Strong and steady is the name of the game in the Atlanta-Sandy Springs-Roswell housing market. Not only have prices remained unchanged in the area, but building permits and consumer demand have stayed largely stable, too — despite higher mortgage rates and other headwinds.
It seems the National Association of Realtors (NAR) was right to call the Atlanta metropolitan statistical area (MSA) the No. 1 market to watch this year, citing its affordability and robust job market.
Will that continue as we head toward 2024? Here’s what data from the U.S. News Housing Market Index tells us.
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How the Atlanta Housing Market Changed in 2022
Like most of the country, the Atlanta MSA saw building permits fall quite a bit across 2022, peaking in March with nearly 3,000 single-family permits, but bottoming out at just under 1,200 by the year’s end.
Fortunately, things have improved since that point, and single-family permits are on the rise once again. From May to July of this year, 7,132 permits were approved in the area. That’s up slightly from the 6,891 approved during the same period a year ago, but it’s also a marked improvement compared to the last few months of 2022, when permits hit their lowest point in at least five years.
Multifamily development has seen the opposite trend. Permits on these properties rose steadily throughout 2022 and have declined notably since the start of 2023.
Still, multifamily permits are getting approved at higher rates than a year ago. Between May and July, 4,439 were approved in the Atlanta-Sandy Springs-Roswell MSA, an increase of 13% from 3,924 a year prior.
Atlanta Housing Supply and Demand
Housing supply is low in the Atlanta market. The MSA currently has just a 2.4-month supply of homes for sale — less than the national average but up nearly two weeks compared with a year ago. (For reference, a balanced market — in which supply and demand are equal — requires about six months’ worth of inventory.)
The low supply isn’t too surprising. With the average 30-year mortgage rate now above 7%, most homeowners are staying put — hoping to avoid trading in their ultra-low mortgage rates for much higher ones.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 5% compared with the previous week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Sept. 1. The Refinance Index decreased 5% from the previous week and was 30% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index decreased 5% compared with the previous week and was 28% lower than the same week one year ago, when rates were in the 5% range.
When you throw in improving consumer sentiment (up 20 points from a year ago) and the high demand the Atlanta-Sandy Springs-Roswell MSA is seeing, there’s just not enough supply to go around. Not only was Atlanta No. 1 on NAR’s “Markets to Watch in 2023 and Beyond” report, a national survey also showed Atlanta as the No. 2 place Americans would move if money were no object. The city of Atlanta added 14,300 residents in the past year, between April 2022 and April 2023, according to estimates released by the Atlanta Regional Commission. Fulton County, home to Atlanta, Sandy Springs and Roswell, added 18,500 residents, the largest numeric increase in the 11-county region.
Rental vacancies are high in the Atlanta area at 8.7%, up 1.7% year over year, above the national vacancy rate of 6.3%. This likely stems from both the uptick in multifamily developments in the metro area across 2022 as well as the overall affordability of homeownership there. According to NAR, nearly 20% of renters are able to afford a typical home in the city.
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Median Home Price in Atlanta
Home prices have held steady in the Atlanta region, clocking in at a median $395,000 as of July, according to Redfin. That’s below the national median ($422,000) and slightly above the median price one year ago.
Nathan Minkwic, a real estate agent with RE/MAX Around Atlanta Realty, expects pricing to remain at this level for the near term.
“Sandy Springs is still showing it’s a hot market because of the lack of inventory and strong buyer demand,” Minkwic says. “Over the next few months, I would expect the pricing trends to continue at a steady pace upwards and likely drop off slightly as we get closer to the fall and winter holidays.”
Rent prices have largely held steady, too, notching a 0.8% increase over the year. The MSA in July averaged a $1,986 monthly rent, according to the Zillow Observed Rent Index — on par with the national average of $2,062.
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Unemployment Trends in Atlanta
The job market in the Atlanta MSA is booming. The area has seen jobs jump by 66,000 in the last year, and unemployment sits at just 3.2%. That’s up 0.4% from a year ago but still below the national average. Employment is projected to jump another 34% by 2050.
Tech employment is big in the area, with Apple, Microsoft and Alphabet all having a presence. Sandy Springs — which sits just 16 miles north of the city — is the perfect spot for those with big-city jobs but who may want a more quiet lifestyle.
“Most people are working from home a majority of the week in the tech industry like at Google and Microsoft, though they still have to go into the office a couple days a week,” Minkwic says. “I get a lot of clients who work in the medical field or the tech industry who are looking for something close to the city, but just far enough to have more of the suburban feel — where they get a yard and a single-family house.”
Jobs in the construction sector are popular, too. The industry has gained over 12,000 jobs in the last year, bringing Atlanta-Sandy Springs construction employment up to 144,700 as of July.
A solid job market and booming employment are likely big factors in the area’s low foreclosure rate. Just 0.3% of Atlanta-Sandy Springs-Roswell properties were in foreclosure in May, according to Black Knight. That’s up just 0.1% from a year ago and below the nation’s 0.4% average.
Builder Confidence in Atlanta Is Improving
Builders are starting to feel good about setting up shop in the Southern U.S. While builder sentiment remains steady year over year, it’s risen from a mere 33 out of 100 in December to the 55 it is today, indicating improving conditions on the ground.
According to Minkwic, many homebuilders are eyeing Atlanta for new communities, but the lack of land in nearby Sandy Springs poses a challenge. There, one-off, custom properties tend to be more common than entire new home neighborhoods.
“In Sandy Springs, there really isn’t a lot of space for spec home communities, but you will find more custom-built homes,” Minkwic says.
Strong demand and steadily declining construction costs nationwide likely play a role in builders’ improved confidence. While construction costs haven’t yet notched a year-over-year drop, they have fallen quite a bit from their November peak and have trended downward for all of 2023.
Nonresidential construction has fallen in the region, with a 4.7% decrease over the last year, according to the Architecture Billings Index. Total architectural billings are slightly higher than national numbers.
Atlanta Real Estate Market: Predictions
There’s no way to say for sure, but with robust job opportunities, high demand from movers, and improving consumer and builder sentiment, the Atlanta-Sandy Springs-Roswell housing market seems poised for a strong and steady fall season.
And while our projections do show a slight uptick in multifamily permits in the coming months, single-family permits will likely drop, which should keep home prices at or above current levels. Lower mortgage rates could also send prices higher, according to Minkwic.
“Buyers are seeming to adjust to the higher interest rates, but the inventory levels are still on the lower side,” Minkwic says. “If the rates drop a bit into next year, I would expect to see prices only increasing further because of buyer demand.”
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Atlanta Housing Market Forecast originally appeared on usnews.com
Update 09/13/23: This story was published at an earlier date and has been updated with new information.
