Four Themes Defining the Atlanta Area Real Estate Market

Here are four things the latest real estate market data tells us about the metro Atlanta market:

Median prices

The median home sale price in the Atlanta area was $400,000 in May, up 3.9% from the same period a year ago, according to Georgia Multiple Listing Services.

But since spring 2020, the median price has increased by 57%. percent.

Credits: J. Scott Trubey

Credit: J. Scott Trubey

Much of this growth occurred in 2020, 2021 and 2022, when interest rates were much lower.

Add to these higher sale prices more expensive mortgages and the market is simply excluding many people.

Interest rate

In May 2020, the median home sale price was about $254,000 and the average interest rate was 3.15%. If a buyer made a 20% down payment, the average monthly mortgage cost (excluding taxes and insurance) was about $873.

For a buyer in May of this year who can put down 20% on a median $400,000 home with an average interest rate that is now about 7%, the average monthly cost of a mortgage is now about $2,128 (again, not including taxes and insurance.)

To avoid the high rate, a significant number of buyers pay with cash, said Kristen Jones, owner of Re/Max Around Atlanta.

“However, we are also seeing a steady flow of first-time buyers and first-time buyers who have accepted the reality of higher rates,” she said.

Provide

In May, there were 19,000 homes for sale in metro Atlanta, according to Georgia Multiple Listing Services. That’s 60% more than a year ago. But even with that increase in inventory, that still represents only about 2.6 months of supply. A more balanced market would be more like six months of supply.

One reason for this supply gap is that the country isn’t building enough new homes. According to a study released June 18 by Zillow, from 2021 to 2022, the national housing shortage increased from 4.3 million homes to 4.5 million.

In metro Atlanta, Zillow found that by 2022, the region would be short nearly 66,000 housing units.

Credit: cus

Credit: cus

“The fact is that there is not enough housing in this country, making homeownership unattainable for too many families,” Orphe Divounguy, senior economist at Zillow, said in a press release. “The affordability crisis extends to renters as well, with nearly half of renter households burdened by costs. Closing the housing gap is the long-term answer to making housing more affordable. We are in a big hole, and it will take more than the status quo to get us out of it.”

Home construction increased nationally in 2022 and 2023, fueled by strong purchasing demand at the start of the pandemic. But the Federal Reserve’s efforts to curb inflation by raising and keeping interest rates high have had an impact on home purchases and new home construction.

Homeowners who would like to move or buy a newer home are currently enjoying much lower interest rates and may not want to sell and take on a more expensive mortgage. This has reduced the supply of existing homes for sale.

Construction limits

The building frenzy was a major factor in the financial crisis and Great Recession from 2007 to 2009. In the years that followed, housing construction in the region was anemic.

Ultimately, construction rebounded, but not at the pace the Atlanta region needs, experts say.

New housing projects are underway. But because of high land, labor and interest rates, much of the new product being built is well above the median home sales price.

Restrictive zoning in many communities has also driven up prices, experts say.

“I think accessibility and affordability are the defining issues of our time,” John Hunt, director of MarketNsight, which tracks Southeast housing markets, said at the group’s biannual conference. “We’re starting to see some change, and I’m very excited about that.”

Removing zoning restrictions against denser development and reducing parking requirements could help address some affordability issues, according to the Zillow report.