The COVID-19 pandemic has been one of the hardest challenges our country has faced in living memory, but if you're looking for a silver lining, the metro Atlanta home market might be it.
According to local news outlet The Atlanta Journal-Constitution, home prices have increased significantly since mid-summer, rebounding quickly from an initial crash at the start of stay-at-home mandates earlier in 2020. By November, the median sales price of a home in the area had increased 15 percent compared to November of 2019. November was also the fourth month in a row that home prices increased by a double-digit percentage.
Industry experts in the real estate world are shocked at these results, but there was a major imbalance within the home sales market even before the pandemic. Buyers outnumbered sellers in the area, and that imbalance only grew by late 2020. Now, prices are surging even higher as competitive buyers attempt to lock down a purchase.
Still, the number of homes listed for sale in metro Atlanta is diminishing. When construction slowed in the midst of the housing bubble collapse a decade ago, the market was able to recover slowly, but construction never kept up with the growth in demand. Sellers started pulling back when COVID-19 first hit. By late fall, inventory was less than two months’ worth as sellers feared not being able to find a new home before selling their own, as well as having to show a house to strangers in a pandemic.
According to Re/Max data within The AJC report, the number of home sales in metro Atlanta dropped 34.9 percent from January to November. Conversely, buyers were looking to upgrade for more space during stay-at-home restrictions, and interest rates became extremely low. The Federal Reserve lowered its regular lending rate to almost zero in an attempt to help the economy survive while small businesses drowned. This change led to a decrease in mortgage rates, even though the home sales prices were increasing. Additionally, homes in the metro Atlanta region began to sell much faster from February to November, and the median prices of houses increased significantly.
Most of these hot sales are “starter” homes which attract first-time buyers as well as investors, according to Jay Cherry, general manager of Opendoor. He mentioned that homes under $200,000 have sold “six or seven times faster” than those listed above $350,000. He's quoted as saying a large portion of these recent buyers have been millennials, mostly with jobs and savings, looking to start a family.
The suburbs became an inviting option for those in need of more space or hoping for lower COVID-19 transmission rates, but many buyers still target the city. Urban home prices have increased an average of 7 percent over the past year and are selling 11 percent faster than they were a year ago.
As more Americans flock to metro Atlanta for modestly-priced houses, some fear the region’s economic potential will decrease. Experts say that the demand-supply balance is not likely to change soon. Read the full report via The AJC.