Welcome to our Monthly Market Trends series. Each month, we will provide you with updates on the relevant real estate and housing market news. We will offer you our interpretation of current trends and provide you with balanced commentary so you can make the best investment decisions today, for the highest returns tomorrow.
Southern States See Robust Home Appreciation in 2022, Forecasted to Remain Stable in 2023
Location is a crucial factor that determines the value of real estate. As an investor, it’s not only about the specific property in the right up and coming neighborhood, it’s about being in the right state, and the right metro areas.
Groundfloor has it covered on these fronts.
Location can significantly influence the demand for a property, as well as the price that buyers are willing to pay for it. Location is often one of the most important considerations for those looking to buy or invest in property.
Here are a few reasons why location can be so important in real estate:
- Access to amenities: Properties that are located near schools, shopping centers, public transportation, and other amenities tend to be more desirable and therefore more valuable.
- Crime rate: Safety is a major concern for many buyers, and properties located in areas with low crime rates are often more sought after.
- Land use patterns: The way land is used in an area can also affect real estate values. For example, properties located in areas with a mix of residential and commercial development may be more valuable than those located in purely residential or commercial areas.
- Natural disasters: The risk of natural disasters, such as floods or earthquakes, can also affect real estate values. Properties located in areas prone to these types of events may be less appealing to certain buyers.
- Economic conditions: The overall economic conditions of an area can also have an impact on real estate values. Properties located in areas with strong economies and job markets tend to be more valuable.
The chart below compares the year-over-year appreciation in various regions of the United States. The South Atlantic region, which includes Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, and the District of Columbia, as defined by the Federal Housing Finance Agency (FHFA), showed strong appreciation at over 15% through Q3 2022. The FHFA uses this classification for statistical and analytical purposes, such as analyzing and reporting on housing market conditions and trends in the region.
In fact, the South Atlantic Region had the highest appreciation for the year 2022.
Groundfloor’s portfolio is purposefully built within the resilient South Atlantic Region and especially in Georgia & Florida. These two states have the highest level of loan origination activity for the company. The following is a breakdown of the company's active loans by location:
Atlanta and Jacksonville are two Metropolitan Statistical Areas (MSAs) in Georgia and Florida where Groundfloor has a strong presence in terms of loan origination activity. By examining these two active lending areas, we can get a sense of how these markets are performing.
In the Atlanta MSA, sellers have been in control of the market, although this has been steadily decreasing since May 2022. It is expected that the market will shift towards becoming a buyer's market sometime in 2023.
The median days on market have been increasing, but the number of listings with price decreases has decreased in the past few months. This may be due to sellers removing their listings. However, this market has relatively fewer price decreases compared to the national average. Inventory levels, which had been rising throughout Q3 2022, stabilized and decreased significantly in Q4. Supply is still largely limited.
The median list price by price segment has generally remained constant over the past year, with the exception of the highest price quartile, which has shown a gradual decline dating back to 2021. Three of the quartiles have remained stable.
The market activity in Jacksonville, Florida exhibits similar characteristics. Sellers have had control of the market, but this has been gradually decreasing since May 2022 and is expected to shift towards becoming a buyer's market in 2023.
The median days on market has been steadily increasing over the last quarter and is expected to continue to rise in Q1 as new listings enter the market. The number of listings with price decreases is higher than the national average of 39%, although it has decreased since November 2022. Inventory has decreased over the past quarter, and supply remains constrained, but the market is increasingly finding balance.
The median list price among the three market segments has remained stable, with the exception of the top quartile, which has seen fluctuations in price. Groundfloor focuses heavily on lending in the bottom two quartiles, and we expect list prices in these segments to continue on a stable trajectory.
According to the latest national forecast from Zillow, both Atlanta and Jacksonville have more favorable outlooks for 2023 compared to most markets in the US. Out of the 669 US markets forecasted to have price corrections, Jacksonville and Atlanta are expected to remain slightly positive with anticipated appreciation of 1% and 2%, respectively.
We look forward to an interesting year ahead and will continue to provide you with the best available market data and forward looking insights.
Groundfloor is uniquely positioned to capitalize on the current state of the economy. Real estate alone is a great investment vertical during recessionary downturns, and with Groundfloor’s portfolio balance toward markets that outperform national averages, now is the time to get into the market and make investments today that will pay high returns in the coming months.
Happy New Year and Happy Investing!