In compiling a list of the markets most impacted by the latest recession, one would be hard pressed not to include Georgia, and specifically Atlanta. While the downturn in Atlanta was not as publicized as say Detroit, it was one of the markets most damaged by the bubble bursting. Subsequently, the decline was due, largely in part, to an “economic fluke.” The city experienced such an influx of new homes prior to the downturn that the overwhelming new supply kept prices from inflating. In other words, they never experienced the upside of the bubble. The Atlanta housing market, therefore, witnessed prices decline as much as 40%, but from non-inflated levels.
According to Jeff Humphreys, director of economic forecasting at the University of Georgia, “Home prices in Atlanta [were] reset to where they were in the late 1990s, which was not true in Arizona or Florida, where prices [were] reset to the start of the boom.”
For as much as the Atlanta housing market was crippled during the recession, it appears to have made significant improvements. Gains in the last three years have helped to pull the local market out of the post-recession price weakness. Home values have improved dramatically and are now stabilizing. In fact, Zillow has already forecasted home values to increase by as much as 7.1% in the next year. According to several indicators (sale-to-list price, price cuts and time-on-market), Atlanta is a warm market that is neither in favor of buyers or sellers, but rather somewhere in between. The last 7 months have changed less than 1%, which shows home values leveling off.
The median price for a home in Atlanta is approximately $166,200, which represents a 16% increase over the previous year. Conversely, on a national average, homes have only appreciated 4.6% in the same period. Perhaps even more encouraging, homeowners in the Atlanta housing market have gained an average of $64,100 in equity over the last three years. For all intents and purposes, Atlanta is heading in the right direction and home values are expected to rise for the foreseeable future. Popular neighborhoods in Atlanta, in particular, are expected to continue the upward swing: Midtown, North Buckhead, Downtown, Kirkwood, Morningside-Lenox Park, and Grant Park.
It is important to take note of price appreciation and principle payments in the Atlanta area. In the last three years, these indicators have boosted total equity growth considerably. In order to illustrate the amount of equity Atlanta homeowners have accumulated since the recession, we have broken it down as follows:
Atlanta’s positive outlook may be attributed to local employment growth, as it is stronger than the rest of the country. Whereas the United States has been the beneficiary of a 1.7% increase in job growth, Atlanta has increased 2.4%. Job growth, as is expected, has also served to reduce the unemployment rate. The current unemployment rate in Atlanta is 7.6%, a 1.0% increase from this time last year.
The percent of delinquent mortgages in Atlanta is 5.0%, which is lower than the national value of 6.9%. The percent of Atlanta homeowners underwater on their mortgage is 30.9%, which is higher than Atlanta Metro at 28.9%.
It is clear that the housing market for the Greater Metro Atlanta area is improving. Right now, we still have prices below replacement costs and incredible mortgage rates.