What to expect in the Atlanta real estate market for 2017 depends on who you speak with. There are always differences of opinions between those working in the field daily and those sitting in “think tanks” studying charts and trends. With almost three decades of appraising and selling, I’m firmly ensconced in the former, but I’m also a data hound. Nothing beats “boots in the dirt” experience seasoned with the appropriate specific data. Once thing seems certain, 2017 is going to be fluid and dynamic with several moving parts.
A look at number of sales over the six years confirms what many thought – 2016 had the highest number of sales overall and for each month. Right behind was 2015, and the two were clearly out in front of 2014 and earlier at every point. The last two years have been very active.
Depending on when you jumped in, some love the chart below and others hate it; it’s a great illustration of the housing roller coaster in the greater Atlanta market. The crater is obvious and the climb out is impressive. That said, let’s not forget that the Atlanta real estate market continues to be steak for institutional investors; they played a huge role in the recovery.
Months of inventory is a very strong indicator of a markets’ condition. This is the time it would take for all current inventory to sell at the current rate without new inventory added. The chart below is very broad and covers the entire “Atlanta” real estate market but it’s easy to see when the region was stagnant and when it was very active. The MOI levels over the last two years look similar to those noted as the pre-crash market began to approach the cliff.
So is caution in order? “When everyone with a pulse is becoming a real estate agent because it seems like easy money, it’s a fairly accurate sign that a correction won’t be too far off,” said Ary Freilick, managing partner of Blumberg & Freilich Equities.
The rise in agent numbers can be a reliable indicator. Because there is no bar to entry in this industry, real estate is a hobby to many agents. Only about 30% actually earn a living and are professional agents, buyers and sellers must be certain to qualify every agent they speak with. In 1996, there were fewer than 20,000 Realtors in Georgia. By the market’s peak in 2006, the state had just over 40,000. From just 2000 to 2006, the Georgia Association of Realtors’ membership increased 86%, compared to the 16% increase from 1990 to 1999. When the market crashed, suddenly being a real estate agent meant more work and less pay, and GAR started to shed members. By 2012, membership was down to 23,426. But now, membership is up 27% the last five years. When the hack real estate agents return in force, caution seems in order. Work only with professionals!
Caution is in order – but no one really expects another crater. A slow down, a slack market, an adjustment consistent with a “normal” market…probably. The difference this time is the modest control over mortgage approval; unlike the boom/bust, more than a pulse is now required to secure a mortgage. And to be candid, some mortgages didn’t concern themselves with a pulse; fraud was rampant during the boom.
We preach a simple and consistent message for buyers; buy with your head and not over it. We preach a simple and consistent message for sellers; exploit every advantage but don’t overplay your hand. Both buyer and seller must have a definition of success because once the process begins, it can move very fast. Everything is local; national and regional data is interesting but Midtown isn’t Milton isn’t Decatur isn’t Marietta. Getting to the micro market data level is essential for sound decisions, analyzing data as an appraiser will provides our clients a major advantage.