The metro Atlanta housing market heated up modestly along with the temperatures last month, as the median home price inched up to $405,000, according to the Georgia Multiple Listing Services.
The median price was up less than 1% from March and was 3.8% higher than a year earlier. The modest increases were signs that the market has come a long way from the over-heated days of 2021-2022, when buyers were often embroiled in bidding wars for homes and prices were leaping at a double-digit pace.
Much of that fever has cooled with solid growth in the number of homes listed for sale and some buyers being priced out of the market by a combination of climbing home prices and high mortgage rates.
“Mortgage rates have been above 7%,” said John Ryan, chief marketing officer for Georgia MLS. “And you have to remember, that is for people with stellar credit. For other people, I’ve seen mortgage rates well over 8%.”
After the average 30-year mortgage rate crested at 7.79% in October, it slid through the next several months, according to Freddie Mac, which buys mortgages in the secondary market and tracks their levels. April was the first time since early December that the average mortgage rate breached 7%.
It was 7.22% at the end of last week.
People with more modest incomes are increasingly unable to find a home to buy. According to a report by national brokerage Redfin, a little more than one-quarter of home sales are to people with incomes of less than $67,900. More than 40% are to people with incomes of more than $123,000.
Still, late spring is generally the high point of housing demand, since so many families try to make a purchase in a new school district in time to move before the start of the next academic year in August. And the market has still not come back to the pre-pandemic levels of buying and selling.
Inventory — that is, the number of homes listed for sale — has been the linchpin in rising prices. With fewer homes available to meet demand, buyers are pitted against each other and the more that buyers bid against each other, the more prices are driven higher.
In a balanced market, where buyers and sellers have roughly the same negotiating power, the number of listings represents about six months of sales. But in the past several years, inventory has consistently been less than half that.
The result has been a sellers’ market and rising prices.
There’s a built-in correction possible: Higher prices typically convince more long-time owners to put their homes out for sale, which balances supply and demand. And in the past month, active listings were up 46% from a year earlier.
But listings were so scanty, that even a robust boost doesn’t bring the market back to balance. Inventory now is the highest it’s been since Oct. 2022, and it’s still barely half what it was five years ago, according to Realtor.com.
That’s partly because new construction was so depressed for so long. But it’s also because many wannabe sellers feel “locked-in.”
Many bought their own homes at historically low mortgages and bargain prices. Now, if they sell and want to buy something else, they will face the result of price hikes along with high mortgage rates. So they do not sell.
“It’s the lock-in effect,” Ryan said.
It’s not only rates roiling the market. On the buyers’ side, the high prices are a large part of it, experts say.
While the pace of price increases has slowed, and while many people have seen salary and pay hikes in the past several years, first-time homebuyers are finding fewer options within their price range, so the most affordable listings are snapped up quickly, according to Georgia MLS.
The largest number of homes sold last month had been priced between $300,000 and $400,000. That is also the price tier with the most homes listed for sale, said the MLS.
Forsyth is the highest-priced county in the core dozen centered on the city of Atlanta, followed by Fulton, Fayette, Cherokee and Cobb. The most affordable homes sold last month were in Clayton, where the median price was $266,918.
The next lowest-priced county was Douglas, with a median of $342,740.
In the 12 counties, 17.7% of the sales were completed in cash, generally something beyond lower-income buyers. A year ago, that was 18.2%.
With so many young professionals renting homes and apartments in metro Atlanta, there’s potential for a buying frenzy, said Kristen Jones, owner of Re/Max Around Atlanta. “There is still a ton of pent-up demand.”
That demand will mostly stay pent-up for now, and the situation is likely to get worse for at least some potential buyers, Jones said. “Values will continue to go up as long as inventory remains low. Economics is about supply and demand.”
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