Wren Atlanta Market Report | 1st Quarter, 2020 & Beyond | Volume 1
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The year 2020 and the global pandemic we’ve all been facing together has brought challenges and uncertainty. As our communities quarantined in place, this slowed the residential real estate market significantly. Though different from business-as-usual, residential market activity is now picking back up.
Our Observations: The Last 30 Days
The Wren Atlanta team at Harry Norman has already seen signs of the housing market gaining strength. We currently have a number of homes under contract and have seen a significant increase in buyers contacting us. Life events continue to happen and this drives demand.
Key Takeaways:
Supply of Homes
The number of single-family homes available for sale in the city of Atlanta is low, at 4 months of inventory in March 2020, for all price points combined. Inventory of homes at low- to mid-price points is lower than the inventory at higher price points. The supply of single-family homes in the city of Atlanta priced from $500,000 - $1 million is only 4 months as of April 2020. Typically, 6 months of inventory is considered a stable market and anything under 6 months is considered a seller’s market.
Housing Inventory in City of Atlanta (2012 - Today)
For single-family homes in Fulton County in May 2020, inventory of active listings was 3,164, down 21.9% compared to May 2019. In Dekalb County in May 2020, inventory of single-family active listings was 1,583, down 19.9% compared to May 2019.
For single-family homes in Buckhead, there were 451 active listings in April 2020, down 14% from April 2019 and down 10% from the 5-year average.
Limited Supply of Land
Real estate values are supported by the fact that there will always be a limited supply of land. In the first quarter of 2020, only the “north central” and northwestern areas of Buckhead experienced any sales categorized in FMLS as “Land” or “Developed Lots”, with a total of 6 sales in these areas combined. These areas of Buckhead were those furthest from the city’s center.
Other residential properties not listed in FMLS as “Land” or “Developed Lots” may have been purchased for homes to be demolished for new construction. Regardless, the total number of homes in a specific neighborhood or other micro geographic area will be mostly limited by previously established zoning designations for density. Examples of zoning factors include setback requirements for determining the buildable area within any given parcel, minimum street frontage per residence, maximum floor area ratios based on total building square footage to lot square footage, limits on total number of units allowed in a multi-unit building such as a condo or townhome, etc.
Demand for Homes
In the first quarter of 2020, the total number of residential real estate transactions in Atlanta recorded in the First Multiple Listing Service (FMLS) was over 3,000, up 14% from a year ago (Q1, 2019) while the total $ amount of residential real estate transactions in Atlanta passed $1.2 billion (up 23% from Q1, 2019). Residential real estate activity then slowed significantly beginning in late March as concerns about coronavirus led community members to practice voluntary social distancing measures and as government shelter-in-place orders took effect.
Source: first multiple listing service
Source: First multiple listing service
The slowdown occurred towards the end of the 1st quarter of 2020. As a result, it is not fully reflected in that quarter’s real estate transactions above. It will likely show up more in 2nd quarter 2020 results.
While the full impact that the coronavirus will have on the housing market is not yet known, when the economy does recover, several factors will likely support the housing market. A few of these factors are described here in this article, and a few more will appear next week as we continue to write in Volume 2. Volume 2 will focus on the Atlanta real estate market from a buyer’s perspective.
As of May 2020, we are already seeing signs of a rebound in home buyer demand. Consider a May 6th, 2020 interview with Lawrence Yun, Chief Economist for the National Association of Realtors. On this production by The Brian Buffini Show, together with the National Association of Realtors, titled “The Podcast That Every Homeowner Needs to Hear,” Yun elaborates:
What I am seeing in recent weeks, the past couple of weeks, is that buyers are slowly coming back to the market. They are kind of disappointed on the lack of inventory, but 70% of the workforce with secure employment, they are looking at historically low mortgage rates and they are just looking for the right home that meets their needs.
- Lawrence Yun, NAR Chief Economist (May 6th, 2020)
CONCLUSION
With a low supply of homes available for sale today, there is currently much less competition for sellers than in Atlanta’s previous spring markets. This coincides with many buyers having increased purchasing power, due to today’s historically low interest rates. This led to strong demand starting in Quarter 1, 2020, which then dropped off in late March and April, before rebounding in May, 2020.
The Wren team has seen a significant increase in buyers contacting us, many with inquiries about our listings and others looking for us to be their agents on the buyer side. We have several homes under contract as a result. Whether you are buying or selling a starter home or a luxury estate, we are prepared to help you make informed decisions while providing first-class service at every step of the process.
For all of our sellers, we provide a comprehensive marketing program. With cutting-edge technologies, the Wren team can help buyer’s view your property from the comfort of their own home. To see a few examples of how we’ve done this, check out the 3D Virtual Model and floor plans we created for one of our clients recently. We have also featured video tours and aerial drone photography, as well as virtual caravans and open houses. We are ready to put our creativity and expertise to work for you.
COMING UP NEXT WEEK
Wren Atlanta Market Report - Q1, 2020 & Beyond (Volume 2): Understanding Atlanta’s housing market, interest rates, equity growth, and other factors for Buyers to consider
Note: This report was created by Matt Wren and is meant to be informative. The postings on this site are my own and don’t necessarily represent Harry Norman, REALTORS®’ positions, strategies, or opinions. Data in charts is from First Multiple Listing Service only, and is believed to be accurate but is not warranted.
Data excludes off-market transactions or any transactions not listed in FMLS.
