In a continued effort to stay on top of the current residential real estate trends for Atlanta, I consistently poll top producers, clients, and lenders and follow the latest statistical market reports. While our local market still has several puzzling traits, I am excited to see some trends that reflect a possible return to what was historically deemed normal for our market.
Historically, the strongest time of the year for the residential real estate market is in the spring as the inventory of homes surges, landscaping blooms, and buyers write offers. As schools break for the summer and the heat rises, the market has historically cooled off in July and August but has rebounded after Labor Day once schools are back in session and families are settled back into their routines. Finally, sales traditionally slow from Thanksgiving through the New Year only to begin the spring cycle again towards the end of January.
Despite the historic norms described above, the last eight years have been anything but traditional or predictable. Beginning in 2005, our region experienced a surge that defied norms with robust sales year round.
That trend lasted through the middle of 2007 when the switch flipped and sales volume hit record lows. We held at the bottom for almost as long as we had been on top, and the first signs of recovery were seen in 2010. We welcomed recovery in any form or fashion, and it came in waves almost as unpredictable as the preceding five years.
For example, the market recovered in the spring of 2010, but the fall of 2010 was unusually slow, and, according to FMLS, sales in December of 2010 exceeded those of the previous five months. Another good example of the market’s unpredictability while recovering was the fact published by FMLS that August was the strongest month for sales in all of 2013.
As the owner of a brokerage firm, I welcome all strong sales months, but in a market where a historically average month turns out to be the best month of the year, forecasting for both my firm and for our clients can be difficult.
Additional inklings of more traditional market norms appeared in RealtyTrac’s Q2 2014 report citing that the percentages of both all cash transactions and institutional investor purchases in our market have dropped.
The percentage of distressed sales and short sales also continue to decline. Home values continue to increase, but the rate of that increase has slowed from last year.
Case-Shiller reports that U.S. home values have recovered to 2004 levels and that home values in metro Atlanta have increased 11 percent over last year’s values. Inventory levels have begun to climb slightly from the record low of March 2013. The number of days that a home is on the market has dropped by more than 50 percent since 2011.
Despite all of these signs of stabilization, metro Atlanta is not falling completely into line yet.
Some statistics, like the average number of days that a listing is on the market can be deceiving. For example, accurately priced homes are currently only averaging 11 days on the market while the others are averaging roughly 130 days on the market, and certain price points in certain neighborhoods continue to have an extreme shortage of well-priced inventory.
Buyers are restlessly circling those markets, but they are very price sensitive.
Another market anomaly is the fact that interest rates on jumbo loans are lower than those of conforming loans.
So while the market has made strides towards returning to historic norms, the exceptions in the market continue to command the focus of even the most seasoned industry professionals.
