The metro Atlanta housing market may be far short of shifting into high gear, but it has picked up speed, fueled by new building and new buyers during the spring season.
Yet experts continue to fret about how much recession residue the market is still dragging. They worry that in the aftermath of the housing bust, people still are reluctant or unable to move, which holds down the supply of homes for sale and skews the market.
Supply, often called inventory, is not enough to match even the modest boost to demand, said Skylar Olsen, senior economist for Zillow Real Estate Research.
“An increase of inventory really would help the Atlanta market to become more normal and have more confidence.”
Recent days have seen several upbeat reports, she noted, and many fundamentals are good: Interest rates are low, job growth solid, prices up and foreclosures down.
Yet the lack of homes for sale is like a crimp in the fuel line that slows progress, she said.
“We are still in a state of limited options.”
In a healthy housing market, the list of homes for sale typically amounts to five or six months worth of sales. But the supply in metro Atlanta has been hovering at three months or so.
Real estate pros hope rising values and renewed job mobility will bring more sellers off the sidelines.
But inventory isn’t the only market drag.
Relatively few millennials are rushing into the market, which is a big part of falling home ownership rates. The Census Bureau this week reported that 64 percent of adults are homeowners, down from a high of 69 percent – a difference that represents more than 6.7 million potential buyers.
Factors include the tough job market for many new college grads, a tighter lending environment and a psychological shift away from hurrying to buy that first home.
Georgia State economist Rajeev Dhawan noted that the home building industry has changed, too, with bigger players taking a more cautious approach and fewer small builders rushing to buy up lots and raise tract homes on spec.
Location, location…
As with much of real estate, the story depends on location.
For instance, in the city of Atlanta, first-time home buyers represent more than half of all purchases, said Zac Pasmanick, broker at RE/MAX Metro Atlanta CitySide.
“That has been true for a few years. I think the market is driven by first-time home buyers.”
And real estate has retained its entrepreneurial appeal for some.
Ashley Sutz, 26, is still in the military for a few months more, is starting a marketing and media consulting company for her civilian career. She and her husband have purchased a house in Marietta.
They had both purchased homes a few years ago at depressed prices after foreclosures. So they had the cash for a down payment of 20 percent of the new home’s $285,000 price.
“We came of age during a horrible economic crisis, but it was a good time to buy a home in 2010 or 2012 and we did well when we sold,” Sutz said. “Otherwise, being able to buy this house would have been a stretch.”
Overall, the metro Atlanta picture is positive. Some important metrics are moving in the right directions:
Sales in March were roughly 14 percent higher than in the same month the previous year, according to the Atlanta Board of Realtors.
Prices, too, are rising. The median price for the month was $218,000, or 8.5 percent higher than last year, according to the board.
Quicker sales
Meanwhile, homes sold are listed for an average of 70 days, a dip of two days from the month before, according to First Multiple Listing Service.
The number of households that are financially stressed has also declined.
A review released last week by CoreLogic shows 3.79 percent of the mortgages in metro Atlanta in serious delinquency – at least 90 days late. That is down from 4.98 percent a year ago and a high of 10.79 percent in 2010.
Still, that stubborn inventory number is barely budging
The short supply gives the upper hand to sellers in negotiations and forces some potential buyers to bid against each other.
Experts have been talking about a pent-up pool of potential sellers, people who have wanted to put their homes on the market but did not. Maybe their home values had fallen so far, they were “underwater” – owing more on their mortgage than their home would bring on the market. Or maybe they were worried about getting laid off.
So as home prices rose and the economy added jobs, surely those people would rush to list their homes for sale.
Waiting for a pick-up
Instead, the number of homes for sale has fallen.
“We are at 2.7 or 2.8 months worth,” said Jeanette Schneider, senior vice president and broker at RE/MAX Regional Services. “I think the next month or two will be interesting. We sure hope there’s a pick-up.”
The inventory of metro Atlanta homes for sale is 5.8 percent below a year ago, compared to a national dip of 0.7 percent, according to the research arm of Redfin, a real estate company.
Average home prices have been rising for several years and they are only back to levels first reached in 2003. And there are many areas where the price increases have been minimal at best.
That means that – even disregarding inflation – many thousands of homeowners owe more on their mortgages than their home is worth. And that’s the main reason that inventory has been weak, said intown broker Pasmanick.
“As long as values continue to move up, there will be more and more sellers,” he said. “You still have people who are underwater and they are just staying put.”
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