There are many reasons why homebuyers focus on the Atlanta real estate market. The warm climate, well-known businesses, and friendly people make it appeal to many different types of people. Singles want to establish their careers, while families want to put down roots.
That broad appeal is the primary reason that the housing market is so strong in Atlanta. You need to understand the real estate market here if you plan to invest, and this article will give you all the information you require.
Atlanta Housing Market Trends
The real estate market in Atlanta has been showcasing some interesting trends in 2023. In fact, the ARA (Atlanta Realtors Association) released a market brief in February that offered an overview of housing statistics for the 11 counties in the metro area.
Overall, construction on single-family homes slowed in 2022, though it had been quite high the previous year. The US Census Bureau provided data showing that permit activity had dropped significantly, indicating a year-over-year decrease of 41 percent.
However, multifamily home construction shifted upward, with over 2,000 housing permits being issued for houses with two or more units. This is a 126 percent increase from last year.
Factors Affecting the Atlanta Housing Market
Understanding the real estate market can be difficult, but here are a few factors that will change things (either for better or worse):
Supply and Demand
Though single-family house construction has slowed down, there's still a strong housing inventory in the Atlanta metro area. In fact, the broad market is up, and Atlanta has a four-month supply of houses. If you're interested in a luxury property, you have a 10.9-month supply waiting for you.
Usually, buyer demand takes a six-month supply of homes, but four months can be a great equalizer in the real estate market. The National Association of Realtors says that the total housing inventory in January 2023 was at 2.9 months, so the national average is a little lower for real estate.
The US News Housing Market Index and Redfin data show that there were 3.6 months of inventory in Atlanta for January 2023, so that's a 1.97 percent year-over-year increase. All told, the market is gaining inventory.
Investors will be happy to note that rental vacancy rates in Atlanta sat at 5.4 percent, which is a decrease of about 0.9 percent from last year. This is 5.8 percent lower than the national average.
Rising interest rates could play a part in the supply and demand of properties. It went up to 6.79 percent for a 30-year fixed mortgage. Even so, there were more mortgage applications being filled in, though most borrowers are waiting for the rates to back down a little.
Median Home Prices in GA
In January 2023, the median home price was $350,000, according to Redfin and the US News Housing Market Index. That's an increase of 1.5 percent from the year prior. This is also in line with national averages for the real estate market.
Atlanta homes often sell close to the list price. Though the original list price to sales price is about 95 percent for luxury and broad markets, that's a bad sign for investors. Properties will likely sell above or below the list price if they're ready to go.
However, investing in real estate could be beneficial because you'll see a higher rental price than in some states. January 2023 saw $1,941 for rent on average, which is up 4.3 percent. Nationally, median monthly rents were $1,942.
Likewise, interest rates were up about 82 percent from last year, so they're sitting at 6.27 percent for a 30-year fixed mortgage.
Residential sales in February 2023 were sitting at 3,840, which is a 27.7 percent decrease from last year. Though that seems like a bad thing, January 2023 was even worse, so things look to be progressing slightly.
December 2022 was a good year; roughly three million people were employed in Atlanta, and the city's unemployment rate was down 0.2 percent, sitting at 2.6 percent.
In the same month, the US Bureau of Labor Statistics showed that the national unemployment rate was sitting at 3.5 percent - more people in Atlanta work than those in the rest of the US.
Low Builder Confidence
February 2023 saw a low builder sentiment. Most construction workers aren't ready to jump into the fray because they feel it's too expensive for the materials and labor. Still, investors can find ready-made homes, fix them up, and rent them to others.
Will the Housing Market Crash in Atlanta?
It doesn't seem like the Atlanta housing market will crash anytime soon. Let's take a look at why.
The February 2023 report from Realtor.com indicates that Atlanta was a seller's market. People wanted to buy, and there weren't as many houses available. Generally, this means there was a sales-to-listing ratio of over 0.2. Atlanta houses saw a median list price of $399,900, but the sales prices were $379,900.
Generally, houses in Atlanta, GA, sold for about 1.02 percent below their asking prices in February 2023. Buyers often want the ratio to be close to 90 percent.
With 199 neighborhoods in/near Atlanta, Morningside - Lenox Park saw a median listing home price of about $950,000. It's one of the most expensive neighborhoods. However, the most affordable neighborhood could be English Avenue because it has a median listing home price of about $260,000.
There's also Fulton County, which holds 16 cities, including Atlanta. This is a seller's market, for sure. The median listing home price was $236 per square foot, and the median home sold price sat at about $395,000.
Houses in Fulton County, GA, sold for about 1.03 percent lower than the asking price and are on the market for about 56 days on average. This has decreased for the area compared to the previous month, though it's slightly higher than the same period last year.
Atlanta Housing Market Statistics
Here are the statistics surrounding the real estate market in Atlanta, GA.
- The median listing home price is sitting at $429,000.
- The median home sold price is $400,000.
- The median listing home price per square foot is $268.
- There are right under 200 neighborhoods in the area. Peachtree Heights West saw a median listing home price of about $1.3 million (most expensive neighborhood). The most affordable neighborhood is Venetian Hills, and the median listing home price is $325,000.
- Those looking to invest in North Buckhead will likely see a median listing home price of $682,500. It seems to be a buyer's market in this neighborhood.
- Turnkey properties start out at $100,000 and often have tenants already.
Housing Market Predictions
The real estate market in the nation is seemingly strong. It's important to understand that it isn't 2021 anymore. Homes won't get multiple offers or sell for thousands over the asking price once they hit the market.
It's not crazy, but it's strong. In a sense, that's what you want because crazy selling and buying leads to more stress.
The data indicate that the housing market for the US won't crash within the next few years. In fact, this market is different from the crisis that led to the Great Recession in 2007 through 2009.
Because lending rules are stricter, there shouldn't be tons of foreclosures, and the housing supply is low. In fact, it probably won't be back up to par for a few years. This means home prices won't drop, which could be a problem for investors.
Many people wonder if the nation is in a housing market recession. This means that total home sales shrunk for six months or more in a row. In a sense, we were in a recession, but February 2023 saw the total number of house sales shoot up to 14.5 percent, marking the end of a full year of decreases.
Overall, it doesn't appear that the US is in a housing bubble. This means that the prices soar higher and higher until they finally plunge. Though there's been rapid growth following the pandemic in 2020, the spike softened halfway through 2022. Then, home values soared and have continued with that trend. There are some declines in certain markets, though.
Atlanta Housing Market Forecast and Predictions
Before you jump online to check the best neighborhoods for investing, it's important to consider the Atlanta housing market forecast. This will predict what things will do in the long term.
Overall, Atlanta is the hottest of real estate markets and has been for years. This is great for buyers and investors who want rental properties. There's been a huge population growth, which has impacted the city for years. Roughly 285,000 people moved to the state in 2019.
That migration made it possible for the state to see businesses jump. In fact, Georgia is now the top choice for companies and has been for seven years in a row. Nine Fortune 500 companies (there are only 10) have a place in Georgia, and 18 companies see it as the world headquarters.
Overall, the migration comes from the Atlantan business environment. It's quite strong, and the city is relatively affordable. In fact, new talent comes here all the time because of the knowledge-based ecosystem in place. With the net migration, there's been a higher demand for housing, which can't be met with the new construction pace.
In a sense, Atlanta has a housing shortage, which should continue to lead to higher prices. Home prices in the city are lower than the national average. Though that might be true, house prices have doubled and sometimes tripled since 2012, and they should continue to increase.
The National Association of Realtors released a report in December that indicated Atlanta should be the leader of the nation for real estate in 2023. It topped the market-to-watch list and performed well in 10 indicators, such as population growth, affordability, and employment.
Zillow has been recording price trends for the past few years, and Atlanta has the lead for long-term real estate investments. In the past 12 months, the home value for Atlanta metro areas has appreciated by about seven percent, according to the ZHVI (Zillow Home Value Index).
The ZHVI represents the entire housing stock and not simply the houses that sell or list in one month. Typical home values in the metro area are sitting at $356,748. Therefore, about 50 percent of the housing stock is worth more than that number, with the other half being worth less.
NeighborhoodScout.com offers data indicating that real estate in Atlanta appreciated by about 142.22 percent during the last 10 years. The annual appreciation rate is roughly 9.25 percent. Therefore, the city is in the top 10 percent for appreciation.
Overall, the Zillow forecast through February 2024 indicates that there should be price gains in Atlanta. That might not fare well for investments, but landlords could find good deals or houses with work to be done, which might lower the cost.
The numbers could be negative or positive, depending on whether you're a buyer or seller. Available inventory keeps it skewed toward sellers, but the metro area market is hot. It won't shift to a buyer's market for a long time, and that's partly due to the robust and large economy.
According to data from the Bureau of Economic Analysis, the metro area in Atlanta was the 10th largest in the United States and part of the top 20 worldwide. There's a high housing demand, which could become a crisis. Therefore, FED offered emergency rate cuts to drop them.
A balanced real estate market would see the supply dwindling to zero in about five or six months. Atlanta would only experience that if supply increased to over five months of inventory; that isn't likely to happen. With the imbalance in demand and supply, it's definitely a seller's market.
If you're interested in buying a rental property, it's crucial to time your local market correctly. Mortgage rates were at their lowest in 2022. People took advantage of the many deals, but seasoned investors often went into bidding wars.
With higher interest rates, there should be a decrease in applications. If you want to buy a property for investment purposes, it's best to do it now. Don't wait because it will just get more challenging as lenders make it hard to gain access to credit. Leverage what you have and use your money to work for you.
Many experts are starting to believe that real estate in Atlanta is overvalued. However, you have to understand the city and metro area. Atlanta could be walkable and houses about 524,000 people. Currently, the population rate is rising at 1.67 percent each year.
Though growth isn't as quick as it was in the 2000s and 1990s, it's faster than in 2022 and should continue that upward trend.
It's wise to look for one-bedroom and two-bedroom apartment complexes, though duplexes and single-family homes are also good choices. Likewise, some investors convert houses to apartments and make more money.
Many landlords cater to students because they enjoy the lower cost of living. They're not afraid to spend more for a quiet place to live so that they can study and be comfortable. However, young professionals are another market to consider. If you're into long-term investments, Atlanta is a great choice.
Overall, the Atlanta real estate market is booming, but that could be a bad thing for buyers. If you wish to find a property to refurbish and rent out, you may have to wait or spend more than you want. With an average home price of around $400,000, you'll be hard-pressed to find a decent mortgage rate.
Those who have already bit the bullet and have rental properties should fare well. However, all isn't lost for new investors. Though there are high prices with low inventory, foreclosures could be a good place to start. Likewise, you may use a Realtor to negotiate for a lower price if the house needs some work.
Generally, you have to know which neighborhoods are ideal but still low-cost. For example, Sandy Springs is an expensive neighborhood, but North Springs could be more affordable.
Regardless, rents are high, and the cost of living is quite low. Investors could recoup their money fairly soon if they choose worthy tenants.
What's the Average Sale-to-list Price Ratio in Atlanta?
Right now, the sale-to-list price ratio is sitting at 98.98 percent. This means that houses in the area sold for about 1.02 percent under the asking price in February of 2023. Ideally, buyers want that number to be close to 90 percent, while sellers want 100 percent or higher.
Should I Invest in Real Estate? Why?
Atlanta has an excellent rental market, and home prices seem to be less expensive than the US average. Plus, you'll find newly renovated properties that already have tenants.
Real estate is a huge success, and there are multiple industries thriving, such as logistics, technology, science, professional, and healthcare. According to the Bureau of Labor Statistics, the unemployment rate is above average, as well.