Are Dark Clouds on the Horizon for the Atlanta Housing Market?
The Atlanta housing market may be flattening after years of growth. But it still outperforms most national indices, which is good for both buyers and sellers.
Nationally, the housing market goes through cycles, some periods best for buyers, others for sellers. In the past decade, prices were rising steadily, mortgage rates were low, and housing supply was relatively low. This made for a highly active market, generally favoring sellers. However that may be about to change and how will this affect the Atlanta housing market?
Based on several recent reports, Atlanta seems to be a good market for both buyers and sellers. For years, Atlanta has been a seller’s market, but it may now be balancing out. One measure of this is inventory supply, which measures how many months it would take for houses currently on the market to sell. In a balanced market, inventory is about six months. In Atlanta, inventory, which was at about one year’s worth of sales, bottomed out in early 2018, to only two months of sales, which allowed sellers to raise prices.
However inventory has been steadily rising again, closing in on the ideal. This is good news for buyers. Skylar Olsen, director of Zillow’s economic research, is quoted in the Atlanta Journal Constitution as saying that homes will be more affordable, with values rising half as fast as last year. A study at the Wharton School of Business, University of Pennsylvania, by Susan Wachter and Benjamin Keys, found that Southeastern markets have a decent supply of affordable housing, coupled with an increase in housing starts, and “Atlanta is a good example of exactly this, where we still growth still occurring.”
What’s good news for buyers may not be as good for sellers. According to 2019 house sale data, there are several indicators that sales are slowing down and that listing prices may have to come down as well.
- Compared to last year, houses are taking 24% longer to sell.
- Showing activity is down 8%, meaning less people are in the market for a new home.
- More homeowners are letting their listings expire, essentially taking their homes off the market. Either they’re not getting any offers or the offers they do receive are unacceptable.
- Competitive offers are way down, 75% from last year. Getting only one reasonable offer on a listing leads to decreased pricing and is a significant indicator of a market slowdown.
At Properly, our data is showing the same indicators, with a few key differences. Our listings are holding steady on both pricing (still selling at 98% of our recommended list price) and we’re seeing the same level of sell-through as last year. The reason we’re beating the market in terms of pricing and sell-through is because we’re pricing homes to the new normal of the market, and not towards unrealistic prices that result in homes sitting on the market.
What’s hot in the Atlanta housing market?
Prices may be peaking in Buckhead and the Perimeter neighborhoods, according to an article in Reporter Newspapers. Prices have risen above salaries and buyers are feeling priced out. Brookhaven is the new hot spot. Prices are healthy and buyers seem eager to pay a premium for relief from commuter traffic. In fact, commute time is one of the major factors that buyers in Atlanta consider when looking for a home.
Inside-the-Perimeter neighborhoods, including Brookhaven and Sandy Springs are enjoying new popularity, especially among young families. Prices in Sandy Springs are up 23% over 2018. Buyers are also interested in houses that need a lot of updating in neighborhoods like north Sandy Springs, where sales are up 5%. This housing is a more affordable option for millennials and other first-time buyers. The median home price on inside-the-Perimeter Sandy Springs is $860,000, while outside the Perimeter Sandy Springs homes are at a median price of $570,000. In general, Brookhaven and Sandy Springs are still more affordable than Buckhead and Midtown, at least for now.
What to expect in Atlanta over the next year
The bottom line is that, even with a national slowdown in the housing market, Atlanta is still in pretty good shape. While many major cities are overvalued, Kiplinger analyzed data showing that Atlanta is among the few cities that are fairly valued. Inventory is up and, in 2019, home value appreciation is growing in double digits, on par with 2018. But, as we noted above, Atlanta may be poised for its own slowdown in the second half of the year and in 2020. This means that sellers need to anticipate stagnant or lower listing prices.
The key for both buyers and sellers is to set their expectations realistically and, even in Atlanta’s changing market, everyone can win.
At Properly, we use data-driven analysis and regional experience to monitor local housing trends, especially in our key markets. Is the joyride over in the country’s housing market? Find out in our in-depth look at the US housing market.
Selling your home in Atlanta or Charlotte? Properly can help. Get started with a free online home valuation.