But the market is not even across a range of prices, he said. “The competition is hyperactive at the $400,000 price range and below.”
That is because young professionals have been increasingly interested in homeownership. Rising prices are bad news for them.
The median list price of a metro Atlanta home has climbed 28% in the past two years, according to Realtor.com.
Many first-time buyers struggle to put together the sum they need for a down payment that many lenders require. Moreover, wages and salaries have risen healthily through the past several years, but not at a double-digit pace.
The recent jump in mortgage rates has been expected to cool the market, mainly by chilling demand.
And the change had to be painful for some wannabe buyers who were stretching to afford a house. A 30-year, fixed-rate mortgage was 2.77% last summer and 3.11% in late December, but it’s been over 5% since mid-April.
The increase can add hundreds of dollars a month to a mortgage payment.
Meanwhile, the purchase price has also kept climbing. That’s because higher rates haven’t yet reversed the supply-demand equation. For several years, the supply-demand balance has been tilting ever-further to the advantage of sellers. And while higher mortgage rates have meant fewer bidding wars and fewer purchases that exceed the asking price, there are still more buyers than sellers.
In a market where buyers and sellers have roughly equal negotiating power, the number of homes listed for sale — supply — should equal six months or more of sales. Yet, for a range of reasons, supply has shrunk to historically low levels, often forcing buyers to bid against each other as prices rocketed skyward.
Last month, the number of listings of homes represented less than one month’s worth of sales, according to Re/Max.
For first-time buyers, the situation is even worse than it looks, according to Kristen Jones, owner of Re/Max Around Atlanta. Relatively few homes are for sale overall, but the scarcity is acute at the lower end.
“That means many would-be buyers are priced out of the market,” she said. “There is not enough inventory to cause a major shift in the market.”
Atlanta continues to draw transplants from around the country.
But homebuilding virtually stopped during the Great Recession of 2008-09 and has never made up for the ground lost. Meanwhile, many homeowners have chosen to stay put, some of them because they fear they cannot afford another home.
Experts say it will be years before the market evens out.
In the meantime, sales have cooled a little so far this month, but it’s not just the rising rates, Jones said. “This primarily is a seasonal trend with the end of school and the beginning of summer.”
Metro Atlanta, housing market, May 2022
Median sales price: $400,000
Compared to April: +3.9%
Compared to May 2021: +23.1%
Number of home sales: 9,611
Compared to April: +7.5%
Compared to May 2021: -8.5%
Median listing price: $412,000
Compared to April: +3.0%
Compared to May 2021: +17.7%
Metro Atlanta, median housing list price history
Since May 2021: +9.8%
Since May 2020: +27.8%
Since May 2017: +51.5%
Metro Atlanta median home price history
Reaches $400,000: May 2022
Reaches $300,000: March 2021
Reaches $200,000: May 2015
Average rate, 30-year mortgage
Mid-day Monday: 5.58%
High this year: 5.78%, first week of June
Sources: Re/Max National Housing Report, Zillow, St. Louis Federal Reserve Bank, Freddie Mac