At the close of one calendar year and the beginning of another, it’s only natural to reflect on what has been and look forward to what will be.
The Atlanta real estate industry — development, construction, sales and finance — has made a slow, steady climb out of the abyss butremains a “cat toy” that gets battered back and forth between market highs and lows. For years, the national press has used the Atlanta real estate market as the poster child for gluttony and excess, then disaster and despair. While a bright light has emerged on the Atlanta horizon, uncertainty still rules most long-term investment decisions.
The year 2013 brought much more than just improvements in Atlanta. We saw real property sustainability and market resurrection. Almost 55,000 homes will have traded hands through the FMLS/GAMLS systems by year’s end. Last year saw Realtors fighting hard for inventory, which hovered from three to five months. The new-home industry, shocked back to life with some sort of celestial defibrillator, had single-family starts annualizing at 15,000 units, principally across north Atlanta.
But at year’s end, once again we hear the “national noise” with regard to Atlanta’s future, projecting a sales slowdown from 2013, stagnant inventory, a flooded multi-family market, and flat new-home construction.
The quick prediction for 2014 is that real estate sales this winter will be slow, spring and summer brisk, and fall less so.
Metro Atlanta real estate professionals understand residential real estate has a social cycle, a clear seasonality of home purchasing. Appreciation only happens from April to July. In August, everyone in Georgia (and America) goes on vacation. Small upticks occur in the housing market in the back-to-school months of September and October, then again in November and December. January buying takes a holiday.
We predict this pattern will repeat itself over and over. Regardless how much stimulus or market hype is pushed on the public, this social cycle won’t vary in degree.
So, what will we see and not see in 2014?
• We will not see a surge in new foreclosures. This wave has largely passed.
• We will not see an energy-fueled construction boom until regulators relax lending guidelines.
• We will see homeownership rates around 64 percent and Atlanta home appreciation to range from 4 to 5 percent per year for several years forward.
• Overall, inventory will remain a modest four- to five-month supply.
• Atlanta has traded 50,000 to 55,000 homes a year through Realtors since 2008. That’s normal demand, and it is not affected by aggressive lending initiatives. Normal is good, healthy and powerful for Atlanta’s real estate market. The year 2014 will be normal.
And there is nothing wrong with being normal.
Frank K. Norton Jr. is CEO/chairman of the Norton Agency.
