May 2023 brings good news in the real estate market!! The Federal Housing Finance Agency reversed its edict imposing punitive fees upon mortgage borrowers with good credit scores!! On May 10th, the National Association of Realtors (NAR) announced:
“This afternoon, following significant urging from the National Association of REALTORSÆ, the Federal Housing Finance Agency (FHFA) rescinded its proposed loan level pricing adjustment (LLPA) upfront fee on borrowers with debt-to-income ratios greater than 40 percent that was slated to go into effect August 1st.”
This is great news! You will recall last month that we were very concerned about the effect that the LLPA would have upon the real estate market. We opined the effects of governmental social engineering upon a mathematically-based economy. We agree with NAR when they conclude:
“We applaud the FHFA for listening to the industry’s concerns by choosing to drop this fee on borrowers with higher debt-to-income ratios. It would have imposed a cost on borrowers at a time in the market when affordability is already stretched and only made them riskier.”
Whew!! That was close but we escaped unscathed! It’s a national victory for our economy!
But what about Atlanta? What is happening in the metro Atlanta area? Inventory continues to be low – much lower than demand! We have been keeping a close eye on supply and demand in Atlanta since 2021 and, even with higher interest rates, supply cannot keep up with demand. Check out our chart showing the difference of the number of homes entering the market versus those leaving the market.
As you look down the column entitled “difference,” note there is never a positive number. Also note that the negative numbers continue to grow. April 2022 starts with a deficit of 3527. By May 1, 2023, that deficit has grown to 9480!! Even after there was a sudden uptick in houses entering the market in November 2022, those homes were voraciously gobbled up by hungry buyers who had been frustrated by the lack of available inventory. That trend has continued, even with rising interest rates!
As a quick comparison, we inserted an April 2022 stat (in orange) right into April 2023 numbers to highlight the stark contrast. In April 2022, there were 2500 properties entering the market and about 6100 leaving the market for a difference of just over 3600. The difference jumps from 3605 in 2022 to 6444 in 2023. Lack of inventory is squeezing buyers out to the sidelines.
If you are a buyer or a seller in the Atlanta area, you need to understand the local market. These numbers explain why it feels so confusing when you listen to the national news, but then see, hear, and feel the reality of our local market.
Do rising interest rates affect real estate? Absolutely! But there are many life events that compel a move regardless of rates. It appears that there are many such buyers in Atlanta still waiting to find their home sweet home and more than willing and able to afford higher interest rates!!
As long as the government continues to stay out of the way, the Atlanta real estate market will continue to thrive for a long time to come. But even nationally, it turns out that the naysayers were way off. Check out Fannie Mae’s adjusted forecast from March to April. In March 2023, they were all bearish, forecasting an annual decrease of 4.2% in home values. But one month later, they adjusted that forecast to a miniscule decrease of 1.2%.
For people who make a living analyzing data to provide some idea of what to expect, I’d say they failed! We only say it this dramatically because it is good to keep in mind the failure rate of the experts when they try to scare us to death with forecasts that the sky will be falling.
Here is a shocking fact – in a good way — to keep in mind when you hear sky falling reports. 67.6% of Americans have either paid off their mortgages or have at least 50% equity in their homes. These are not homeowners who will fall right into foreclosure should an unexpected financial crisis occur. They are sitting on large cushions of equity which give them options. This was not the situation in 2008 when homeowners often owed more on their mortgages than their homes were worth. Remember that!! 67.6% of American homeowners are sitting pretty!!
And with that encouragement, let’s dive into our Top 7 North Atlanta Suburbs starting with Milton.
The average sales price in Milton was $1.2 million, a 14% year-over-year decrease. There were five fewer homes sold in April 2023 for a total of 24. Those homes sold for an average of 99% of list price as opposed to 103% last year. Days on Market increased from 16 to 58. May began with 13 fewer active listings for a total of 67. This means that there are about three months of inventory in Milton. Remember 6 months is a balanced market where buyer and seller have equal negotiating power.
The average price at Lake Lanier was 24% greater than last year at $1.2 million for the 30 homes that were sold in 39 average days on market, nearly the same as last year. Always keep in mind that these stats only cover lake homes with docks. May began with 87 active listings, 12 fewer year-over-year, and buyers paid 95% of list price as opposed to 100% last year. This tells a story that even though prices are rising, sellers are overpricing the market by an average of 5%.
The average price of $695,000 in Roswell was up by 5% year-over-year for the 86 homes sold for 100% of list price compared with 107% in 2022. Days on market were about the same at 18 and active listings at the beginning of May were 92, down by 9. Roswell continues to be a highly sought-after place to live which explains the 100% sales price to list price ratio as well as the 18 average days on market.
In Suwanee, 49 houses sold in April (as opposed to 118 last year) and the year-over-year average price decreased 6% to $696,000. Average Days on Market went up from 37 to 47. Houses sold for an average of 99% of list price compared to 107% last year. May began with 62 fewer listings for a total of 72. The Suwanee market had significantly less supply and demand in 2023 which resulted in a decrease in average price. Will that trend continue in June is the question.
In Johns Creek, the average year-over-year price was down by 9% to $869,000 for the 26 homes sold, exactly half as many as last year. Those homes sold for an average of 100% of list price compared with a whopping 108% last April. Days on Market were up from 15 to 33. May began with 33 active listings compared with 78 in 2022. With 26 homes sold and only 33 active listings, Johns Creek has just over a one-month supply of inventory, a robust sellers’ market!
Alpharetta’s average price for April 2023 was up 15% to $905,000 for the 98 homes that were sold. Average days on market were up from 12 to 32 and Buyers paid 100% of list price compared to 106% last year. Supply, that is, active listings, decreased from 179 to 133.
The average price in Cumming increased by 3% from last year landing at $638,000. The number of homes sold was down year-over-year by 71 to 201. Average Days on Market increased from 14 to 31. Buyers paid 99% of list price compared with 109% in 2022. May’s active listings were down by 61 to 218.
We enjoy providing these updates as we get to report on actual facts, not fear. The North Atlanta suburbs are thriving and even nationally, things aren’t as bad as most predicted. What we’re seeing is the market returning to normal from the last two record-breaking years.
If you ready to cash out on all that equity you’ve been sitting on? Give us a call so we can put together a custom plan to get you the highest market price in the least amount of time. If you are ready to buy, reach out so we can discuss your particular situation and goals. With our proven strategies, we’re confident we can save you time, money, and headaches.
You can email us at mccowngroup@ansleyre.com or call or text at 678-807-9566. We look forward to hearing from you.
