So much to talk about...

It's been a few months since I wrote about what's happening in the Atlanta market.  Since April, things have continued to change in ways that make sellers very happy campers while frustrating buyers and investors.   Here's a run down of what's been happening since the first of the year.

INVENTORY AT AN ALL TIME LOW

The biggest talking point city-wide is the current state of housing inventory.  Since the beginning of the year Atlanta has seen the absolute lowest number of properties on the market listed with Realtors.  According to FMLS, one of Atlanta's MLS services:

"Active inventory level for Residential Single Family Detached continues to drop with 16,532 active listings as of the end of May 2013 vs. 22,142 active Residential Single Family Detached listings as of the end of May 2012.  This represents drop in active inventory for Residential Single Family Detached of 25%.  Active inventory level for Residential Single Family Attached continues to drop with 2,410 active listings as of the end of May 2013 vs. 3,883 active Residential Single Family Attached listings as of the end of May 2012. This represents drop in active inventory for Residential Single Family Attached of 38%".  

This is making buyers and especially investors, anxious and very competitive in terms of their approach to how they make offers on houses nowadays.  Most investors still have certain yield requirements but are going back to the drawing board as prices continue to climb.  Yield compression is pushing small-time investors out of the market while the larger fund-type investors push forward in their quest to build up their residential portfolio.  And then with multiple offers (sometimes into the teens) you can imagine what's happening.  Listing agents are having a tough time keeping up. 

That might change soon.  Word on the street is that foreclosures are on their way back and that we'll see a new wave of properties coming onto the market.  Ok, it might be more of a splash than a wave but still it appears that there might be a bump in inventory numbers coming soon.

RISE OF THE MORTGAGE RATES

Another reason for the low inventory numbers has been attributed to the historically low mortgage rates.  Buyers sitting on the fence soon jumped into the game to get themselves a new home at a good price.  But it quickly became a seller's market and prices started to climb.

And we're now seeing the start of a climb in mortgage rates - jumping the most since 1987 to almost a two-year high according to a report recently released, in part, by the National Association of Realtors and the Mortgage Bankers Association.   Traditional buyers (not the all-cash investor-types) are out in droves trying to lock in and get something - anything - under contract before rates push dream homes out of their reach.   As this continues, however, those greatest hit will be people trying to refinance and folks looking for recreational properties.  Will this affect prices?

PRICING HAS A MIND OF ITS OWN

I've touched on this above but here it is again.  Prices are climbing throughout metro Atlanta.  Actually, it's a phenomenon being seen in most metro areas across the country.   According to FMLS statistics, there's been an almost 23% increase in the single family average prices since this time last year.  Ok, that's considering all price points, city-wide.  Certainly there are pockets that are seeing less increase but still...you get the idea.  The low inventory numbers and low mortgage rates fueled most of this but now what?


Where's it all going and how does affect buyers and sellers?  Well, at the moment, it's still a seller's market.  Lenders are benefiting as they are recouping more on their REO asset values.  Private owners are benefiting as well - especially those attempting a short sale.  The down side there is that the lenders on those short sales might back off approving such sales as they continue to monitor the market.   X today might be X+ tomorrow and they want to be sure they're not writing down more than they have to.

Buyers and investors are not doing so well as they feel the heat of the competitiionbut when you sit back and consider the big picture, prices are still below historic highs and still offers a good bang for your buck.  

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I think that's enough for now.  I know people like to get information in small doses sometimes so I'll close and come back with updates as things change.  If you have questions on the market, please let me know.  I'm happy to help.

John Breaux, CDPE, CIPS

Investment Broker

+1 678-230-9613

Information contained herein is for informational purposes only and should not take the place of professional due diligence and/or market research.  Always speak with your tax or legal adviser before making any investment decision.