A severe housing inventory shortage has the Atlanta real estate market in uncharted territory. Housing and economic strength are inherently welded together; they have a beneficial symbiotic relationship and in a sense they need each other. The lethargic economy continues to be a challenge and that is having a direct impact on housing; not just on buyers but surprisingly on listing inventory. Homes for sale in the Atlanta area and nationwide are down significantly and while a number of reasons are offered, there are several reasons for the housing inventory shortage. Data from the last two years indicates the following key seller stats:
- 26% of owners have to sell at any given time for a variety of reasons; jobs, personal circumstances, etc.
- 76% of owners have options on when or if to sell.
- Median ownership time is 9 years. This decreases with younger growing families and increases with stability.
The highs and lows of the Atlanta real estate market are significant; it is an exceptionally fast moving, turbulent time. There are 7 major factors behind the shortage of quality homes to buy. By quality, we mean accurately priced, well presented and in areas where homes are in short supply. Not every area is experiencing a strong buyer's market but almost all areas have at least reached equilibrium.
The major factors are a combination of several components; mostly intertwined but a couple of stand alone reasons. The first is a common problem, a lack of equity. Estimates are that almost 19% of owners lack at least 20% equity in their homes, This makes it very difficult to cover the cost of a sale, a purchase a move and the other factors associated with changing homes. Some 10.7% of homeowners nationwide remain "underwater" and owe more than their homes are worth.
Tied to this is the fact that many sellers want to make a profit upon the sale of their home. About 16 million homes were bought during the peak of the bubble and many sill own these homes. As of the third quarter of '15, only 57% of the top 300 markets had reached or exceed their peak prices. Owners want to make a profit and this is tide directly to the equity challenge.
Consider mortgage rates. How many thousands of owners refinanced over the years with rates under 4%? Some even found rates under 3%; that will not be replicated. Why would they move unless absolutely necessary? And even if they could move, where would they move to? Would they want to immediately be tossed into the uncertainty of trying to find a home? Why would they?
During the crash, the great Atlanta real estate market saw upwards to 110K listings at any given time. In fact, the damage to the mental state of commuters on major highways was brought into focus when groups called for automated billboards showing the number of active listings be taken down. Daily, commuters running up and down I-75 and I-85 saw listing volume cracking 110K homes. Now, the range is between 20K and 25K since late '12.
Read much more by clicking the 7 major reasons for the housing inventory shortage; see several interactive charts as well and learn more about how this lack of adequate supply is making home buyers crazy.
THE HANK MILLER TEAM COUNSELS HOME BUYERS AND SELLERS IN THE ATLANTA AREA WITH OVER 25 YEARS OF SALES AND APPRAISAL EXPERIENCE.
