Affordability challenges, low inventory, Gwinnett remains HOT!

St. Bourke, an Atlanta-based asset management and property development company, offers a Q3 Atlanta housing market overview and a peek at what could lie ahead in 2023.

“The St. Bourke team certainly leans towards a ‘glass half full’ mentality when considering Atlanta’s housing market and the broader economy. We are undoubtedly feeling the punch of unaffordability, diminishing demand, and sliding builder confidence,” St. Bourke’s Director of Research & Communications Katie Fidler said. “It is our view, however, that the unsustainable level of home price growth and inventory shrinkage that we were experiencing during the high point in 2020-2021 was doing more harm than good in the medium and long term. What we are experiencing now is a temporary, and necessary, recalibration of the housing market that will ultimately allow demand to rebound.”

Highlights from the Atlanta market overview report:

Affordability

High home prices and rising mortgage rates had a significant impact on new home construction activity and sales during Q3. The home building industry is starting to refer to affordability as “attainability” because the base price of even entry-level homes has risen to above $400,000.

• New construction and sales activity for both detached and attached homes is being impacted by declining affordability, but attached product is faring better than detached product because attached homes are generally offered at a more affordable price point due to cost savings yielded from development and construction efficiencies.
• Further evidence to support the relative resilience of attached product in the current market: 3 of the top 5 selling communities in Q3 were townhome communities (4 of the top 10 selling communities).
• Starts and closings are down on a quarterly and annual basis, but lot deliveries are going strong (likely started during or near the market peak).

Supply of available homes

The availability of both new and resale homes is still critically low with only 2.1 months of supply, compared to 6 to 8 months which is normal for Atlanta.

• This matters because 80 – 85% of all home sales are existing homes. Inventory of existing homes remains critically low because there is currently no incentive for current owners to list their homes and move or upgrade. They would acquire a much higher interest rate mortgage and pay inflated home prices.

Market Overview: Gwinnett County and Secondary Counties

Gwinnett County continues to be the top County in all categories, but some secondary counties made major moves (both up and down) during Q3:

• Starts
  • Fayette +16.2%, Dawson +18.8%
  • Dekalb -41.2%, Forsyth -42.2%
• Closings
  • Fayette +33.3%, Dawson +22.4%
  • Rockdale -42.7%, Clayton -48.6%
• Lot Deliveries
  • Rockdale +144.8%, Bartow +139.2%, Jackson +132.0%
  • Carroll -100.0%, Spalding -94.8%, Dekalb -75.8%

Top performing communities

The list of top 10 communities for Q3 differs entirely from the Q2 list. This typically does not happen; usually, at least one to two communities carryover. Additionally, we saw a resurgence of townhome communities in the top 10; three of the top 5 selling communities in Q3 were townhome communities (4 of the top 10 selling communities). Exurb expansion remains a notable storyline as seven of the top 10 communities are over 30 miles from Atlanta’s urban core. And of those seven, three are over 40 miles away. None of the top 10 communities have more than a six-month supply of finished lots, so we expect a significant amount of turnover on the Q4 top 10 list.

Affordability matters: of the communities that are still selling well, most of them are offering comparatively affordable homes with base pricing between $350,000 and $400,000. This proves that affordable homes still sell in this market, and people are willing to pay increasing mortgage costs for the right home at the right price.

 Top performing builders

Once again, D.R. Horton is the top-performing builder across the Atlanta MSA. Nine of the top 10 builders closed more homes in Q3 than in Q2.

• The most notable Q3 increases: Pulte +59%, Taylor Morrison +47%, Century Communities +41%.
• The most significant Q3 declines: Starlight Homes/Ashton Woods -68.6%, Rockhaven Homes -53.3%, and Meritage Homes -32.8%.

The 2022 Q3 National Housing Market Overview and Atlanta Housing Market Reports are available to view/download on the St. Bourke website – https://www.stbourke.com/market-reports.

St. Bourke is an asset management and property development company primarily focused on residential communities and commercial assets. Offering a full suite of placemaking services ranging from acquisition through detailed design and development to ongoing management, St. Bourke creates thriving communities and drives significant value for its clients, partners and community stakeholders. Since its inception in 2015, St. Bourke has helped a variety of both private and institutional clients achieve their project goals. With more than 90 active projects across 20 U.S. markets, the St. Bourke portfolio consists of more than 12,000 acres of land and 25,000 residential lots. For more information on how to work with St. Bourke from the ground up, call 678-853-2530 or visit www.StBourke.com.

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