To everything there is a season, and time for every purpose. The Atlanta real estate market is no different.
The residential development and brokerage industry has been battling the cyclical nature of its business models for decades. Over time, market volatility has been tempered with better construction timetables, winter inventory reductions and brokerage firms’ internal sales and listing contests to sell off year-end inventory or build up inventory.
Thankfully, our metro Atlanta seasonal adjustments are rooted in psychological consumer patterns dominated by the noise of the holidays, not arctic winds and snowdrifts that impede construction. In some national markets, the construction season is only six or seven months long versus the metro Atlanta area, which tracks an average of 21 bad weather days from November to March.
The quick forecast for the Atlanta real estate market (new construction and resales) is that the overall market will slow in December, January, February and early March. It will re-energize in the spring and ignite a storm of new construction and a summer of heavy migration and relocation to the area. National builders create huge supply-and-demand computer models to deliver housing inventory like “just-in-time” automobile manufacturers or widgets, but consumer consciousness — or holiday unconsciousness — overrules technology.
The “winter dip” is the time builders analyze the year’s sales results, product mixes and home buyer preferences and develop hot new floor plans. It’s a time for the home buyer to scan magazines and planning books to look forward to his or her own spring construction. It’s a time to explore vacant developed lots or acreage for potential construction or related initiatives.
Winter is “snakeless,” a perfect time to walk in the woods and dream of a new human nest. Winter — with the naked hardwoods and dead underbrush — is a terrific time to see a property’s terrain, landscape features and, of course, views. For generations, winter sales on Lake Lanier have soared because astute buyers can see all the best and all the warts of a property at the same time.
Some expectations for the 2015 real estate market:
• Overall home inventory will remain at historic lows in most metro Atlanta micro-markets. Expect 3.5 to 4.8 months of home supply throughout 2015. Low supply in our market is likely until the feds relax constraints on regional and small-town banking, which would allow speculative home construction to resume.
• National builders will continue to dominate the new-home sector because of their external sources of capital. We predict Atlanta’s top 10 builders will construct 50 percent of all new homes by the end of 2015.
• School zones drive the strongest markets. Hot demand for public education at the elementary school level is driving market inventory.
• Expect the 22-county region to permit slightly more than 20,000 new housing units, single-family and condominiums. That’s nowhere near our peak of 58,500 in 2006, but it is more than four times the annualized activity of our low year of 4,500 units in 2009. And as in the last five years, 52,000 to 55,000 homes will trade hands through the FMLS and MLS multiple-listing services in 2015. That’s normal activity, with average people with average credit buying average homes.
• Residential growth begets commercial retail development. Commercial retail development begets medical and service sector office growth. Medical and service growth begets new jobs and business industrial expansion. And jobs and business industrial expansion beget new residential units. In 2015, it starts again.
Frank K. Norton Jr. is CEO/chairman of the Norton Commercial and Acreage Group.
