The Atlanta real estate market is a dynamic and evolving landscape characterized by several key features. The city has a growing population, diverse neighborhoods, a strong job market, and a reputation for affordability. All these make Atlanta an attractive destination for businesses and residents, including millennials.
According to the National Association of Realtors (NAR), Atlanta is positioned to lead the charge as the standout housing market with exceptional growth potential this year. The Atlanta’s real estate market has exhibited high demand, rising prices, and low inventory. In this article, we’ll explore Atlanta real estate trends and forecasts for the next year or two.
Atlanta Housing Market Overview
Here is a snapshot of the Atlanta, GA housing market:
1. Number of Homes Sold
In Atlanta real estate, home sales have experienced a notable decline, with a year-over-year decrease of 20.1%, resulting in 4,717 transactions. Delving deeper into the market dynamics, on average, homes in Atlanta take approximately 29 days on the market before finding their new owners.
2. Median Sales Price
As of July 2023, the median home prices in Atlanta’s real estate market stood at $430,000. It marked the first uptick in the Atlanta median home price in four months.
This figure signifies a year-over-year decrease of 3.6%, shedding light on the evolving price dynamics within the city’s real estate market.
It is a valuable indicator of the recent shifts and trends in property values, offering insights into the affordability and competitiveness of Atlanta housing market.
3. Inventory Level
Housing inventory plays a pivotal role in shaping the real estate market’s balance, and recent data in July for Atlanta underscores its significance.
The total housing inventory stood at 10,169 units, marking a substantial 20.5% decrease compared to July 2022. New listings mirrored this trend, with a total of 6,842, reflecting a notable 23.0% decrease from July 2022 and a 10.4% decrease from the previous month.
As a result of these dynamics, the month’s supply over a 12-month period expanded to 2.1 months, a reflection of the evolving supply-demand dynamics within the market.
Trends in Recent Years
In 2022, there was an overall deceleration in the construction of single-family homes, following a period of heightened activity in the preceding year. Data from the US Census Bureau revealed a significant decline in permit activity, signaling a substantial year-over-year decrease of 41%.
On a different note, the construction of multifamily homes seems to be on the rise. More than 2,000 housing permits were issued for properties with two or more units.
Specifically, The Atlanta-Sandy Springs-Roswell Metropolitan Statistical Area (MSA) saw a substantial increase, with 4,439 permits approved between May and July. This translates to a 13% increase compared to the 3,924 permits issued during the same period the previous year. Multifamily property permits had been steadily increasing in 2022. However, permit issuance has been declining since the beginning of 2023.
On the other hand, the Atlanta-Sandy Springs-Alpharetta Metropolitan Statistical Area (MSA) is making substantial strides in the housing market. It ranks 61st in the FHFA rankings for metro areas with the highest percentage changes in house prices, with an impressive 11.04% year-over-year increase.
Over the past five years, Atlanta home prices have appreciated byover 70%. Typically, this indicatesrobust and sustained growth in this real estate market. A noteworthy shift is happening in Atlanta. While the southeastern part of the city and the southern suburbs were overlooked for investment in previous years, this trend is changing.
The scarcity of land in other areas of the metro region is driving attention and Atlanta real estate investment towards these previously less-explored areas.
Factors Influencing the Market
Economic Conditions
Atlanta’s reputation as a business-friendly city with a straightforward tax structure has made it an attractive destination for major national and international companies. This trend has been evident in the tech sector. Giants like Apple, Microsoft, Twitter, and Visa have opened offices or relocated their headquarters to the city creating a diverse job market.
These corporate moves have not only bolstered the Atlanta economy but have also had ripple effects on the Atlanta job market and housing demand. Notably, they have contributed to the city’s overall growth and reduced inflation.
Interest Rates
With interest rates on the rise, we’re already witnessing a decline in mortgage applications.
If you’re in a position to purchase a property, whether for Atlanta real estate investment or personal use, it’s advisable to consider doing so sooner rather than later. The road ahead may become more challenging as access to credit tightens further.
Leveraging available credit wisely can be a strategic move for you. Additionally, making timely decisions in this changing financial landscape can potentially yield greater benefits in the long run.
Employment Trends
The robust employment trends in Atlanta have had a significant impact on the city’s housing market. With approximately 3 million people gainfully employed and a declining unemployment rate of 2.6%, the Atlanta job market has been notably stronger than the national average of 3.5%. This employment strength has contributed to increased demand for housing as more people seek homes in the city.
The optimistic projection by the Atlanta Regional Commission indicates a potential population surge and a 34% increase in total employment by 2050. Demand for housing is forecast to remain strong in the foreseeable future.
Atlanta Population Growth
Atlanta’s current growth rate of 1.67% per year is indicative of its dynamic expansion. Since the most recent census in 2010, the Atlanta population growth has surged by an impressive 24.78%, with the census recording a population of 420,003 at that time.
Significantly, Atlanta reached its highest population peak in 2021, with 524,067 residents. This population growth has benefited Atlanta’s housing market. The increasing demand for housing has created a positive impact, driving opportunities for real estate investment and development.
As more people choose Atlanta as their home, it reinforces the city’s position as a thriving and attractive hub for both residents and real estate investors alike. The net migration to Atlanta has created a surging demand for housing that is outpacing the current rate of new construction.
Atlanta New Construction Homes
In February 2023, builder sentiment in Atlanta metropolitan area remained subdued. Many construction workers were hesitant to engage due to high material and labor costs. However, this remained an opportunity for realtors to acquire existing homes, renovate them, and rent them out to meet the demand.
Builders’ confidence has improved lately. This is due to strong demand and the consistent decline in construction costs nationwide.
Although construction costs have not yet recorded a year-over-year drop, they have substantially decreased since their peak in November and have continued to trend downward throughout 2023.
In other words, it can incentivize builders to initiate new projects, potentially correcting the low supply chain issues of new housing units and stabilizing home prices.
Atlanta Real Estate Forecast for the Next Year or Two
In recent years, Atlanta has experienced significant growth and a development boom, solidifying its position as a top choice for real estate investments. A December 2022 article by Realtor.com specifically identified Atlanta as one of the housing markets to keep an eye on in 2023. Despite ongoing debate and speculation about a potential Atlanta housing market crash, most experts concur that this outcome is unlikely.
While the market has experienced a moderation with fewer new listings and closed sales, it’s important to note that demand remains high, and Atlanta home values are on the rise. Moreover, the increasing population further reinforces the expectation of a resilient and robust housing market.
On the other hand, experts predict that mortgage rates will gradually ease through the remainder of the year and into 2024.
According to a Zillow survey, the largest group of respondents (38%) expects inventory to return to a monthly average of 1.5 million units or more in 2024.
However, a more optimistic perspective from the second-largest group (36%) believes that supply will bounce back to pre-COVID-19 pandemic levels in 2023. Meanwhile, 12% of respondents envision a return to normal housing supply levels in 2025, earning it the third-highest share of votes.
According to Lawrence Yun, Chief Economist at the National Association of Realtors®, the 30-year fixed mortgage rate will gradually decrease to 6.0% in 2023 and further down to 5.6% by 2024.
A continued housing shortage of home inventory has brought the current real estate market to a standstill. Homeowners presently hesitate to participate in the market due to the prevailing higher interest rates.
The good news is experts predict that this situation will change as rates fall to a more acceptable percentage. The Atlanta market is expected to regain momentum when interest rates reach the 5.5% range.
Impact of Different Factors in the Market
Home sales
The scarcity of land in other metropolitan areas will likely drive higher Atlanta home appreciation, particularly in Southeast Atlanta and its suburbs compared to the rest of the city.
Furthermore, the demand for affordable housing options is expected to attract more Gen Z and first-time homebuyers, escalating the need for new developments in the region.
Inventory Level
Recent data highlights an increase in construction jobs in the Atlanta metro area, rising from 140,000 to 143,200 between April and May 2023.
Additionally, data from Realtor.com indicates a slight uptick in Atlanta home inventory, with listings going from 12,566 in May 2023 to 13,276 in June 2023.
The upsurge in the construction job market suggests a possible change in pace as we approach the end of 2023.
If this increase in construction employment leads to a higher rate of single-family home construction, there’s a likelihood of alleviating Atlanta’s home inventory constraints.
Bidding Wars
Low inventory has given rise to frequent bidding wars, with sellers waiting for mortgage rates to drop while buyers compete for the limited pool of available homes.
Redfin reveals that, on average, each home in Atlanta receives three offers, highlighting the competitive nature of the current real estate market.
Considering the present pricing trends, a sales rebound could drive consistent home price growth.
As long as demand continues to surpass supply, Atlanta’s real estate market is poised to maintain its competitive landscape, characterized by strong competition and bidding wars.
Atlanta Real Estate Advice for Buyers and Sellers
Are you uncertain about the opportune moment to buy or sell your house in Atlanta? Here are key considerations to help you make an informed decision:
Atlanta Real Estate for Sellers
For home sellers, the current conditions are advantageous. So, consider the following best practices to benefit from the market:
- Prepare your home: Make the necessary repairs. Also, consider fresh paint, professional staging, and high-quality photography to make your property more appealing to buyers.
- Price competitively: While prices may remain stable, sellers may need to adjust their expectations regarding the final sale price.
- Be patient: The gap between the list price and the sales price may narrow. Be prepared for negotiations and consider all offers.
- Explore financing options: Encourage buyers to explore alternative financing strategies, such as adjustable-rate mortgages or lower down payments, to make your property more accessible.
- Work with local lenders: Ensure buyers have reputable local lenders to avoid potential financing issues.
- Consider future refinancing: Buyers can refinance if rates go down, so don’t focus solely on current rates.
Atlanta Real Estate for Buyers
Before embarking on your house-hunting journey, it’s crucial to consider the following:
- Take your time: With reduced competition and less pressure, buyers have the opportunity to thoughtfully consider their purchase. Don’t rush into decisions.
- Maintain contingencies: Keep contingencies related to inspections and appraiser’s reports intact to protect your interests and avoid potential buyer’s remorse.
- Offer prudent concessions: In competitive situations, consider offering shorter due diligence periods, substantial earnest money, or temporary occupancy for the seller to sweeten your offer.
- Budget realistically: Rising interest rates may limit your purchasing power. Understand the new Atlanta housing affordability ceiling and budget accordingly.
- Expand your search: Explore different neighborhoods and property types if your preferred area becomes less affordable due to rising rates.
- Stay informed: Continuously monitor the market to adapt your strategy to changing conditions.
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Final Word
The Atlanta housing market forecast presents a combination of data points that provide valuable insights into future prospects. With an expected growth path, competitive sales indicators, and a rapid pace of transactions, Atlanta continues to be a focal hub for real estate activity.
Whether your plans involve buying, selling, or investing, staying informed about these trends will enable you to effectively navigate the Atlanta housing market and make decisions that align with your specific objectives.
