Many younger professionals are renters, so when they buy, most are leaving apartments, not leaving a house vacant for a potential homebuyer. And if they’ve been renting a house, the landlord may just want another tenant.
Moreover, many older homeowners are sitting tight because zoning restrictions in much of the region have limited the number of options for downsizing Boomers. Many municipalities make it hard to build townhomes, condos, apartments and even single-family homes smaller than a certain size.
“In spite of historically high prices, my generation is not unloading their homes because there’s no place to go,” Hunt said. “Inventory is so low — that is the difference-maker.”
More than 12,400 homes were listed for sale last month, up modestly from July, according to the Georgia MLS.
While that number is higher than a year ago, it’s still dramatically lower than in a pre-pandemic market in which buyers and sellers have roughly equal negotiating power, housing experts say.
Moreover, the balance between demand and supply is different in different areas and at different price points. Higher-priced homes are fairly common, but listings for lower, more affordable homes in metro Atlanta are increasingly scarce.
The number of homes for sale at $500,000 or more is the highest it has been in more than two years, said Kristen Jones, broker and owner of Re/Max Around Atlanta. “But inventory of homes under $300,000 is 62% of what it was in August 2019.
So the more expensive the home, the less a seller can count on a bidding war among potential buyers, said Emily Wheeler, chief operating officer of Village Premier Collection, a network of real estate agents.
“Across the $400,000 and up market, we have seen a lot of price reductions and more sellers contributing toward the buyers’ closing costs. Anything under $300,000 is still going under contract quickly,” she said.
Another reason for the scarcity of for-sale homes is that the rise in mortgage rates has given owners a reason to sit tight and not sell.
The Federal Reserve’s campaign to tame inflation with higher borrowing costs is largely responsible for the rise in rates from an average of less than 3% late last year to 5.81% early this summer. Those rates dipped below 5% in July and early August, which prompted some buying, but then they started climbing again. Late last week, the average 30-year mortgage hit 5.89%, the highest level since late 2008.
At 5%, the monthly mortgage payment for a $400,000 home, after a 20% down payment, would require a payment of about $2,000 a month. A 6% mortgage would require about $200 a month more.
“The market has had a big shift in the last month,” Wheeler said. “More listings are coming to the market but more buyers are waiting to purchase because they are uneasy about where the market is headed.”
Average 30-year mortgage rate
Summer high: 5.89% (Sept. 8)
Summer low: 4.99% (Aug. 4)
Past year high: 5.89% (Sept. 8)
Past year low: 2.86% (Sept. 16, 2001)
Previous pre-pandemic high: 18.5% (Oct. 1981)
Previous pre-pandemic low: 3.32% (Nov. 2012)
Metro Atlanta* housing market, August
Median sales price: $394,000
Active listings: 12,428
Metro Atlanta* housing market, August vs. year ago
Sales: down 21.3%
Median sales price: up 16.2%
Active listings: up 59%
Sources: Federal Reserve Bank of St. Louis, Federal Home Loan Mortgage Corp., Georgia Multiple Listing Service