That shortfall in supply means many buyers compete against each other for desirable properties.
Nationally, about 60% of wannabe buyers faced “a bidding war” in December, according to a report from brokerage Redfin. That was up from 54% in December 2020.
Half the nation’s largest metros have seen large drops in listings, said Atticus LeBlanc, chief executive of PadSplit, an Atlanta-based company that rents shared housing. “This isn’t an isolated Atlanta issue. Housing is not being created at a rate that is keeping up with the need, millennials are buying at a record pace, investors are buying at a record pace, and baby boomers are aging in place.”
The upshot has been steadily rising prices and fewer transactions.
Last month, about 7,900 homes were sold in metro Atlanta. That was a drop of 17% from a year earlier, giving the region the third-largest decline in sales of any large metro, according to Re/Max. Only San Francisco and Manchester, N.H. had steeper falls.
In the city of Atlanta and adjoining municipalities, the average sales price was $626,967, up 17% from 2020, according to Bill Adams, president of Adams Realtors, which tracks the intown market. Homes sold in an average of 30 days, compared to 43 days in 2020, with many sellers choosing from multiple offers.
“This is a good reflection of the impact of demand being greater than supply,” Adams said.
The most expensive neighborhood in Atlanta was Ansley Park, where sales averaged $1.8 million. The least expensive was Sylvan Hills, where sales averaged $290,000.
Homebuilding has been lagging in Atlanta since the burst of the housing bubble bankrupted many builders and left the survivors super cautious. As demand for homes picked up again, builders have been hampered by rising costs, as well as shortages of both materials and workers.
The lack of listings is a self-propelling spiral. Potential sellers become reluctant to sell because they fear they won’t find a home they want to buy — which makes for fewer homes listed for sale and more owners reluctant to sell.
Meanwhile, the surge in potential buyers has been fueled by a robust job market and solid salary increases among many professionals.
Interest rates also have been at historically low levels, but rising in recent months. According to a separate Redfin survey, nearly half of house hunters say they would feel even more urgency to buy a home if mortgage rates rose above 3.5%.
The interest rate on a 30-year fixed mortgage rose to 3.22% during the first week of 2022 from 3.11% the prior week, the highest level since May 2020. Rates will likely rise to 3.6% by the end of this year, said Daryl Fairweather, Redfin’s chief economist.
In the meantime, higher prices and the lack of choices have kept many people renting, which encourages investment in “build-to-rent” properties, said Barden Brown, chairman of Atlanta-based Global Real Estate Advisors, which consults with residential investors.
“Many buyers are finding themselves priced out of the housing market,” he said. “Many millennials are choosing to rent rather than buy.”
Metro Atlanta housing market in December
Number of homes sold: 7,906
Number of sales, compared to November: -7%
Number of sales, compared to December 2020: -17%
Number of homes listed for sale: 9,349
Number of listings, compared to November: -11%
Number of listings, compared to December 2020: -22%
Median price of home sold in December: $355,000
Rise in median price of home sold from November: 1.3%
Rise in median price of home sold from December 2020: 22%