Metro Atlanta saw its usual May sales burst in the housing market as potential buyers shrugged off rising mortgage rates to search for a home, but they found a market still tilted to sellers’ advantage, according to the Georgia Multiple Listing Service.
The number of home sales in the region rose 12.5% from April and the median price of a purchase edged up to $400,000 in the dozen core counties covered by the report.
A spring spurt is typical, as many families tried to lock in relocations to a desirable school district before the start of the next school year, but that seasonal action came amid a shortage of homes listed for sale, said John Ryan, chief marketing officer for Georgia MLS.
When demand is healthy and supply is anemic, the homeowners who do decide to sell have the upper hand. On average, sellers last month got 99% of their asking price, Ryan said. “And there are still multiple offers for many homes.”
With economic growth robust, incomes growing and home construction slow, metro Atlanta became a sellers’ market about a decade ago. Demand was driven by demographics as a huge wave of young professionals grew old enough to start families and buy homes.
But supply didn’t keep pace. The burst of the housing bubble in 2007 led to years in which very few new homes were built in metro Atlanta.
In the past five years, the average value of a home has risen an average of 52%, according to an analysis of Census data by LendingTree, an online lending exchange. Atlanta is currently the nation’s fifth-best market for homeowners, LendingTree concluded.
When buyers and sellers have roughly equal bargaining power, inventory — that is, the number of homes listed for sale — represents more than six months of sales, experts say. But in May, there were 9,377 homes listed for sale in the region, representing less than two months of sales.
That mismatch became acute last year because of rising mortgage rates.
That rate climb began in late 2021 as the Federal Reserve started its campaign to slow the economy as a way to chill inflation. By the fall of 2022, rates had shimmied from below 3% to more than 7%.
But the vast majority of the area’s homeowners bought their homes when rates were low, so if they sold and bought another home, they’d face a potentially painful increase in the price of their loans.
That convinced many owners not to put their homes up for sale.
“The move-up buyers are hesitant to give up the low rates they have now, even if they are also enticed by the idea of cashing in the increased equity they have,” said broker Latoya Lyonel Forbes with Village Premier Collection in Stockbridge. “People got sort of spoiled during the pandemic with the low rates, but that was not a normal market.”
Ascending rates also effectively cut the purchasing power of most buyers by raising the monthly payments they would make on loans. So, many potential buyers stopped looking, hoping that rates would drop.
Rates did dip, but not dramatically.
At the end of May, the average 30-year mortgage was 6.79%, which was higher than at any time between early 2002 and 2022.
The market has been “gridlocked,” said Andy Walden, vice president at Black Knight, a housing software and data provider. “Interest rates are acting as a double-edged sword, reducing or increasing both demand and supply as they rise and fall.”
Still, when spring came, many potential buyers came back to the market — some paying cash to avoid a mortgage, some downsizing their search to do less with more.
Some potential sellers likewise decided to bite the bullet, but not enough of them to balance off the number of buyers. The number of new listings was up 14.3% from April, but the total number of listings barely changed.
Still, when mortgage rates were much higher during the 1970s and 1980s, people kept buying homes.
It’s the change that makes people pause, but then they get used to the new normal, said Kristen Jones, a broker and owner of Re/Max Around Atlanta. “Buyers are more cautious as interest rates increase, but life goes on, and life changes lead to housing changes. There will always be people who need to move.”
Metro Atlanta housing market, May
Homes sold: 5,683
Median price: $400,000
Homes listed for sale: 9,377
Metro Atlanta housing market, May compared to April
Homes sold: up 12.5%
Median price: up 2.6%
Homes listed for sale: up 0.1%
Most May sales among 12 core counties
Most homes sold by price range
$300,000 to $400,000: 2,280 sales
$400,000 to $500,000: 1,670 sales
$1,000,000 and up: 1,079 sales
Sources: Georgia Multiple Listing Service