For prospective buyers, venturing into the Atlanta housing market is a little like stumbling into a rapid-fire auction.
They have to pay close attention, act quickly, bend a little on features and be prepared to raise their bid to win.
“We knew it was a hot market,” said Mark Viglotti, 27, who recently took the plunge and wound up with a house in Brookhaven. “So we had to tamp down expectations. You have to make a decision quickly.”
First time buyers like Viglotti are crucial to a healthy housing market, spurring demand at the lower end and enabling existing owners to move on. But many first-timers opted to stay on the sidelines after the housing bust.
Now, there are signs they’re back in the game.
In the first three months of the year the number of new-owner households formed was double that of renter households, according to an analysis of Census Bureau data. First-time buyers now account for 42 percent of purchases, up from 31 percent in 2011, according to Fannie Mae.
However, the market younger buyers are entering is fraught with challenges. Supply is low, driving up prices and sparking bidding wars in hot areas.
Even offering more than the asking price is no guarantee, Viglotti said. “We tried two houses in which we were over the list price and we still got beat.”
Viglotti and his fiancé, Corey English, looked at nearly 15 houses – mainly in Brookhaven and Sandy Springs, some in Atlanta.
They finally landed a deal for a home in Brookhaven, put down 10 percent of the $300,000-plus price and moved in Memorial Day weekend.
They wanted to start their marriage in a home and, as metro Atlanta natives, they expect to stay put for a while.
“It’s definitely a long-term investment,” Viglotti said.
But that differs by area. Some parts of Atlanta’s market are lagging — in some cases by a lot.
Schools, commutes to big employment centers and access to transit can affect values and demand. Sometimes it’s just cosmetic, said David Konzen, an agent with Re/Max of Greater Atlanta, citing a part of Decatur where he has struggled to get a home sold.
“A lot of first-time homebuyers like to live in cool areas and this looks really bland. The untrained eye looks and says, ‘Oh, this is run down,’ but it’s not.”
A low inventory of for-sale homes has become chronic. In a balanced, healthy market, supply is typically equal to about six or seven months of current sales. In metro Atlanta it’s less than half that.
Experts say in some cases it is because some homeowners who bought during the early-2000s price peaks are still “underwater,” owing more on their mortgage than their homes are worth.
Meanwhile demand is building, thanks to the wave of millennials making more money, getting older and forming families.
Kristin Jackson, 27, got married in December. Since the lease on their Brookhaven rental was up in May, she and her husband started looking for a house.
“Every open house there were about 30 people there, a lot of them our age, and a lot of couples,” Jackson said. “Right now it’s so crazy. You really have to go in with a strong offer.”
Ready for roots
They found a home in Roswell, not quite as close to its square as they wanted, but as close as they could find in their price range. They made a strong offer and were accepted. The house cost something over $300,000, and they made a down payment of 5 percent.
Jackson said she won’t worry too much about the short-term gyrations of the market.
“I grew up in East Cobb and I love Atlanta,” she said. “I am hoping that we are never going to move.”
Homebuyers in the past were often warned not to buy if they weren’t sure they’d be in the home long enough to make up for the short-term costs of a purchase. But like Jackson, many first-time buyers around Atlanta say that’s not an issue.
Many millennials are children of parents who migrated to the Atlanta area. Family ties and solid job growth here provide incentives to stay. Moreover, Americans in general are less mobile than in the past. That rootedness is good for housing demand.
Drew Johnson, 25, and his wife started looking several months ago, mainly on the north side of town.
‘We want to be here’
“We have seen about 25 homes, and we haven’t found anything that wowed us,” he said. “But we are both from Atlanta and we want to be here. That is a big reason that we are comfortable looking here.”
But the lower mobility may also contribute to the tight supply. And too much demand chasing too few homes is a formula for higher prices.
“If you put something on the market at about $400,000 there could be multiple offers by midnight,” said Shapiro. “I have seen some homes have 15 offers.”
The trajectory of higher prices and growing demand will likely continue, said Brad Hunter, chief economist for HomeAdvisor, an online home services marketplace.
“New home closings are running at just under 20,000 a year (in metro Atlanta), implying a lot more room for housing to increase.”
“I expect to see home price appreciation that outpaces the nation as a whole for the next few years,” he said.
MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.
AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:
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