Happy New Year Everyone!!
We begin the first market update of 2023 market update by harkening back to 1967 when Dr. Doolittle introduced a rare animal that is the perfect metaphor for our current real estate market.
The Pushme Pullyu represents tension. One end pulls one way while the other pulls against it.
In the current market we have tension between the experts telling us what to expect in the coming years, tension within the Fed telling us which data they should focus on and how much weight to attach to what data, tension between the CPI and JOLTS report, tension between national trends and local trends.
Let’s start with experts! They disagree! Here is a chart of 8 real estate experts who have 8 different predictions for 2023.
Realtor.com predicts a 5.4% INCREASE in home prices while Ivy Zelman predicts a 5.1% DECREASE. And you can see everything in between.
Next is the economy and interest rates. All eyes are on the Fed, but there is even tension WITHIN the Fed! In Jonelle Marte’s January 12th article on TheEdgeMarkets.com, Philadelphia Fed President, Pat Harker, expresses his strong opinion that there will be no more 75-point hikes! He says, “I expect that we will raise rates a few more times this year, though, to MY mind, the days of us raising them 75 basis points at a time have surely passed. In my view, hikes of 25 basis points will be appropriate going forward.” … Tension!
Then there’s the tension regarding to which data should we pay most attention to predict what our economic future is? The Consumer Price Index or Job Openings and Labor Turnover report? If you want to know more about these debates, we refer you to Meet Kevin’s video of January 14th entitled, “Michael Burry’s New Warning, etc.”
But our point for the moment is…. More tension!!
Finally there is the tension between national and local trends. Nationally? Layoffs layoffs and more layoffs!! The tech industry has laid off more than 88,000 employees! Locally? Not so much!
In a December 5, 2022 article in Bisnow Atlanta entitled, Wave Of Tech Layoffs Hasn’t Hit Atlanta, But Office Demand A Different Story, Jarred Schenke writes, “But in Atlanta, where tech companies have been growing rapidly in recent years, the local industry workforce has been relatively unscathed.” He pushes on to acknowledge the announced national layoffs at Meta, Amazon, Microsoft, and other tech giants, but then abruptly pulls back and says that Georgia Labor Commissioner, Mark Butler, “has yet to receive word if cuts will be made locally. Tech insiders say Atlanta is positioned as a city where companies want to INCREASE staffing, rather than reduce it.” [emphasis mine] The same story goes on to quote Larry Williams, CEO of the Technology Association of Georgia: “There are a lot of efficiencies that I don’t want to say make Atlanta immune to the economy, but Atlanta is viewed as an asset to the tech industry in terms of recruiting talent in the marketplace.”
Let us push a bit further. The National Association of Realtors, in their recent article entitled, “10 Housing Markets Expected to Lead the Nation in 2023,” named Atlanta as the number one market! Author, Melissa Dittmann Tracey, says, “The city, dubbed the “New York of the South,” rose to the top of NAR’s list of markets to watch in 2023 for three main reasons: Atlanta has greater housing affordability than comparable cities, its population is growing more rapidly and 20% of renters there can afford to buy a median-priced home—higher than the national average.” She goes on to say that Atlanta also boasts a robust and growing job market, where many major technology companies, such as Apple, Microsoft and Visa, are relocating from the West Coast.
In this same article, National Association of Realtors’ Chief Economist, Lawrence Yun, says, “The demand for housing continues to outpace supply. The economic conditions in place in the top 10 U.S. markets—all of which are located in the South—provide the support for home prices to climb by at least 5% in 2023.”
Is there tension, even contradiction in the marketplace narrative? Absolutely! But as we push away the data that does not apply to the Atlanta market and pull toward the more important local market data, a clearer picture emerges. A picture without stress and fear of the unknown. A picture without tension.
There are market consequences when local governments create a higher-cost and high-tax market, but that is not Atlanta! Jarred Schenke, in his Bisnow Atlanta article says it this way: “Metro Atlanta has been a beneficiary of the corporate migration that saw companies from higher-cost and high-tax markets on the West Coast and Northeast gravitate toward the Sun Belt.”
That’s us! That’s our market all those people and companies are moving to!! So keep that in mind as you listen to the national news. Remind yourself that they are talking about San Francisco, LA, Chicago, and New York. Those are the places people are moving away from to live in sunny, business-friendly places like Atlanta. Like Melissa Dittman Tracy says, “All eyes are on the South, where home affordability, job and population growth and inventory levels are strongest heading into the new year.”
Enough pushing and pulling! Now that we know the secret to the market is knowing our local market data, let’s dive into our thriving Top 7 North Atlanta Suburbs starting with, you guessed it, Milton
Milton’s average price increased 27% year-over-year from $1.1 million to $1.4 million in December 2022. Days on Market were 62 which was 12 more than last year. There were 12 more active listings at the beginning of January 2023 than last year. Increased supply and longer days on market is good news for buyers. But there is also good news for sellers in Milton. Considering the average price in Milton is well over $1 million dollars, inventory continues to move quickly when it is staged and marketed well and the starting price is not too high.
The average price at Lake Lanier was up by 6% year-over-year to $953,000 for the 13 homes that were sold in 66 average days on market. THIRTEEN! December is, of course, a very slow market at the lake, but 13 homes sold is very low! By comparison, December 2021 saw 27 homes sold. January began with 69 active listings compared with only 38 last year. Buyers paid only 88% of list price, which is the largest gap in all of the Top 7 North Atlanta markets. Since the gap between supply, that is 69, and demand, that is 13, is so great, we can expect prices to remain flat and average days on market to increase at Lake Lanier in the next few months.
The average price of $669,000 in Roswell was up by 12% year-over-year. The 66 homes sold for 96% of list price compared with 99% in 2021 and they sold in 38 average days compared with 24 days in 2021. Active listings at the beginning of January were 105 as opposed to a piddly 47 in 2022. Buyers are grateful for the doubled supply year-over-year and can likely look forward to more inventory coming in the spring months.
For the 57 houses that sold in Suwanee in December, the year-over-year average price decreased 7% to $560,000. Average Days on Market increased by 26 to 45. Houses sold for an average of 94% of list price compared to a whopping 104% last year. January began with 110 active listings, 77 greater than last year. That is a huge jump in supply!
In Johns Creek, the average year-over-year price was down by 5% to $823,000 in December. The 27 homes sold for 96% of list price compared with 101% last December. Days on Market were up by 20 year-over-year to 40, still not very long. January began with 44 active listings compared with only 16 active listings last year. Johns Creek remains a micro-market where there is still stiff competition. The most important thing for sellers is to withstand the temptation to overprice. If sellers price at or slightly under market value, they may still find themselves benefiting from a bidding war.
Alpharetta’s average price remained almost the same as last December: $730,000. The 75 homes that were sold stayed on the market an average of 53 days which is 32 more days than last year. Buyers paid 94% of list price compared to 102% last year. Supply, that is, active listings, increased from 65 last January to 152 this year. If you are a buyer wanting to move to Alpharetta, now is the time! This may be the lowest average price you will see for the year.
Lastly, the average price in Cumming increased by 7% from last year landing at $574,000. The number of homes sold was down year-over-year by 162 to 116. Average Days on Market increased from last year by 19 to 40. Buyers paid 95% of list price compared with 101% in 2021. January began with 311 active listings, 200 more than last year. There is a lot of new construction in Cumming so supply will continue to increase. Many first-time homebuyers choose Cumming because of the lower price point. However, it is first-time homebuyers who are most affected by interest rates. It will be interesting to see how supply and demand play out in the coming months in Cumming.
As we close out this January 2023 market update, are you personally feeling a different kind of Pushme Pullyu tension? Are you wondering if now is a good time to sell? What is my house worth today? We can help! Claire and I would LOVE to come take a look at your home to give you an idea of how much you could expect to make and what you need to do to maximize your net! Even if you are just thinking about it and are not sure of your next step, give us a call. We love to provide our clients with essential data so they can make informed decisions.
If you are ready to buy in 2023, give us a call so we can sit down and discuss your particular situation. We can save you time, money, and headaches. Plus, we have a lender that offers free refinancing in the first 3 years of your mortgage which is a great opportunity in today’s market.
You can find us on Facebook and Instagram at The Best of North Atlanta or visit our website at mccowngroup.com. Of course, you can go old school and call (or text) us at 678-807-9566. We look forward to speaking with you soon.