Several months of increased mortgage rates may be pushing some people out of the housing market, but the balance between buyers and sellers hasn’t changed enough yet to cool the rapid rise in prices in metro Atlanta, according to several reports.
Home prices also climbed despite a dip in sales in April as the inventory of available homes remained low across the metro area.
The median price of a home sold last month in the extended, 28-county region was $385,000 — up 4% in a month and a robust 23% higher than the price in April a year ago, according to Re/Max, which tracks transactions across a 28-county region.
A tighter focus showed a similar trend, according to the Georgia Multiple Listing Service. In the 12 counties around the city of Atlanta, the median price of a home sold in April was $394,143, up 4% from March and 22% from a year earlier.
Rising prices typically reflect a mismatch in the market — far more wannabe buyers than desirable homes to buy. And in metro Atlanta, both sides of the equation contribute.
Demand is strong because the area’s economy has surged, drawing an influx of well-paid professionals from around the country hoping to own a home. And supply has been increasingly anemic. Partly because the pandemic convinced some homeowners to stay put and not sell their homes.
Credit: Alyssa Pointer, alyssa.pointer@ajc.com
Credit: Alyssa Pointer, alyssa.pointer@ajc.com
But also because homebuilding since the Great Recession has fallen far short of the expanding population’s need, said Richard McPhail, chief financial officer of Home Depot, whose $150 billion-a-year business depends on home improvement.
“There’s a chronic shortage of housing units,” he said, earlier this week. “We are looking at, at least five years, if not seven or eight years, until we get back to equilibrium.”
The result has been bidding wars among buyers, declining sales and higher prices, putting Atlanta’s reputation for affordability at risk.
In April, there were 8,941 homes sold, down 7% from March and down 14% from April of last year, according to Re-Max.
Some experts expect higher mortgage rates to help even things out, but it might come at the expense of buyers most in need of financing to purchase a house.
The interest on a 30-year, fixed rate mortgage last week averaged about 5.3%, double its low last year. That can add hundreds of dollars a month to the payments made by a new borrower, effectively cutting their purchasing power.
That discourages some buyers, especially those who are stretching their finances already to make a purchase.
And it has virtually killed the demand for refinancing, since most homeowners are paying less than the current rates, said Casey Daniel, vice president at Bank of America.
Yet some buyers have stayed in the market by looking to adjustable rate mortgages, which provide a discounted rate for at least a few years, he said. “I think we will see more of that.”
And current rates are not high compared with the decades before the housing market collapse that triggered the 2007-09 recession, so it shouldn’t be surprising that there’s still plenty of action in the market, said broker Kristen Jones, who owns Re/Max Around Atlanta.
“Although mortgage rates are moving up, they are still very low compared to the historical average and should not dissuade would-be buyers,” Jones said.
Higher rates could be an incentive for some current homeowners with low-rate mortgages — or none at all — to stay put rather than buy another home with a more expensive mortgage. But in April, the number of homes listed for sales ticked up, a hopeful, if modest step toward regaining balance, Jones said.
“That Atlanta real estate market remains competitive but seems to be leveling out a bit,” she said.
The mismatch may be easing, but the market is still very much tilted in favor of sellers.
Even with the higher rates, any desirable home is getting offers, said Mike Skordeles, senior macro strategist for Truist Bank.
“If it’s hanging around unsold, there’s something wrong with it,” he said.
By the numbers
Metro Atlanta housing market, April
Number of sales: 8,941
Median price of sale: $385,000
Number of homes listed for sale: 8,779
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Metro Atlanta housing market, April
Number of sales, compared to March: -7.2%
Number of sales, compared to previous year: -14.0%
Median price, compared to March: +4.1%
Median price, compared to previous year: +23.0%
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Average 30-year fixed mortgage
Second week of May: 5.30%
Second week of April: 5.00%
Second week of March: 4.16%
Second week of February: 3.92%
Second week of January: 3.45%
Second week of December: 3.10%
Low, previous year: 2.77% (August, 2021)
Sources: Federal Reserve Bank of St. Louis, Freddie Mac, Re/Max, Georgia Multiple Listing Service
