There’s a reason many homebuyers flock to Atlanta. Between its warmer climate and the fact that it’s home to a large number of thriving, well-known businesses, it’s easy to see why the city appeals to a range of buyers, from singles looking to establish careers to families aiming to plant roots.
Jenni Bonura, president and CEO at Harry Norman, Realtors, points to this broad appeal as a reason for Atlanta’s strong housing market today. But if you’re thinking of buying a home in Atlanta, or investing in one, then it’s essential that you have a solid pulse on the real estate market there. Here’s what you need to know about the market today and looking forward, based on information from the U.S. News Housing Market Index.
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How the Atlanta Housing Market Changed in 2022
Single-family home construction slowed down in Atlanta in 2022 compared with 2021. Based on data from the U.S. Census Bureau, permit activity dropped from 2,272 in January 2022 to 1,348 in January 2023 — a 41% year-over-year decrease.
On the other hand, construction for multifamily homes ticked upward. In January 2023, there were 2,015.833 housing permits issued for multifamily buildings housing two units or more, a 126% increase over January 2022’s 892.667 permits. This is the highest number since at least 1995.
Atlanta Housing Supply and Demand
Despite a slowdown in single-family home construction, Bonura says that housing inventory in the Atlanta metro area is fairly strong.
“Broad market inventory is up,” she says. In fact, for the broad market, Bonura says Atlanta is seeing a 4-month supply of homes, and luxury homes in Atlanta are at a whopping 10.9-month supply.
For context, it typically takes a 6-month supply of homes to fully meet buyer demand, but in some markets, a 4-month supply will equalize things nicely. It’s also worth noting that on a national scale, total housing inventory as of the end of January sat at a 2.9-month supply, according to the National Association of Realtors.
Meanwhile, the U.S. News Housing Market Index shows that as of January 2023, based on data from Redfin, Atlanta housing supply sat at 3.6 months of inventory, representing a year-over-year increase of 1.97%. So all told, Atlanta’s market seems to have gained inventory nicely. At the national level, there were 3.2 months of housing inventory in January 2023, up 1.71 months year over year.
Now it’s worth noting that Atlanta has recently seen a big uptick in property listings. As Bonura explains, “For our market, spring starts in February.” Spring is a common time for housing inventory to pick up, so Atlanta may have gotten a bit of a jumpstart.
Meanwhile, the rental vacancy rate for Atlanta as of January 2023 was 5.4%, representing a decrease of 0.9% from one year prior, based on data from the U.S. Census Bureau. The U.S. rental vacancy rate for the fourth quarter of 2022 was at 5.8%, putting Atlanta’s vacancy rate below the national average.
As far as homebuyer demand goes, a healthy level of inventory has created a situation where “we’re still seeing multiple offer situations,” Bonura explains. But, she adds, “not to the same degree as we were at the peak of the market.”
Bonura also says that at the peak of the market, about 10% of Atlanta area homes were being sold sight unseen. “In our market today, I’d put that number at 1% or less,” she says.
As of March 3, the Mortgage Bankers Association’s seasonally adjusted Purchase Index increased by 7.4% compared with the prior week. On an unadjusted basis, the Index went up by 9% compared with the previous week and down 76% year over year. The interest rate on a 30-year, fixed-rate mortgage rose to 6.79% — the highest level since November 2022 and 270 basis points higher than a year ago, the MBA pointed out. But even with higher interest rates, there was still an increase in mortgage application volume. However, many borrowers continue to wait for rates to come back down.
Since February 2020, consumer sentiment has plummeted from 101 to 64.9 in January, according to the Survey of Consumers from the University of Michigan. Year-over-year, consumer sentiment dropped 2.3 percent.
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Median Home Price in Atlanta
The median home price in Atlanta was $350,000 in January 2023, according to the U.S. News Housing Market Index, based on Redfin data. That’s a 1.5% increase from a year prior. It’s also in line with the national median existing-home sale price in January, which was $359,000, per the NAR. That’s a 1.3% uptick year over year.
Homes in Atlanta are largely selling at a price that’s close to their listing price, Bonura says. “Our sales price to original list price still hovers around 95% for both the broad market and luxury market,” she says. “Properties that are ready to go and updated will sell at or above list price.”
Even sellers who are making concessions aren’t dropping prices to such a drastic degree. “If (a home has) been on the market or the price is unrealistic, you’re going to have lower than average results — somewhere between 90% and 95%,” Bonura says.
The median Atlanta rental price in January of 2023 was $1,941, up 4.3% on a year-over-year basis. On a national scale, the median monthly rent in January 2023 was $1,942, according to Rent.com’s February rent report.
Data from Black Knight Inc. shows that 0.3% of homes with mortgages in Georgia experienced foreclosure activity in December 2022, up from 0.2% over December 2021, while delinquency decreased by 0.3%.
Interest rates were also up 82% over the last year, sitting at 6.27% for a 30-year, fixed-rate mortgage in January, from 3.45% in January 2022. Since then, Freddie Mac’s Primary Mortgage Market Survey increased to 6.73% for the same mortgage as of March 9, 2023.
Unemployment Trends in Atlanta
As of December 2022, more than 3 million people in Atlanta were employed, and the unemployment rate in the city was 2.6%, down 0.2% year over year.
That same month, the national unemployment rate was 3.5%, according to the U.S. Bureau of Labor Statistics. All told, the jobless rate in Atlanta is lower than it is on a national level. And for context, 3.5% is where the national unemployment rate sat prior to the pandemic.
It’s also worth noting that in December 2022, there were close to 134,000 construction jobs in Atlanta. That’s an increase of roughly 600 construction jobs from a year prior.
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Builder Confidence in Atlanta Is low
In February 2023, builder sentiment in Atlanta was 45 out of 100. That’s a steep drop from a year prior, when builder sentiment was 84. However, it’s on a steady upward trajectory from December 2022’s 35. Builder sentiment is negative at a value below 50, neutral at 50 and positive over 50.
Meanwhile, on a national level, builder confidence in the housing market was 42 in February of 2023, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. That represented the strongest reading since September 2022.
Builder confidence in Atlanta could change, however, as buyer demand picks up. And Bonura says she’s anticipating a very positive spring.
The Architectural Billings Index, which is an economic indicator for nonresidential construction activity, was rated 46.9 in January, down 14.3% over the last year. A score above 50 indicates an increase in firm billings from the previous month.
Atlanta Real Estate Market: Predictions
Bonura thinks that in the coming year, the housing market will normalize. She also expects an uptick in housing inventory.
“I don’t think we’ll hit the 6-month mark this year,” she says. “But there are some levers that could influence that.”
Bonura also thinks buyer demand will hold strong, even with mortgage rates being higher than they’ve been in a long time. “Because of COVID, people want what they want,” she explains. “People don’t want to delay their decision to move, whether it’s for pleasure, for work, or for family needs. They still want to make those moves happen.”
She does think mortgage rates have the potential to drop in the next year. But she also doesn’t expect borrowing costs to heavily influence buyers.
“I don’t see people delaying their decision (to buy a home) for a modest adjustment in rate.”
Finally, Bonura expects to see a modest depreciation of home prices in the 3% to 5% range. But all told, she thinks Atlanta’s housing market will hold strong in the year ahead. At the same time, there should be ample opportunity for buyers to get in on it, largely due to a healthy level of inventory, and also due to a nice range of inventory.
“There’s a pretty broad mix,” she says. “Luxury homes are about 10% of the market. And we still have a starter market — that’s an advantage of Atlanta.”
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Atlanta Housing Market Forecast originally appeared on usnews.com
