Atlanta housing market turns away from seller advantage: more listings

Without lower mortgage rates, the old ‘normal’ may be out of reach, expert says
With metro Atlanta still suffering from scarce housing, Providence Group is developing a 512-unit  housing project in Cumming that will include townhomes, condos and single-family houses.

Credit: cus

Credit: cus

With metro Atlanta still suffering from scarce housing, Providence Group is developing a 512-unit housing project in Cumming that will include townhomes, condos and single-family houses.

Like the proverbial ocean liner, the Atlanta home market changes direction slowly, so getting back to its original, pre-pandemic course could take some time — if it happens at all.

But it sure looks like it’s turning.

Among the nation’s large metros, the region last month had the fourth-fastest growth in homes listed for sale, according to national broker Re/Max. That trend would bring Atlanta closer to a match between supply and demand, giving potential buyers a better shot.

“There does seem to be a shift, and we hope it’s an inflection point,” said broker Kristen Jones, owner of Re/Max Around Atlanta. “We are still at much lower levels than is needed for a balanced market. We need a prolonged period of listing growth to make up for the historic lows of the past few years.”

Nearly 18,000 homes were listed for sale in May, about 60% higher than a year earlier.

Listings offer the simplest way to measure what’s happening in the market. Experts say that when that supply is equal to about six months of sales, buyers and sellers have roughly equal negotiating power. The last time the Atlanta market had six months of supply was 2012, according to MarketNsight, which tracks housing markets in the Southeast. Since then, the pendulum has mostly swung dramatically in favor of sellers.

At the most extreme, in mid-2022, listings represented less than one month of sales. Since then, supply has edged higher, reaching 2.6 months in May, according to Re/Max.

That’s still a pretty good market for sellers.

After Erica Vivar moved from California to take a job as a lab technician in Atlanta, she “fell in love” with a townhome in Lilburn, but had to bid against six other offers.

“I had asked the broker, ‘What can I do to stand out?’” she said. “So, I said I’d pay what they were asking for, $350,000.”

She was not happy about the mortgage rate — 7%. But she had sold her previous home for $500,000, so when she closed on the townhouse a few weeks ago, she lowered the new monthly payment with a 20% downpayment, Vivar said. “I know they say the prices are going up here, but they are still cheaper than California.”

Still, markets are local, so climbing prices — layered with higher mortgage rates — are still a challenge to buyers. First-timers especially struggle, because even with a decent income, it can be hard to save enough for a downpayment.

One way around it are government-backed loans, either from the Veterans Administration or the Federal Housing Administration. The loans are made by private companies who typically feel freer to take a little bit of a risk since they have the guarantee of at least partial repayment if the borrower defaults.

Loans to veterans are increasingly a way for younger people to get a home when they have a less-than-perfect credit history or haven’t had enough time to gather savings, said Chris Birk, a vice president at Veterans United, the largest VA-backed lender.

“Some vets who wouldn’t be homeowners without this benefit, and others could do it without a problem,” he said. “But about 50% of the purchases are going to first-time homebuyers.”

Typically, a downpayment isn’t needed for a VA-backed loan, he said.

For homeowners, the listings drought was great for their investment, but for potential buyers — including many who owned but wanted to move — it was like trying to row after a runaway ship.

In mid-2022, the median price of homes sold in metro Atlanta was up 23.1% from the year before. But the increased listings have slowed the rise of that tide: the median sale price last month was up 3.9% from a year earlier, according to Georgia Multiple Listing Services.

If listings do continue to rise, that’s a positive for all potential buyers, but especially lower-income households, said Marisa Calderon, chief executive officer of Prosperity Now, a nonprofit, advocacy and research group that supports more equitable growth.

“That is especially true for the Black community in Atlanta,” she said. “An inventory shortage creates higher costs at the same time that the amount of mortgage payments (is) significantly larger.”

The imbalance in the Atlanta market was caused by two supply side problems.

The market depends on homeowners selling their homes to move up, downsize or relocate. But the rise in mortgage rates “locked in” many of them who didn’t want to give up their low rates. Nearly 90% of the nation’s homeowners currently have rates below 6%, and many are much lower than that, said chief economist Danielle Hale of

The median price of a metro Atlanta home sold last month was $400,000, but most new construction is priced above the affordability for many first-time buyers.

Providence Group, for example, is building a 512-home development in Cumming that includes condos, townhomes and single-family houses. Prices range from $500,000 to $800,000.

No problem finding buyers, said Dusty Talbert, marketing director The Providence Group. “Housing demand in the Atlanta area remains strong, even with interest rates where they are today.”

But new homes have not been able pick up the slack, said John Hunt, principal at MarketNsight.

After the building frenzy sank into the deep Recession of 2007-09, the region went years with virtually no homebuilding. When construction picked up, it was constrained by expensive land and zoning restraints in many municipalities, he said during a recent MarketNsight conference.

With mortgage rates — even for those with pristine credit — consistently flirting with 7%, decisions on both supply and demand are distorted and a return to a balanced market is a long way off, he said.

“Nothing has been normal since 2019,” Hunt said. “Until mortgage rates are at 5.5%, I don’t know if we are ever going back to that trend.”

Yet, in decades past, the rates were often this high or higher and home sales just kept on cruising, so the recent increase in listings could be a sign that consumers might adjust, Hunt said. “We are beginning to see people get used to it.”

Metro Atlanta housing, May

Median price of homes sold

2020: $254,487

2021: $320,990

2022: $395,000

2023: $385,000

2024: $400,000

Homes listed for sale

2020: 19,352

2021: 7,530

2022: 11,832

2023: 11,832

2024: 17,834

Average rate, 30-year mortgage

2020: 3.15%

2021: 2.95%

2022: 5.10%

2023: 6:57%

2024: 7.03%

High rate, rate, 30-year mortgage

1970-1980: 16.35% (1980)

1981-1990: 18.53% (1981)

1991-2000: 9.61% (1991)

2001-2020: 7.18% (2002)

2021-2024: 7.79% (2023)

Sources: Georgia Multiple Listing Services, Re/Max, Federal Home Loan Mortgage Corp.