Aug 29, 2022 - 9m read
Atlanta’s Real Estate Market: Trends, Prices, and Forecasts for 2022 and Beyond
When the COVID-19 pandemic started, nearly every real estate market in the U.S. underwent substantial changes. Once the Federal Reserve dropped interest rates to keep the economy afloat, many new buyers entered the market for the chance to obtain a mortgage with a low interest rate. Because of the increased demand and lower supply of homes, the real estate market in Atlanta grew by a considerable amount.
Anthony Reinoehl
Co-Founder
When the COVID-19 pandemic started, nearly every real estate market in the U.S. underwent substantial changes. Once the Federal Reserve dropped interest rates to keep the economy afloat, many new buyers entered the market for the chance to obtain a mortgage with a low interest rate. Because of the increased demand and lower supply of homes, the real estate market in Atlanta grew by a considerable amount.
In fact, home values jumped by an average of 13.9% in 2021, which made market conditions highly beneficial for sellers and existing homeowners. Since that time, interest rates have steadily increased, which has resulted in the market slowing down slightly. However, there are still a high number of buyers in the market as well as relatively low inventory.
When taking a look at Atlanta’s real estate market, there are several factors that must be taken into account, which include recent trends, home inventory, and pricing. By analyzing these trends and assessing granular market data, it becomes possible to forecast how the overall market will perform. The following guide offers a more comprehensive overview of the Atlanta real estate market and how it should perform for the next five years.
Atlanta Real Estate Market Trends
There are many trends that have been taking place in the Atlanta real estate market over the past year. Once interest rates started to increase towards the end of 2021, demand among buyers stopped rising at such a rapid rate. In recent months, demand has slightly decreased, which is a trend that is likely to continue as long as interest rates remain high. Keep in mind, however, that demand is still much higher than it was before interest rates were first dropped by the Federal Reserve in 2020.
Even though housing demand has decreased somewhat from the highs in 2021, home prices have yet to fall since there is still a low amount of inventory on the market. Year-over-year increases in home values have been seen every month in 2022, which is a trend that’s expected to continue for the foreseeable future.
Atlanta Real Estate Market Pricing
In 2022, high demand for homes has continued throughout the Atlanta real estate market. Despite the slight drop in demand, home prices have risen continuously during the year across Atlanta. The sale-to-list price in Atlanta is right around 100%, which is an increase of around 0.4% when compared to July 2021. With a ratio of 100%, this indicates that sellers are receiving the exact list price they’ve asked for when selling their homes.
More than 44% of homes in Atlanta are being sold above list price, which is around 7.6% higher than the previous year. This statistic is among the most important when measuring the health of the real estate market in Atlanta.
Even though demand has dropped somewhat, this metric points towards demand still being far higher than supply, which results in bidding competitions among potential buyers that drive prices higher than the asking price. If demand continues to drop, it would still take a considerable amount of time for it to be low enough that sale prices start to drop.
The only price indicator that reflects the reduced demand is that 31% of homes in the Atlanta area have had to drop their price in July 2022, which is around 6% higher than last year. However, this metric doesn’t necessarily paint a clear picture. Because of how much home values increased throughout 2021 and the first half of 2022, many homeowners have been listing their properties at prices that are higher than they might be worth, which could result in these properties needing to drop to a more reasonable price before being sold.
Median Price
The median sales price throughout Atlanta has continued to increase in 2022. In fact, the median price in July 2022 was right around $420,000, which is more than 15% higher than the median price in July 2021. At $498,000, the average sale price is even higher and has increased by nearly 14% since July 2021. While prices are continuing to rise, inventory has also increased as of late, which could shift the market slightly back towards buyers in the months to come.
Housing Demand
As touched upon previously, housing demand has decreased in recent months, which is largely the result of high interest rates among buyers who need to take out a loan. During July 2022, the number of homes that were sold in Atlanta was 5,815, which is a drop of 16% from July 2021. Keep in mind, however, that home sales were astronomically high in July of last year, which means that a drop of 16% isn’t too bad. The next few months will be more of an indicator of the rate at which demand is dropping.
Housing Supply
When looking specifically at housing supply, Atlanta has been a seller’s market for a few years as the result of not many homes being on the market. Even before the COVID-19 pandemic, there was a shortage of homes on the market that buyers had to deal with. Housing inventory throughout Atlanta was just over 12,100 in July 2022, which is around 34.6% higher than July 2021.
However, new listings were only 6.3% higher than July 2021 at a total of 8,695. The supply of homes in July throughout a 12-month period went to 1.2 months, which indicates that sellers are unable to meet buyer demand. The market will only become balanced between sellers and buyers when the total number of listings equates to six months worth of sales, which isn’t expected to happen anytime soon.
Atlanta Real Estate Market Forecast for the Next 5 Years
Because of rent trends and prices throughout the Atlanta real estate market, forecasting what the market will be like in five years isn’t as difficult as it might seem. Atlanta has been among the healthiest real estate markets in the U.S. for more than a decade, which is a trend that should continue for years to come.
One reason why the housing market has grown is because of population growth. In 2019 alone, upwards of 285,000 people ended up moving to Georgia. More residents means more people buying homes. It’s common for people to choose to move to Georgia because of the state being known as a top spot for businesses. In fact, Georgia was named the best state for business from 2014-2020 by Area Development magazine. At the moment, nearly every top 10 Fortune 500 company has operations in Georgia, which means that population growth shouldn’t slow in the near future.
As touched upon previously, the housing shortage is far from over. At a given time, there is only 1.2 months of housing supply available to buyers, which is less than the six months of housing supply that’s needed for the market to be balanced. When there aren’t as many homes for buyers to purchase, prices will continue to increase. Keep in mind, however, that Atlanta home values are slightly less expensive when compared to the national average. Homes values in Atlanta have doubled in the past decade, which is a trend that will likely continue in the next five years.
When taking a look at the Zillow Home Value Index, buying a home in Georgia costs around $405,000. Even though home prices reached historic highs in 2021, they have continue to increase in 2022. Since housing supply should remain low in the next few years, there’s no reason that prices won’t continue to rise. However, the rate of increase will likely slow over the next five years.
Real estate appreciation from 2000 to 2022 is at more than 137%, which places the city in the upper 10% nationally when it comes to appreciation. When taking a look at this historic data, it’s clear that home values are almost constantly increasing, which is likely what will happen for the foreseeable future.
At the moment, Zillow is predicting that home values throughout Atlanta will grow by another 5.5% by July 2023. Keep in mind that previous estimations have been lower than the actual increase. Atlanta home values have increased by more than 15% since July 2021.
Even if the rate of increase drops in the near future, home values should continue to rise from 2022-2027. If home values go up by 5% each year for the next five years, a home purchased for $400,000 in 2022 could be worth more than $510,000 in 2027. On the other hand, buyer demand is starting to drop slightly as a result of high demand, which means that now is a great time to sell.
The Atlanta real estate market is doing better than ever. Home values are still increasing at a high rate, which means that sellers are usually able to receive offers that match or exceed the listing price. With somewhat fewer buyers on the market, buyers don’t have as much competition when searching for the right home.
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