Every month, I eagerly await the real estate economic outlook by Lawrence Yun, Chief Economist for the National Association of Realtors. He has a real talent for breaking things down into concise and meaningful statistics and predictions. His monthly article in Realtor Magazine focuses on national statistics; however, these sometimes differ from real estate statistics in Georgia, Atlanta and specifically, among our individual neighborhoods. Being able to compare and contrast big picture trends with what’s happening in our communities gives Realtors a better understanding of their target market. This month’s article was particularly interesting, as well as relevant to an issue directly affecting our city.
In many parts of Atlanta, buyers have been faced with low levels of inventory throughout the first half of 2012, which is a challenge, according to Yun, people are struggling with across the nation. “The inventory of homes for sale peaked at 4.5 million units in 2007, fueling the big drop in home prices that we’ve seen. Today, we have the opposite problem: Only 2.49 million homes are for sale, even though demand has risen some 10 percent from a year earlier,” says Yun.
Yun’s positive predictions for the coming months hinge on the ability of the White House and Congress to work together to reasonably resolve budget issues, and builders' access to financing. Yun says: “While seriously delinquent mortgages remain high, at 7 percent, their share of the market is down from a peak of 10 percent in 2009. That suggests inventory will further decline—unless home builders start building again. But most builders can’t do that because lenders are making few construction loans. Housing starts have been running at a 700,000 annualized pace since the beginning of the year, less than half the average rate over the last 50 years…Political polarization in Washington could [contribute to another housing slide] if the White House and Congress fail to resolve budget issues looming this year.”
As Yun points out, if builders aren’t granted access to financing that would lead to increased housing starts, home prices will likely spike. That may be good news for many homeowners in the short term. However, as we've seen in the past, inflated market appreciation isn't a "healthy" market and is detrimental to overall economic recovery.
We can’t predict the market with certainty, but the coming months will be interesting for sure. My hypothesis: the roller coaster ride isn’t quite over yet, and it will be intriguing to see how Yun’s thoughts and predictions reflect or contradict the real estate market in Atlanta.
I tell clients, "It's never a buyer's market and a seller's market at the same time". Currently, however, in our little corner of the market, it seems to be a great time for sellers to sell—as long as they can afford to price their home right for a market suffering from low inventory levels. And, it's a great time for buyers to buy because prices remain low and interest rates are extremely favorable. While I don't think this market "opportunity" will last for long, it’s definitely a nice change of pace for now.