Mid-Year Market Recap

2021 is shaping up to be a record-breaking year for the Atlanta real estate industry. The city has recovered quickly with unemployment dropping below pre-COVID levels, business growing, travel returning, and the future of metro-Atlanta looking brighter than ever. However, this incredible growth has not come without its challenges. Demand for homes of all types across the metro area has surged to levels that far exceed supply. This, among other factors, has driven up home prices by 20% within the past year alone. Residential building permit applications are at historic lows, far from meeting demand, and prices for land, materials, and labor continue to increase. Despite these challenges, Atlanta, compared to other major metro areas, remains relatively affordable, cementing its status as a highly sought-after place to live.  

So, where are we now and what does the future hold? Looking back on 2020, the period was dominated by the COVID-19 pandemic. The beginning of the year saw the traditional “early Spring” market arriving right as the pandemic began. Shortly after quarantine started, demand for single family and townhomes increased substantially. Because of their communal spaces and lifestyles that depend on nearby amenities (parks, restaurants, shops, etc.), condo sales receded, and inventory levels increased nearly 40%. This trend continued until 4Q2020, when demand rose, and inventory levels diminished 20%. As the pandemic receded, so too did its effect on the condo market, resulting in a return to pre-pandemic supply and demand levels by the end of the year. Demand for single family and townhome product continued to increase exponentially. Rapid absorption of new home inventory drove supply levels to historic lows. Broken supply chains, delayed production of materials, and sky-rocketing costs to construct slowed production and completion of new homes, exacerbating the low supply levels.   

Then in Q12021 vaccinations began, causing COVID cases to drop. The economy began to see an accelerated recovery, boosted by pandemic savings and government stimulus. Pent up demand coupled with additional savings lead to aggressive spending for homes, home improvement, automobiles, and travel. The metro Atlanta real estate market started the year with 1.6 months of inventory, substantially lower than previous years. By mid-year, months of inventory plummeted to an all-time low of 0.8 months, an average days on market of 17, and an average sale price of $478,000. This, coupled with increased building costs, resulted in an 18% average sale price increase from January 2021 to June 2021. These drastic numbers have fueled a belief that there is a bubble in the metro Atlanta housing market. For buyers and sellers, the answer is a reassuring- no. 

Home prices, like most of the economy, are driven by supply and demand. Supply, as previously mentioned, has never been lower, and demand has never been higher. The influx of new residents (over 100,000 in the past year alone), paired with high impact companies relocating or adding offices in Atlanta continues to feed the rising demand for homes in the metro area. Large companies such as Microsoft, Facebook, and Google are relocating or adding tens of thousands of new jobs to the city center. Tech companies and the burgeoning movie industry continue to add jobs, creating demand for other small businesses and housing. In short, there are simply no factors that indicate that the Atlanta market is at risk for a bubble. 

For more in-depth information on this time of growth and change as it relates to the market visit https://evatlanta.com/market-research/.