Eugene James, Director of Metro Study, joins hosts Todd Schnick and Carol Morgan on this week’s edition of All About Real Estate on Atlanta Real Estate Forum Radio.
As the director of Metro Study, James uses analytics to determine the state of the housing market, and he shared some of his observations and predictions with Todd and Carol.
Eugene makes the point that jobs are important for people to have. People who don’t have jobs aren’t going to be buying houses. Luckily the job market has been on the rise in Atlanta over the past few years. These job opportunities have encouraged more people to move back into the region, and over the last couple of years, Atlanta has gained around 100,000 new people, which further affects the housing market.
Foreclosures are back near their levels in 2004 and 2005. Banks don’t have any homes they’re holding and are getting rid of their distressed inventory. Large opportunity funds are trying to buy any houses they can, so they can rent them out. This makes for a hot renting market.
Resale supply is limited in Atlanta. The city currently has a three month supply when most often a six month supply is considered normal. This is leading to people getting desperate and paying significantly more for houses than necessary. Furthermore, many people simply aren’t putting their homes up for sale, because they don’t believe they’ll be able to fund a new home.
There is a common idea that Millennials just don’t buy houses, but James was quick to claim that notion a myth. In fact, Millennials are leading the charge and buying most of the homes these days. Many move to the suburbs in order to find more affordable homes. This is not to say Atlanta isn’t an affordable place to live; Eugene describes just the opposite.
The median resale home price is around $173,000. This includes many smaller houses around or below 2,000 square feet. However, smaller houses are what Millennials want for their first homes, so they definitely have affordable options. If these smaller houses are removed from the calculations, the median resale home price increases to around $250,000 instead.
Renting is a volatile practice that Eugene discourages. Especially in Atlanta, it’s more cost effective to buy a home than to rent. There simply not enough houses to accommodate the influx of people moving into the region, and the ones that are available will often be priced highly.
The main problem is that homes simply can’t be built fast enough. This leads to the demand outpacing the supply, which increases prices. Furthermore, the prices of the land to build on are high as well, so businesses are forced to look elsewhere. With the land supply limited, house prices are increasing from that factor as well.
Although house prices are rising and demand is limited, Eugene doesn’t necessarily see cause for panic. The main difference he notes between now and the collapse of 2006 is that the banks are far more disciplined, and they won’t hand out loans to just anybody anymore. This new caution should help avoid another collapse.
The analytical insight Eugene and Metro Study are able to provide grants a new perspective to the Atlanta housing market. The market is definitely improving, but because of several factors, inventory is low, and therefore prices are high. Buy homes now in order to avoid the increasingly rising prices in the future.
To contact Eugene James or to learn more about the housing market or Metro Study, visit www.metrostudy.com or call 404-510-1080.
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