Home Prices

Homes in the Metro Atlanta appreciated in value at record pace in 2020, 2021, and the first half of 2022 before returning to a more typical pace of appreciation in the second half of 2022.

In the last three years—between December 2019 and December 2022—the average sale price in Metro Atlanta rose by 40% from $335,948 to $461,667, an increase of $125,719. That rapid growth was more than double the pace of the previous 3-year period from December 2016 to 2019, when prices rose 17%, or an average of $50,804.17 As a result, many homeowners have significant amounts of equity in their homes from price appreciation, but the cost of buying a new home is higher than ever.

The average sale price varies by home type. In Q3 and Q4 2022 the average sale prices in Metro Atlanta for each type were:

• Single-Family Home: $499,874

• Townhome: $391,205

• Condominium: $323,137

For the past 47 years, the Atlanta market has averaged 4.6% annual home price appreciation.18

After a few of years with historically high levels of price appreciation, we are returning to these more moderate levels of price growth. As of December 2022, the average Metro

“Metro Atlanta home price appreciation in December 2022 was 4.2% year-over-year, near the 47-year average of 4.6% annual price growth.”

Atlanta home price of $461,598 was up 4.2% year-over-year, near that historic norm. For Q3 and Q4 overall, average prices were up 9.9% yearover-year, with an average sale price of $477,682.

Homes sales—and sale prices—tend to ebb and flow with the seasons of life, with the greatest demand in the spring and summer and a natural slowdown in the winter months. In Atlanta, home prices typically rise throughout the spring market, peak in June, decline in the second half of the year, see a slight end-of-year bump in December. With frenzied demand in 2020 and 2021, that normal historical pattern did not occur, and prices continue to rise through much of the fall and winter.

2022 largely brought a return to seasonality, with prices peaking in June and declining heading into the fall. However, the declines in home prices between June and December 2022 were greater than a typical historical decline for this period. From 2009 to 2019, the average sale price for all homes in the Greater Atlanta Area typically declined between June and December, ranging from -1.9% to -14.5%, averaging

-4.8%. In 2022, the average sale price declined -9.7% from June to December, outpacing normal seasonality for most years, but still less than the maximum decline during this period, which occurred in 2011. The most significant price declines in 2022 occurred between June and August—when normal seasonality coincided with mortgage interest rates first exceeding 5.25%—and leveled off toward the end of the year.19

Earlier this year, home prices were rising rapidly due to intense buyer competition and homes were often appraising below the contract price, requiring buyers to pay the appraisal gap in cash. In April 2022, a record high 20% of homes had an appraisal gap. As mortgage interest rates rose and demand cooled over the summer, offers began to more closely align with appraised home values. By October 22, just 6.3% of homes were appraised below the contract sales price,20 reflecting a market more in line with actual home values.

The question on everyone’s minds as of late has been how far—if at all—homes prices can be expected to drop in 2023. Home price growth in 2023 will vary significantly by region. In Atlanta, there are several fundamental conditions that have prevented dramatic price declines even as interest rates doubled over the course of a year, including:

• Low inventory levels;

• Low construction activity;

• A strong economy; and

• A growing population.

These fundamentals are so strong that the National Association of Realtors (NAR) named Atlanta the #1 housing market in the U.S. with the most potential for growth in 2023. It was also ranked #9 on Zillow’s list of the hottest housing markets for 2023.

Home price forecasts vary widely and are adjusted often, and actual prices will depend on factors like inflation, prevailing mortgage interest rates, unemployment levels, submarket, and individual home quality. Despite forecasts of home prices plateauing or declining slightly on a national level in 2023,21, 22, 23 , 24, 25, 26 the Atlanta market is forecasted to see home prices grow by at least 5% this year.27

Mortgage interest rates are also expected to level off in the first half of 2023 and gradually decline in the second half of the year, with many economists anticipating rates stabilizing below 6% later in the year. This rate reduction and stabilization would lower the cost of home ownership and increase the sense of certainty in the market, increasing demand by widening the pool of eligible buyers and enabling buyers of all kinds to get more for their money.