Keller Knapp Realty 2022 Annual Report

M E T R O A T L A N T A 2 0 2 2 ANNUAL R E P O R T

HAPPY NEW YEAR!

What an interesting year we have in the rearview mirror And we ’ re l kely to experience a roller coaster in 2023 as we head into the Spring market!

After a decade of increasing prices and home sales, the housing market experienced a shift during the summer of 2022, triggered primarily by a qu ck and drastic increase in interest rates We saw buyers pull back swiftly as the rising rates affected affordability Some have called this a slowdown, but locally, it feels more like a “return to normal” Normal days on market Normal Sales Price/List Price ratios And, maybe most mportantly, more normal rates of price appreciat on

As we head into 2023, the metro Atlanta market is still showing h storically low levels of inventory. This means we will likely not see a drastic fall in prices. And we expect Days on Market to continue to be historically low We ve seen our lender partners pivot, offering loan programs to help affordability as rates have risen All these things point to perhaps a more balanced market n 2023, but a robust market in metro Atlanta, nonetheless

At Keller Knapp Realty, we feel that a return to more normal market condit ons is a good th ng It represents balanced opportunities for both buyers and sellers Atlanta is still a popular metropolitan area, and we anticipate continued populat on growth n the coming years Our 2022 Annual Report h ghlights some of the key aspects of the market shift around the city, and where buyers and sellers might find great opportunities in 2023

With nearly 200 agents in three Atlanta offices, our team of agents is ready to help you nav gate this crazy real estate roller coaster. Come take a r de with us!

Sincerely,

Weslee Knapp REALTOR® Principal Broker, Owner

F R O M O U R P R I N C I P A L B R O K E R W E S L E E K N A P P

RISING INTEREST RATES & AFFORDABILITY

In 2022, the Fed did a series of increases to the Federal Funds Rate that were swift and dramatic, designed to slow inflation. When the federal funds rate increases, the cost for banks to borrow money increases and will often result in an increase in mortgage rates that banks offer to consumers – they have to pay more, so they pass it off to the customer. However, there are many factors that can affect mortgage rates such as the overall state of the economy and the general demand for housing.

When we look at the average 30-Year Fixed Rate over the course of 2022, we see an upward trend that has increased nearly 100% from a year ago. The average rate on January 27, 2022, was 3.55%. On January 5, 2023, the average rate came in at 6.48%.

The robust housing market in recent years, particularly in high-demand metropolitan markets, has been driven by demand and low inventory. When the interest rate rose quickly and dramatically, it had the short-term effect of putting the brakes on demand. Home buyers who were actively in the market looking for homes in the Spring would find themselves both nervous about the rising rates and dismayed that affordability was decreasing.

So, what can we expect as we head into 2023?

• Rates seem to have stabilized a bit and are still at historically low rates (around 5.875%). While this number seems shockingly high compared to a year ago, buyers appear to be adjusting expectations and beginning to move forward with loan applications. According to Laura Witte with Highland Mortgage, “Mortgage applications are up 1.2% at the start of 2023. We have started to see rates trend lower mainly due to signs that we are past the peak of inflation. We expect 2023 to be a solid year”.

• We expect rates to continue to decrease and most projections are that rates will probably be back in the low 5% range by the end of the year.

• Lenders have responded with new loan programs to help buyers with affordability. Some of these include down payment assistance, temporary and permanent buydowns, Debt Service Coverage Ratio and Adjustable Rate options.

• While higher rates seem to have returned the market to more balanced conditions, low inventory and high buyer demand will keep prices from falling to a great extent in Atlanta. We should see price adjustments in some areas, but overall, the prices should stabilize and we’ll see more normal rates of appreciation.

The 2023 Spring market in Atlanta is expected to post strong sales, with great opportunities for both buyers and sellers. Our 2022 Annual Report takes a closer look at how this shift affected prices, sales and general market activity in our 10 Areas of metro Atlanta.

680,000 670,000 660,000 650,000 640,000 630,000 620,000 610,000 600,000 590,000

MARKET ANALYSIS

SINGLE-FAMILY HOMES

Northwest Atlanta is, by far, the most affluent area in the city. Historically, these neighborhoods have been more insulated from market fluctuations than many other areas of Atlanta.

Interestingly, the Northwest Atlanta area started the year off with an Median Sales Price of $1.24M in Q1 and ended the year with exactly the same MSP in Q4. Like many areas in Atlanta, we’re seeing a slowing of price appreciation to more normal market conditions. In 2021, the same comparison showed a 16.0% increase in MSP over the course of 2021.

price in Northeast Atlanta was up 15.1% year over year but down 6% from Q3 to Q4 2022. Days on Market was down year over year at -15.1%, but up 50% Q3 to Q4. Inventory remains tight for the area but prices and market activity seem to be stabilizing.

continues to be the affordable option in this area that could change as Toll Brothers moves forward with the development of 27 acres that it purchased at the beginning of 2022, which will include single-family homes and townhomes. The desire for affordable housing convenient to all the amenities of metro Atlanta will likely

upward in the coming years.

The City of Tucker is making big strides, literally! The city is slowly building out a 32-mile network of trails, as new restaurants, apartments and homes pour into the suburb.

So it’s not surprising to see the real estate market reflecting the progress in the city. Along with an increase in sales price, DOM decreased indicating that the City of Tucker continues to have a low inventory. Sellers have an opportunity to capitalize on the seller’s market, while buyers will appreciate relative affordability.

in North Decatur is a significant increase in DOM in Q4 year over year (124.5%) from 10 days to 22 days. Even DOM 2021 to 2022 was up 6.3%. Sellers who were used to a quick listing period are edging closer to a month to sell their home going into 2023. On the other hand, this presents opportunities for savvy buyers to get into highly sought after neighborhoods as the market stabilizes. Particularly in Druid Hills, DOM was up 311.1% year over year, which may be a great opportunity for buyers to win contracts.

Intown Atlanta is home to many of Atlanta’s quintessential neighborhoods that are less susceptible to a market shift. The area overall posted a 12.4% increase in sales price year over year, with the gains only slowing slightly in Q3 and Q4, even as rates continued to increase.

Days on Market tells an interesting story in Candler Park and Lake Claire. These communities saw higher DOM increases than other neighborhoods in the Intown Atlanta area, and may represent a great opportunity for buyers to get into these highly desirable areas.

SINGLE-FAMILY HOMES

Prices saw a double digit increase (10.4%) in 2022, and posted a modest increase at (24.5%) in DOM. Inventory remains low, and City of Decatur remains a sellers market. Buyers should be prepared to go in with strong offers and the best terms they can bring to the table.

Of note, Oakhurst saw a 60.7% increase in sales price in Q1 accompanied by a -84.2% DOM. In Q4, sales prices dropped -8.2% and DOM was up 14%. In these more balanced market conditions, buyers may have a bit more breathing room to preview homes and make offers, but must also be aware that highly desirable neighborhoods still have low inventory and will often be competitive.

SINGLE-FAMILY HOMES

Even as interest rates rose sharply in Q3, sales prices rose 14.5% in South Decatur. And that trend continued in Q4.

The real standout is Avondale Estates. Sales prices were up 18.5% year over year and inventory was down 42.3% in the same time period. The city was awarded the Atlanta Regional Commission’s 2022 Regional Excellence Award in the Great Places category for the Town Green project. As the city continues to invest in creating a sense of place for its residents, the desirability of Avondale Estates will keep increasing.

Southeast Atlanta has seen a development boom in recent years, driven by development along the Southeast Beltline corridor, Memorial Drive and the Georgia State stadium in Summerhill. Demand has been strong and limited inventory drove prices skyrocketing. However, by the end of the year, Days on Market had dropped by 125% and prices only increased by 2% in Q4.

Ormewood Park is a great example of this phenomenon that we see in many popular neighborhoods around Atlanta. Even while homes were staying on the market longer (5 days in 2021 to 22 days in 2022), home prices were still rising, albeit at a more typical rate of appreciation.

Southwest Atlanta development continues to be spurred on by the new Microsoft Campus. The redevelopment of the West End Mall also promises to be an important part of this redevelopment as the community works to maintain the mall’s relevance to the surrounding neighborhoods.

All of this played out in Days on Market through the year. In the first two quarters of the year, Days on Market declined while home prices soared. As interest rates took off, Days on Market started to rise as well and sales prices took a dip in the fourth quarter down to -1.5%. Buyers should keep their eyes open for opportunities, particularly in College Park, Hapeville and East Point.

Westside has been the darling of redevelopment in recent years. Driven by the Atlanta Beltline and Westside Reservoir Park, the whole area has been ripe for investment. And, while prices have certainly increased, there are some great opportunities for first-time buyers.

Heights continues to represent a relative bargain on the booming Westside. Typically, in a market shift, neighborhoods in a lower price point will be hit hardest by falling prices. But, prices in Collier Heights

relatively stable throughout the year with typical seasonal fluctuation, ending the year with a Median

of just $274,080 (up 15% from 2021).

MARKET ANALYSIS 2022

CONDOS & TOWNHOMES

TOWNHOMES

Our overview of the Condo and Townhome market includes 5 Metro Atlanta Areas that make up approximately 85% of the total Residential Attached sales. These areas are rich in high-density and multi-family housing. We also present Condos and Townhomes separately, because there is a substantial price difference between the two types of homes.