Atlanta Intown, more investor renovations and new entry-level condos are needed.” (Dac Carver – Managing Broker for Beacham & Company Realtors)

Crazy Statistic

Atlanta’s limited housing inventory is the trending topic when discussing real estate. Here is a crazy stat to put this all in perspective. There are fewer homes on the market today than there were in the year 2000. However, Atlanta has over 2 million more residents than it did back in 2000! That means there are 2 million more people vying for the same number of homes. No wonder prices are on the up! And I don’t see this changing overnight.

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2017-07-03T17:11:00-04:00May 16th, 2016|Categories: Atlanta Real Estate News|Tags: , |