The first half of the Atlanta 2023 housing market shared many similarities with the first half of the 2022 real estate market. Despite continuous caterwauling from the MSM about a crash, home prices around greater Atlanta haven't really moved from a year ago. In fact, some market are ahead of those record highs of '22. Clearly it's not the same market, but the interest rate shock seems to be accounted for.
Owners Love Low Mortgages
Pretty simple. During the pandemic, the government bought mortgage backed securities and artificially maintained those historically low interest rates. Working at home became "a thing" and people spent a lot more time in and around their homes. Many leveraged those low rates and refinanced, taking money out and completing home improvements. Why move now? Why give up that sweet mortgage rate?
- 91.8% of U.S. mortgaged homeowners have a rate below 6%,
- 82.4% have a rate below 5%.
- 62% have a rate below 4%
- 23.5% an interest rate below 3%
It's likely to be a good while before owners feel the gumption to move. While rates in the 7's aren't bad by any measure, they're not very appealing to those locked in much lower.
Atlanta Home Prices Q2 2023
The MSM was ebullient, just delighted when the housing market hit the brakes in the last half of 2022. Several West Coast markets tanked for reasons not fully discussed, most are still trying to find solid ground. Not Greater Atlanta. This region is diverse in employment, continues to grow the film and media industry and is a landing spot for many new college grads. Dip? Yes, but the first two quarters snapped right back and prices are at or above record highs. Q2 '22 vs Q3 ' 23 -
- Sale -0.5% median price 438K
- Pending +2.3% median price 440K
- Active +3.6% median price 450K
- Prices dipped as they did nationally but roared back in Q1 / Q2
- No substantive sale price drop across this data set, pending and actives point higher still
Atlanta Housing by the Numbers
The interest rate bumps achieved the desired effect, the number of home buyers dropped. However, personal spending remains high and debt is piling up a record levels; the average car payment is pushing $750/mo before insurance, and that's for a 72 mo loan. Combine that with rent and daily expenses, it's no wonder the buyers on the edge fell off when rates jumped. Fewer buyers, fewer contract and sales. Listing inventory down as well, in the mix is the dearth of new construction when builders slammed on the brakes. Those numbers are rising again. Still a sellers market, just not as bonkers for buyers.
Overall numbers from the last two years won't likely happen again. The market is balancing and that is due to interest rates.
- Closed sales down 27.4%
- Pending sales down 21.2%
- Actives down 13.5%
- Stark to be sure but better than many areas of the nation
- Increases on all Q1 to Q2
Days on Market Increases in Atlanta
It's taking longer to sell a home, usually. It gets very in the weeds but a deeper dive into the data clearly shows two patterns. Those sellers that accurately price and market their home still tend to see multiple offers and short market times. Those sellers that aspirationally price marginal homes are not having much success. Buyers are not rushed like last year, all contingencies are not being waved and buyers are not simply paying any price. And that is good.
Big statistical increases but no where else to go but up. Still well below a normal market though.
- DOM is up 95% from historic lows
- CDOM is up 121% from historic lows
- DOM still below 30 at 27 days
- CDOM just over 30 at 34 days
- Both numbers are well below the 45-60 DOM of a “balanced market”
What's Next for Atlanta Real Estate?
The Greater Atlanta market is among the strongest, most resilient markets in the nation. It remains a well regarded business hub and the growth in media and music adds strength to the base. The fundamentals are strong and the demand is clearly above the supply, this trend is likely to continue to several quarters. Snapping back so quickly from the interest rate shock demonstrates the core strength; this market is nothing like the MSM headlines. Every micro-market is different and some are stronger than others, but it can be said with a high degree of confidence that there are no segments or areas in distress at this time.
Posted by Hank Miller on