No doubt now, the brakes are engaged: the metro Atlanta housing market has continued to slow, as higher mortgage rates depress prices and sales.
The median sale price in October $379,455, a slight decline from the month before, and a nearly 8% drop since June, according to the Georgia Multiple Listing Service, which tracks sales in a 12-county area centered on the city of Atlanta.
“There have been four straight months of price declines,” said John Ryan, the group’s chief marketing officer. “Historically, we usually see a seasonal decline, but the decline is accelerated from what we’ve seen in the past.”
That median price is still 7.5% higher than a year earlier, but a year ago, prices were rising at yearly clip of 20%.
The slowdown in Atlanta area home sales and decline in prices comes as the Federal Reserve has hiked its benchmark interest rates to tame inflation.
About 4,800 homes were sold in the region, down 16% from September, Ryan said.
“We have seen a steady decline in the market,” he said. “The activity has definitely slowed down.”
Mortgage rates, while nowhere near historical highs, have more than doubled in the past year, rising from around 3% to about 7%. Those hikes are leading to lower prices by discouraging spending.
And it is sure working in housing — virtually all the signals are flashing red.
Higher rates mean borrowers pay more for loans, which means higher monthly payments, which gives buyers less purchasing power.
A buyer of a $400,000 house who makes a down-payment of 20%, would make a monthly payment of about $1,770 on a 3% loan according to Zillow, the home listing and research company. At 6%, the monthly payment jumps by $570. At 7%, it’s $780 higher.
Some wannabe buyers target less expensive homes, which can mean looking farther away. Some stop looking, at least for the moment.
Fewer buyers means less intense competition for homes, the bidding wars that were propelling prices dramatically higher. And since homes listed for sale are less likely to be snapped up immediately, more homes are on the market.
Inventory — the number of homes listed for sale — has soared 247% in the past five months, Ryan said.
While many would-be buyers are still out there, the balance has shifted away from a total sellers’ market. Not only do homes take longer to sell, about one in five sellers lowered their asking price before a sale.
Another sign of the shift, is how many sellers now know they need to work harder at marketing and presenting their homes in order to sell them, Ryan said: The number of open houses has more than tripled.
Kristen Jones, broker and owner of Re/Max Around Atlanta, said it’s important not to look at recent comparisons since the pandemic period has been so unusual. Moreover, larger demographic forces can still fuel the market, even if interest rates are higher.
Inventory might have risen dramatically, but it is still lower than 2019, she said.
The sheer number of younger professionals means that demand is not going to evaporate and the vast numbers of boomers who are looking to downsize means there will be owners motivated to sell, Jones said.
“There is still a lot of pent-up buyer demand, and we expect to see more activity in early 2023, especially if inflation tempers and rates drop a little,” she said.
Metro Atlanta*, real estate market, October
Median sales price: $379,455
Number of homes sold: 4,800
Homes listed for sale: 13,470
Thirty-year fixed-rate mortgage: 6.95%
October compared to last year
Median sales price: +7.5%
Number of homes sold: -31.8%
Homes listed for sale: +79.6%
Thirty-year fixed-rate mortgage: +125%
October’s signals a slowing
Days on market: up 167% since June
Inventory (homes for sales): up 247% since June
Price: down 8% since June
Open houses for listed homes: up 247%
Number of sales: down 31% in a year
2021: price down 1%
2022: price down 16%
2021: sales down 3.2%
2022: sales down 16.6%
*12-counties centered on Atlanta
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