The grizzled crusty veterans feel it and the questions are starting...is the Atlanta real estate market shifting? Has the move away from historic inventory shortages and home buyer frustration finally started? That argument can be made...and while the data lags by several weeks, the radar of many experienced agents is lit. The feeling in the field can't always be immediately confirmed but we're beginning to see the data evidence. It'll take a few more months as markets always tend to "feel" before the "proof"; that's just a challenge of the business. One thing that's not debated, the mortgage rate increases (with more promised) have been an ice bucket challenge to the market.

But first -it bears repeating that "the Atlanta market" is not a monolith; it is a mix of just about every type of location, property type and price point. What is happening in some areas may not be happening in others, same for price points. Are we returning to the normal "spring market" where listings in highly desirable school districts pour in? Are homes staying on the market a bit longer? Does it matter though if we go from 6 days to 9 days for homes to go under contract? Are investors clouding the data? Point is, like everything else, these signs are not universal to every market and every price point.   

Is the Atlanta Real Estate Market Shifting?

Let's start with a look at the basics. As before, the focus is on the six major Atlanta metro counties - Cherokee, Cobb, Dekalb, Forsyth, Fulton and Gwinnett. All price points and detached homes only. The charts below look back from Jan '21 to the end of Apr '22. The number of listings and sales shows the expected seasonal swings but look at the first quarter. As rates jumped, buyers did as well. Many were priced out but the rush was on, especially first timers. As rates continued, note the drop - opposite of a year ago. Lower inventory and rate of rise as well. Many buyers that were on the edge or might have waited too long have now become renters....possibly for a long time.

Zeroed in on the first time buyers up to 400K shows the impact of rising rates. The number of sales is dropped drastically since Jan '21 and continues to slide. Given the Fed's actions and rising inflation, this is expected to continue. The bounce in the first quarter reflects buyers in Nov-Jan jumping in as the Fed went to work. The cliff in Mar-Apr shows the rates taking effect. Number of listings is also down, now we'll watch the spread between the two and see if this grows.

400K-700K segment is also volatile. The shift here for buyers isn't necessarily them being knocked out, it's them being knocked down. As rates rise, buying power decreases and the 700K buyer a year ago is now a 500K buyer and soon, likely a 400K buyer. We see the seasonal drop around Christmas but when inflation went crazy and the Fed became serious, these buyers went to work. The first quarter sales significantly lead listings but just as fast they're diving down. These buyers are likely to leverage what they can, buy before additional bumps and this is likely to keep this segment busy.

Buyers over 700K tend to be more stable and less impacted by rate changes. In fact, they may be the primary beneficiary of the market shift. We see the increase in sales over the first quarter but also the sharp increase in listings since the last quarter of '21. Over the last couple of weeks, those listings continue to grow but buyers have pulled back. Part of this is the loss of buyers leveraging the low rates, they are now into the lower price points, (above). Part of this may be that these buyers tend to be less emotional and more measured; some may be waiting to see what happens over this year. Another key segment are buyers coming from other states. Covid relocations may be slowing, those cash tossing free wheelers from higher priced markets may be staying put.

Prices overall have yet to reflect the apparent shift, again there's a lag. Note however, most of mid '21 was largely level as the market found some normalcy. The Fed taking action pushed buyers off the fence in the first quarter and prices increased, of course sellers pushed higher as well. We'll see how that looks over the next few months.

It's still a fast moving market, the appealing homes sell rapidly and we're still seeing multiple offers and aggressive contracts as buyers scramble. Days on market remains crazy low, the months of inventory bump is expected every spring. The wild card there is determining if it's a spring bump or due to slowing demand. Too early to tell, likely mostly a spring bump but rising rates are slowing the pace overall. Up a bit from April '21 but still well entrenched in a "seller's market".

There's plenty of anecdotal evidence to support the idea that the Atlanta real estate market is shifting, that's not a bad thing. The economic indicators outside of real estate continue to flash yellow; a government cannot simply spend money that doesn't exist. Printing money leads to inflation and now the Fed is tasked with being the mean parent. Their actions are directly impacting the real estate market, which may not be a bad thing as the current situation is unsustainable. How the remainder of this year shakes out is a complete wild card but the mix of factors influencing the real estate and the economy in general is significant.


The Hank Miller Team puts 30+ years of full time sales & appraisal experience to work for you. Act with complete confidence & make sound, decisive real estate decisions. 678-428-8276 and info@hmtatlanta.com

Posted by Hank Miller on

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