But the market doesn’t even cover a price range, he said. “Competition is hyperactive in the price range of $400,000 and below.”
Indeed, young professionals are increasingly interested in home ownership. Rising prices are bad news for them.
The median price of a home in Metro Atlanta soared 28% in the past two years, according to Realtor.com.
Many first-time buyers struggle to raise the money they need for a down payment that many lenders require. Additionally, wages and salaries have grown healthily over the past few years, but not at a double-digit pace.
The recent spike in mortgage rates is expected to cool the market, primarily by dampening demand.
And the change must have been painful for some budding buyers looking to afford a home. A 30-year fixed-rate mortgage was 2.77% last summer and 3.11% at the end of December, but has been above 5% since mid-April.
The increase can add hundreds of dollars per month to a mortgage payment.
Meanwhile, the purchase price also continued to climb. This is because higher rates have not yet reversed the supply-demand equation. For several years now, the supply-demand balance has been tilting more and more in favor of sellers. And while higher mortgage rates have meant fewer bidding wars and fewer purchases that exceed the asking price, there are still more buyers than sellers.
In a market where buyers and sellers have roughly equal bargaining power, the number of homes for sale – the supply – should equal six months or more of sales. Yet, for a variety of reasons, supply has fallen to historic lows, often forcing buyers to bid against each other as prices soar.
Last month, the number of home listings was less than a month’s worth of sales, according to Re/Max.
For first-time buyers, the situation is even worse than it looks, according to Kristen Jones, owner of Re/Max Around Atlanta. Relatively few homes are for sale overall, but scarcity is acute at the lower end.
“That means a lot of potential buyers are shut out of the market,” she said. “There is not enough inventory to cause a major shift in the market.”
Atlanta continues to attract transplants from across the country.
But residential construction all but came to a standstill during the Great Recession of 2008-09 and never made up for lost ground. Meanwhile, many homeowners have chosen to stay put, some of them because they fear they won’t be able to afford another home.
Experts say it will be years before the market clears.
Meanwhile, sales have cooled off a bit so far this month, but it’s not just the rate hike, Jones said. “It’s mostly a seasonal trend with the end of school and the start of summer.”
Metro Atlanta, housing market, May 2022
Median selling price: $400,000
Compared to April: +3.9%
Compared to May 2021: +23.1%
Number of home sales: 9,611
Compared to April: +7.5%
Compared to May 2021: -8.5%
Median listing price: $412,000
Compared to April: +3.0%
Compared to May 2021: +17.7%
Metro Atlanta, historic median house prices
Since May 2021: +9.8%
Since May 2020: +27.8%
Since May 2017: +51.5%
Historical Median House Prices in Metro Atlanta
Reached $400,000: May 2022
Reached $300,000: March 2021
Reached $200,000: May 2015
Average rate, 30-year mortgage
Monday noon: 5.58%
High this year: 5.78%, first week of June
Sources: Re/Max National Housing Report, Zillow, St. Louis Federal Reserve Bank, Freddie Mac