How Far Will Prices Fall in Metro Atlanta?
Here’s what you need to know about Metro Atlanta’s housing market.
How far are home prices going to fall? Let’s take a look at the latest housing numbers and see where our market is heading.
Here’s what happened in August in Metro Atlanta: Inventory is up 62.7% year over year, which is great. We really wanted to start seeing inventory climb. However, homes under contract are still down for the year, which had been the case every month this year so far. Pendings were down 28.9% in August, and closings were down 30%.
I'm starting to study price reductions because we'll likely see more of them. More inventory leads to more price reductions, especially when there are fewer pending. In August, over 32% of the homes that went under contract and closed had to reduce their prices before they got an offer.
"I still think it's going to be a great year for real estate; just different."
This was the third consecutive month where we saw a month-over-month price decline. As an example, in July, the average sales price in metro Atlanta was $451,000. In August, we ended with $440,000. However, we are still up year over year by 15.8%. Finally, supply went from 1.2 months to 2.1 months of inventory.
We're still very much in a seller's market, but it feels different because buyers don’t have to fight each other for homes anymore, and interest rates still climbing are pulling some buyers out of the market. We are heading towards a normal market, except that the normal markets that we've seen in years past have usually had low interest rates.
One of the things that I'm hearing a lot is people are putting their searches on hold because of interest rates. I think that that's an option that everyone should be considering. However, when you're putting off a purchase in the hopes that interest rates are going to come down, what if they don't?
We're still thinking that interest rates could climb to 7%, and the average sales price is still going to be up year over year. Even if homes only appreciate a normal amount, price will still be higher tomorrow than they are today. When you wind up purchasing that same house later, it is going to likely cost you more.
If you're renting right now, your rent is going up and will continue to in all likelihood. When people talk about putting their search on hold, I understand the concern. However, if I'm a buyer right now, I'm analyzing how I can take advantage of listings that have been sitting on the market to overcome the interest rate that I'm locking in. In the meantime, I recommend you lock in your rate, because until we get a hold on inflation, they will continue to climb.
So that is the metro Atlanta August market update. We'll see what happens in September. I think we're going to start to see a little bit more price decline, but it won’t be the end of the world. We will start to see inventory level off probably a little bit. And overall, I still think it's going to be a great year for real estate; just different.
If you have questions about this topic or anything else, please call or email me. I am always willing to help!