Atlanta’s hopeful homeowners are in a precarious place this year: the market is red hot but the prices are sky high. Homes are spending less time on the market, are climbing in price and are growing increasingly difficult to find.
According to a report by the Federal Reserve Bank of Atlanta, housing in Georgia’s capital is officially unaffordable. Following the Atlanta Realtors Association’s report that the median price for homes in Atlanta topped $400,000 for the first time in April, it’s not hard to imagine why residents are having a tough time locking down homes.
The median price for Atlanta homes increased 20.3% from last year, as of the release of the May report.
“While interest rates are rising, they are historically still low,” ARA president Karen Hatcher said in the release. “We are continuing to see multiple offers on homes and offers above the list price. Buyers should continue to stay prepared for a search that could take months.”
A month later, the association reported yet another price hike. The median Atlanta home price increased from $412,500 in April to $430,000 in May.
“We don’t expect any strong price correction coming soon, even with the rising interest rates, due to the lack of inventory,” Hatcher said in the press release. “Buyers on the lower end of pricing will be the most affected, simply because there is extremely low to no inventory of starter homes or affordable housing.”
Hatcher said the increase in prices is because of the lack of supply.
“Metro Atlanta remains ripe with strong demand even with increasing interest rates,” Hatcher said in a June report. “The lack of supply continues to result in a decrease in the number of sales and double digit increases in price.
“We don’t expect any strong price correction coming soon even with the rising interest rates due to the lack of inventory. Buyers on the lower end of pricing will be the most affected simply because there is extremely low to no inventory of starter homes or affordable housing.
“Sellers are still realizing huge gains as our economy grows and housing prices increase, so now is still a great time to list a home.”
According to the Georgia Association of Realtors, Georgia homes are being bought off the market at a swift pace. Total days on the market for Georgia homes decreased 22% year-over-year as of June.
Georgia’s capital is facing a “national corporate housing buying crisis,” according to the Atlanta Regional Commission.
“When you think of the average Atlanta homeowner, you might imagine a young family ready to settle down,” Samyukth Shenbaga, managing director of Community Development at ARC, said in the report. “However, the reality is often much different. Instead, it’s corporate investors with all-cash offers who turn around and rent properties for sky-high rates. We’re seeing a national corporate housing buying crisis, and metro Atlanta is very much at the center of it.”
University of California, Berkeley, researcher Desiree Fields estimated four companies own more than 27,000 single-family homes within metro Atlanta.
While higher interest rates have cooled the housing market on the national scale by a small amount, the Joint Center for Housing Studies of Harvard University said the surge in gas prices, food and other necessities has only worsened the market nationwide. The university said home price appreciation in the U.S. hit 20.6% in March, marking the largest hike in appreciation in three decades.
Despite all of the economic bad news, the university posited things will be looking better in the housing market within the near future because of demographic shifts, a low unemployment rate and wage growth.
“There is also the longstanding challenge of producing affordable homes, given the high cost of building materials and land as well as the shortage of labor,” Chris Herbert, managing director of the center, said in the report. “The lessons learned during the pandemic have led to a number of proposals to greatly expand the housing safety net and provide increased support for first-generation homebuyers. While these measures have yet to be implemented, it is important to continue the policy debate over the best approaches to making housing affordable for all.”
About the Author
