In this Monthly Market Trends series, we'll continue to 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.
Atlanta has been in the news recently, so we thought it would be a good idea to double down and share our thoughts on this major market - since it's both our home market and a key part of our business.
The Atlanta real estate market has experienced significant population growth in recent years, leading to increased demand for homes. The Atlanta area offers a variety of housing options, from historic homes in the city to new developments in the suburbs, which appeals to a range of homebuyers.
The question on my mind today and subject of this market trends update is to look at the Atlanta market data in detail to gain understanding on how the seasonal Spring market may be setting up and ultimately unfold.
Spring is often regarded as the peak season of activity in the housing market. Thanks to the milder climate and longer daylight hours, it's an ideal environment for buying or selling homes. Many people take advantage of the spring season to make a move, resulting in an increase in the number of homes for sale and a higher level of competition among buyers. During this time, it's not uncommon for homes to receive multiple offers and for bidding wars to occur. The spring real estate market can be a great opportunity for sellers to capitalize on the increased demand, which is fantastic for our borrowers nearing the end of their projects and are ready to sell or who have had to hold on thru the past couple of months to optimize sales proceeds.
Let’s look at the data!
Purchase Mortgage applications show solid signs of housing demand building. In the past few weeks, purchase applications have been trended higher, a positive sign that the Spring market is gaining traction. This bodes well for future closed home sales in the next 60 to 90 days - the height of the Spring season.
This mortgage application demand data, though originating from a nationwide source, can be taken as representative for metro areas such as Atlanta and other regions where Groundfloor lends.
Let's explore the housing supply and demand of Atlanta's core counties.
First, we are going to utilize the Market Action Index provided by Altos Research.
This Market Action Index answers “How’s the Market?” by comparing the rate of sales versus inventory. Based on a score of 1 to 100, we note that 30 and below represent a “Buyer’s Market” and above 30 represents a “Sellers Market.”
Core Counties Atlanta, Market Action Index
Scores range from 47 in Cobb County to 43 in Fulton County. Sellers have an advantage if a score is above 30, as indicated by the sparkline representing the 90-day trajectory.
Each county initially showed movement towards a buyers market, then reversed over the last 30 days with the trajectory favoring more movement on the sellers side. It's too early to be sure what this means, but it's clear that sellers certainly have options while buyers have access to a better market than previously. There is no indication of a crashing market related to prices.
How are sellers behaving? To answer this, a good indicator to reference is what percentage of listings have had price decreases. A high percentage of decreases would indicate that sellers are capitulating and prices are under pressure, while fewer decreases or a declining number suggest that they have competitive offers to consider.
Let’s take a closer look at Atlanta's core counties in relation to percentage price decreases:
Core Counties Atlanta, Market Action Index
Each core county has seen fewer price decreases in the past 45 days than before. The national average for price decreases is 34%, while the counties mentioned have higher percentages of decreases, the recent trend shows that the numbers are declining. This is a sign that prices are not cratering.
Inventory spiking in this time of year would clearly indicate problems within the market as the seasonal trend for this time of year tends to show inventory decreasing ahead of an increase of inventory in Spring. We see that the typical seasonal trend is in line, regarding inventory; however, the inventory is near historic lows. The core Atlanta counties all show a recent decrease in inventory, as we would usually expect for this time of year.
Core Counties Atlanta, Market Action Index
A positive sign for buyers can be found by reviewing the median list price data. Each core Atlanta county is showing a lower Median list price. Since affordability is a key concern, a lower median price with recent reductions in mortgage rates could be a very positive sign for buyers.
Core Counties Atlanta, Market Action Index
Currently, Groundfloor has 35% of its loan volume in the five core counties of Atlanta. Given the market data we have reviewed here, we anticipate a more active Spring market than perhaps was envisioned a quarter or two ago. The Atlanta market health is important to our investors getting repaid, and our borrowers finding good quality transactions for us to lend. So far the information is promising and we will continue to monitor changes and new developments closely.
Next month in this blog, we'll be exploring the issue of housing affordability in our key markets and across the country.
Feel free to leave a comment and let us know what topics you'd like to hear more about.