2020 Forecast

2020 METRO ATLANTA

RESIDENTIAL REAL ESTATE FORECAST

ATLANTA LIFE

Things that impact our life and our real estate ATLANTA S TECH BUSINESS ATLANTA IS THE #1 RELOCATION CITY More people are choosing to call Atlanta home.

Atlanta has been the #1 Relocation city in the US for 9 consecutive years. On average 36 people relocate to Atlanta EVERY DAY.

ATLANTA RANKS 3RD IN THE LIST OF CITIES WITH THE MOST FORTUNE 500 COMPANIES In 2019 Georgia was home to 18 fortune 500 companies.

Four Atlanta based companies made it to the top 100: Home Depot, UPS, Delta and Coca-Cola.

2 |

HARRY NORMAN, REALTORS®

ATLANTA TECH VILLAGE IS THE 4TH LARGEST TECH HUB IN AMERICA The tech trend is likely to continue due to low corporate tax, favorable employment laws, low cost of living, and our diversity. Immigrants to the US are responsible for more than half of this country’s largest startups.

ATLANTA IS NOW THE CAPITAL OF ESPORTS Atlanta is home to three franchised city-based esports teams: the Atlanta Reign (Overwatch), Hawks Talon (NBA 2K) and the Atlanta FaZe (Call of Duty). Georgia is home to 150 gaming studios, and the headquarters of major gaming developers.

POPULATION BOOM

HIPSTURBIA...COMING TO A SUBURB NEAR YOU

In 2020 Atlanta’s population is estimated at 6.11 million and Metro Atlanta has the 4th-fastest growing population in nation. Over the next 5 years Atlanta’s population is projected to grow more than any other US city, increasing by over 90,000 annual net migration.

Millennials are shifting focus from city living and moving to the ‘burbs. They are holding on to their live/work/play lifestyles choosing suburbs that offer walkable downtown areas with retail, restaurants and recreation. This nationwide trend reaches Atlanta areas like Decatur and Alpharetta, and is emerging in places like Marietta, Roswell and Duluth.

TELECOMMUTING – THE SOLUTION TO ATLANTA TRAFFIC?

IT PAYS TO BE SMART (TECHNOLOGY)

In metro Atlanta, more than 600,000 commuters are using telework, compressed work weeks, and flextime to drive change. “We are living in such a fast-paced world that spending time commuting and physically moving from place to place just can’t work anymore”.

ATLANTA EMPLOYMENT GOES FROM STRENGTH TO STRENGTH The US economy continued to support steady employment gains throughout 2019. In December 2019 national unemployment dropped to a 50-year low of 3.5%.

Atlanta’s unemployment sits even lower than the national rate, at 2.9% in December 2019, down from 3.7% in 2018 and 4.6% in 2017.

The continued evolution of the Internet of Things, AI and now 5G is driving increased demand and consumption of smart technologies. Smart buildings and homes are on the rise and home buyers are looking for options with high speed connectivity and green technology.

2019 UNEMPLOYMENT RATES

3.5%

NATIONWIDE

2.9%

ATLANTA

2020 METRO ATLANTA RESIDENTIAL REAL ESTATE FORECAST

| 3

HOUSING MARKET INDICATORS Looking across the full year of 2019 the average sold price of homes in metro Atlanta increased 4.8% to $347,000.

In the second half of 2019 inventory became an increasing challenge. New listing inventory increased 2% on same period in 2018, but sales and pending home sales increased by 7%. This put upward pressure on price and in December 2019 the average sold price of homes in metro Atlanta had increased 8% compared to 12 months earlier, lifting to $354,000.

This trend did not impact all price points and areas equally, with the lower and mid-tier markets seeing the greatest impact. We examine the key factors driving the market to understand where 2020 will take the Atlanta market.

SOURCE 2020 2021 2022 Home Price Expectation Survey

+2.5

+2.2

+2.7

Morgage Bankers Association

+3.1

+2.2

N/A

Zelman & Associates +3.7 +3.3 N/A Fannie Mae +4.1 +2 N/A National Association of REALTORS

+3.6

N/A

N/A

Freddie Mac +2.8 N/A N/A

INTEREST RATES Mortgage interest rates have a profound impact on housing market activity and overall affordability. The Federal Reserve cut its Federal Funds Rate three times in 2019 and has indicated it is unlikely to increase in 2020. For 30-year fixed rate loans interest rates are expected to remain consistently low through 2020 at between 3.7% and 3.8%. Historic comparison to interest rates of recent years and past decades, demonstrate that financing a home is now much more reasonable:

HOME PRICES Home prices nationally are expected to continue to show solid growth in 2020, but for many markets this will be at a slightly reduced and steadier pace than that experienced in 2019. Top indicators nationally forecast this to be in the 2.5-4% range, and for the state of Georgia CoreLogic has indicated the year-on-year price increase could be as high as 4.9%.

HISTORIC RATES 12.7% 8.12% 6.29% 3.8% 1980 1990 2000 2020

OUR TOP 2019 SALES

1401 BULLARD RD $9,495,000

4 |

2790 HABERSHAM RD $7,600,000

HARRY NORMAN, REALTORSÂŽ

4315 GARMON RD $6,210,000

88 W PACES FERRY RD #1830 5975 WINTERTHUR RIDGE $5,700,000 $3,850,000

Source: Trendgraphix, Inc (includes Cherokee, Cobb, Dekalb, Forsyth, Fulton, Gwinnett)

HOME INVENTORY The second half of 2019 saw home inventory decline creating a supply shortage. A five to six month supply of homes is considered a balanced market. In quarter four, 2019 the supply in metro Atlanta was about 3.3 months, 6% lower than the same period in 2018. This decline in inventory was not a result of lack of buyer interest; the number of people viewing each residential property increased on the prior year.

THE COST OF RENTING The cost of renting in Atlanta is almost on par with ownership. The Rent/Ownership cost ratio in Atlanta is 0.9, meaning that when you account for all costs, renting is approximately 90% of the cost of owning. This is among the highest of all capital cities in the United States and is a factor of high rent and purchase affordability. Rent in Atlanta has increased 5.4% in the last 12 months and 84.5% in the last 10 years. Despite this, the growing transient population of Atlanta keeps rental demand high. Apartment vacancy rates in Atlanta remain extremely low, and anticipated condo conversions of recent years keep delaying due to strong rental revenue.

NEW CONSTRUCTION When adjusting for population growth, the number of new starts across the last decade was substantially lower than previous. At the end of 2019 annual new construction starts were down 6%. South Atlanta areas saw increases, but these were offset by equal increases in sales for the region, and construction decreases in North Atlanta areas. Construction is one of Atlanta’s fastest growing job sectors, but with much going into commercial and infrastructure, investment in residential real estate is expected to remain flat in 2020.

AFFORDABILITY Atlanta remains affordable in comparison to other major cities in the United States. The ratio of household income to home price remains reasonable and is a major drawcard for large corporations bringing headquarters to Atlanta. On-going urban renewal projects are creating ‘hot market’ pockets where prices have increased fast, but across the board housing affordability remains better than the two decades prior to the market crash of 2008.

14200 HOPEWELL RD $3,400,000

239 15TH ST $3,150,000

3005 NANCY CREEK RD $3,105,000

66 MOUNT PARAN RD $3,100,000

13650 BETHANY RD $3,050,000

2020 METRO ATLANTA RESIDENTIAL REAL ESTATE FORECAST

| 5

Low Interest Rates

High Levels of Employment

Limited Inventory

OVERALL FORECAST FOR ATLANTA IN 2020

Strong Economy

The outlook for the Atlanta housing market in 2020 is positive.

Prices will continue to move up, and while this is expected to be at a greater rate in Atlanta than other cities, it will be a steadier pace than in previous years. Based on the strength of the US economy, most economists are now stating that the likelihood of any economic recession in 2020 is lessened, which is increasing consumer confidence. Prior to 2008, during three of the last four recessions home prices lifted, demonstrating that even in a recession, the housing market can stand strong.

Atlanta is increasingly becoming the real estate market to watch.

In 2019 based on market trends and projections, Atlanta ranked 8th nationally in Overall Real Estate Prospects. This is an improvement on previous years and is validated by Atlanta’s 3.6% share of US transactions in the past 3 years, compared to a 1.8% share of the total US population.

The luxury market, which has strong connections to overall economic performance, starts the year in a positive position.

With concerns around the US and global economy subsiding, buyer confidence is improving and the $1million and above home market is showing growth in Atlanta. In quarter four, 2019 homes sales volume over $1million increased 20% on the same

6 |

HARRY NORMAN, REALTORSÂŽ

High Cost of Rent

Rapid Population Growth

period in 2018, reducing home inventory levels in market. If the US economy remains strong, this optimistic housing trend is expected to continue at a moderate pace in 2020.

The big challenge in 2020 will be around housing supply. In a market of strong consumer confidence; can the supply of homes in Atlanta meet the demand of buyers? The combination of supply shortage and people staying in their homes longer is going to drive an imbalance of supply and demand in some areas and price points. Stable economic conditions providing consumer confidence matched with high rents will see people opt out of renting in favor of ownership.

2020 is anticipated to be a good year to be active in the Atlanta real estate market. In a dynamic market such as this, factors change monthly, weekly and even daily. What is reported in one neighborhood can be completely different in another. Making informed decisions based on the right information specific to your own situation will be critical to success. Working with Harry Norman, REALTORSÂŽ you can be confident you have only the best in your corner. Our agents are trusted local market experts and advisors, supported by market analysts and a marketing team who truly understand your market.

FURTHER QUESTIONS? WE’D BE MORE THAN HAPPY TO HELP. Backed by 90 years of Atlanta experience Harry Norman, REALTORS® operates with strength and market clout, while priding ourselves on providing clients a boutique-style, luxury real estate experience. Speak to us today about your real estate needs and let us show you what first class real estate service looks like.

In addition to a personalized valuation, some of the many things your Harry Norman agent and advisor can talk to you about could include:

How much have prices changed in my neighborhood?

Is it a buyer’s or seller’s market in my area?

What is the trend for my price point?

The return of spot loans in the condo market

Should I list now or wait until later in the year?

Financing your home

Which areas have the greatest opportunity for growth in 2020?

How much could my home rent for?

How do I target international, luxury buyers?

What renovations or home improvements will help best position my home for sale?

2020 METRO ATLANTA RESIDENTIAL REAL ESTATE FORECAST

| 7

“Extremely professional and a pleasure to work with through the whole process. Made my first time buying experience an easy and positive endeavor.”

– Buyer

“Very pleasant through the whole process.

Couldn’t have been a better experience.”

- Buyer

“… top notch, friendly and very informed about our market. Her expertise helped us set and achieve top dollar for our home! ”

- Seller

“Our Sales Associate was the most professional and very knowledgeable sales associate we have ever dealt with. Her care and understanding of our needs were always her first priority.”

- Seller

ATLANTA NORTH 770-622-3081 ATLANTA PERIMETER 770-394-2131 BIG CANOE® 770-893-2400 BLAIRSVILLE 706-745-3000 BLUE RIDGE 706-632-7211 BUCKHEAD 404-233-4142 BUCKHEAD NORTH 404-814-9000 BUCKHEAD NORTHWEST 404-261-2700 THE COLLECTION AT FORSYTH 770-497-2000 EAST COBB 770-977-9500 HISTORIC MARIETTA 770-422-6005 INTOWN 404-897-5558 LUXURY LAKE & MOUNTAIN 706-212-0228 NORTH FULTON 678-461-8700 PEACHTREE CITY 770-632-8526 SAVANNAH 912-233-6609 WOODSTOCK 404-495-8331 LONDON +44 20 7467 5330

Sources: 1. Trendgraphix, 2. Metrostudy, 3. Keeping Current Matters, 4. Showing Index (ShowingTime), 5. Emerging Trends in Real Estate (PWC and Urban Land Institute), 6. This is where rents have increased the most over the last decade (Marketwatch), 7. Experts predict what housing market will bring (Washington Post), 8. Atlanta, GA Unemployment rate (YCHARTS), 9. December Jobs Report (NY Times), 10. Market Pulse Report (Core Logic), 11. Economic housing outlook (Fannie Mae), 12. Consensus Forecast (NAR), 13. Construction Corp Insights (Cummings), 14. Georgia Rankings 2019 (Metro Atlanta Chamber)