VIEWPOINT

During 2022 there was a long awaited and dramatic shift in the housing market. The Federal Reserve raised interest rates 7 times during the year, in an effort to combat inflation. Mortgage rates went from around 3.25% in January to a high of over 7% in November, drastically increasing the monthly cost of financing a home purchase and therefore reducing a Buyer’s “purchasing power.” This shift in the market took us from an “Extreme Seller’s Market (with very low inventory, frequent multiple offers with over asking prices and waived contingencies) in the first half of the year to a return to a more “normal” market by the end of the year.

Most notably the market shift caused a substantial decline in the number of closed transactions. While the total number of single family detached home sales year to date (“YTD”) declined by 17% in 2022 as compared to 2021, the decline was much more prevalent in the second half of the year. As of June 30, 2022 the year to date decline was only 5%. On a month by month basis, July through September were down 21-23%, down 30% in October, and down 45% in November and December, over the previous months in 2021. We will have to see if this trend continues.

While the number of closed transactions for single family homes declined significantly, the average sales price YTD in metro- Atlanta through December 2022 was $453,541 vs. $402,399 for year end 2021. This represents an increase in Average Sales Price of 13%. While prices were up, year over year, the median home sale price in metro-Atlanta declined about 10% between June 2022 and December 2022. We are also seeing more price reductions than in recent years and an increase in the inventory of available homes. If this continues it will likely lead to a flattening or reduction in sales prices, a long needed bright spot for Buyers who can possibly lock in a price on a home while prices have stabilized and there are fewer Buyers to compete with in the market, with the intention of refinancing when mortgage rates become more favorable.

Active inventory of single family homes in metro-Atlanta increased from 7,682 at year end 2021 to 11,625 at December 31, 2022, representing a 51% increase in available homes. We are still much lower than historical inventory levels (e.g. December 2014 the listings were 19,310), but if this increase in inventory continues, eventually we will see reduction in sales prices and longer time on market.

Of the 81 neighborhoods we reviewed, every neighborhood was still deemed to be a “seller’s market”. We used the measuring stick that six months of available inventory represents a balanced market: meaning less than six months of inventory represents a seller’s market (a market more favorable to sellers in negotiations), and over six months of inventory represents a buyer’s market.

The Average Sales Price to Original List Price ratio, a measure of how close to the original asking price a seller is getting, remained high in the majority of neighborhoods. Over a third of surveyed neighborhoods still had averages of over 100%, meaning the average house in that neighborhood sold for over the asking price. This is almost always the result of multiple offers. It remains a lucrative time for Sellers to sell.

Generally, the Average Days on Market, the length of time from listing the property until binding contract, decreased in most neighborhoods we reviewed between 2021 and 2022, and in almost 61% of the neighborhoods, it was under 30 days.

While it is hard to predict future real estate trends, we want our clients to understand what is happening in the market, so they will understand pricing and how quickly a home will likely sell in the neighborhoods where they live or hope to live. We hope this report will help with that. If you would like a more in-depth analysis of a specific area or want to determine the value of your home, our neighborhood real estate experts are here to help.

We know the Atlanta market. Your neighborhood is our business.

Randal Lautzenheiser, Managing Broker and Owner

Len Kwilos, Agent and Owner David Vannort, Agent and Owner