If you've been keeping an eye on the Atlanta real estate market, you may have noticed some changes. After a two-year pandemic boom that led to a frenzied housing market, rising interest rates are finally bringing things back down to earth. The market is slowing, and buyers and sellers are adjusting to a new climate. In this article, we'll explore what this means for those who are looking to buy or sell their homes.
Competition is Down: Buyers Can Breathe Easy
During the height of the housing boom, the market was characterized by intense competition. Buyers were rushing to make offers, often over the asking price, to secure a property. Bidding wars were the norm, and houses would go under contract within days. However, the current slowdown has given buyers a much-needed breather. With houses staying on the market for longer, buyers now have more time to carefully consider their options and make thoughtful decisions.
According to Kam Williams of Kam Williams Realty Group, "Now buyers are a bit relieved. If they see something, they don’t have to run out in the next two seconds. They can go to open houses on the weekend; they’re not feeling as much pressure."
Real estate agents now advise buyers to keep contingencies that depend on inspections and appraisals intact. Additionally, offering shorter due diligence periods, substantial earnest money, and temporary occupancy for the owner can help sweeten the deal in this new climate.
Rising Interest Rates and Affordability
One significant factor affecting the current market is the rise in interest rates. Higher rates mean higher monthly payments, which can limit a buyer's budget. Affordability becomes a challenge, particularly for those looking for homes under $500,000 and first-time homebuyers. Additionally, rents have also gone up.
Chad Polazzo with Re/Max Metro Atlanta Cityside notes, "The interest rate environment is scaring some people, who are worried rates will continue to go up. But that means it’s working—they’re having their intended effect. It will slow things down, which is the intent."
While the hiked rates aim to create a more stable market, it may push some buyers towards smaller homes or different neighborhoods. Atlanta's housing landscape may undergo further changes.
Inventory is Increasing, but New Construction Lags
One positive outcome of the slowing market is the increase in inventory. Redfin reports that the number of houses on the market for more than 30 days, known as "stale" listings, has gone up by 12.8 percent year-over-year. This gives buyers more options and an advantage in what was previously a strong seller's market.
However, new construction is still facing challenges due to supply chain issues. Builders are struggling, which hampers inventory growth. Despite this, the longer time houses spend on the market provides buyers with more choices. Price reductions are even becoming more common, indicating motivation from sellers.
High Prices Remain the Norm, Particularly in Hot Neighborhoods
Although the market is slowing, high prices are still prevalent. Atlanta hasn't seen significant decreases in listing prices yet, and stability is expected. Some experts predict that prices may drop as inventory continues to increase, leading to a slowdown in price growth.
Homes in popular neighborhoods such as Inman Park, Candler Park, Ansley Park, and Morningside remain in demand, especially properties under $1 million. These areas also attract out-of-state buyers who find Atlanta's prices more affordable than those in cities like New York and California. However, in other neighborhoods and at higher price points, the market may move at a slower pace.
Adjusting Expectations for Sellers
While some areas remain favorable for sellers, the market is shifting towards a buyer's market in other locations. Sellers may need to put in more effort to prepare their homes for listing and adjust their expectations.
Anna Kilinski, CEO of Anna K Intown/Keller Williams Intown, advises sellers not to skimp on preparing their homes and to price competitively. It's crucial to make a strong first impression, including fresh paint, professional staging, and great photography for the listing. By setting realistic expectations and being patient, sellers can maximize their chances of success.
Sellers no longer face the appraisal gap that was common during the height of the market. Buyers don't need to worry as much about homes appraising for what they're offering. Sellers are also more willing to make concessions to make the terms more appealing.
The Importance of Timing and Local Financing
Real estate professionals emphasize the importance of timing when it comes to home buying or selling. Trying to time the market based on interest rates is not recommended. Instead, focus on finding the right house for your needs and family. Interest rates fluctuate, but finding a home that suits your lifestyle should take precedence.
Local financing and appraisals are crucial factors to consider. It's essential to work with a reputable lender who can offer creative financing options. Exploring adjustable rate mortgages, buying down your rate, or putting less money down can help buyers navigate the current market.
Danielle Hale, chief economist at Realtor.com, advises, "A lot of buyers are kicking themselves for not putting themselves in a position to purchase when rates were low. I think interest rates may go up again, and the whole waiting thing may end up pricing you out."
Refinancing is also an option in the future if rates go down.
Conclusion
The Atlanta real estate market is experiencing a slowdown, bringing a sense of normalcy after a period of frenzied activity. Buyers now have more time to make informed decisions, and inventory is increasing. However, high prices remain the norm, particularly in sought-after neighborhoods. Sellers must adjust their expectations and prepare their homes for the market.
The key for both buyers and sellers is to focus on their specific needs and work with experienced professionals who can guide them through the changing market conditions. By staying informed and making thoughtful decisions, buyers and sellers can navigate the Atlanta real estate market successfully.