(Video:)How is the housing market in Atlanta? Will you be priced out of your own neighborhood?

Every real estate forecaster says prices will continue to rise this year. If you’re wondering if this pace is sustainable and what you should do in the face of rising prices… this video is for you. Let’s talk affordability in metro Atlanta… do you ACT NOW or WAIT, and risk being priced out of your favorite neighborhood.

Will house prices in the metropolitan Atlanta area continue to rise?

Video Transcript:

Hi there. It's Itanza with Velocity Real Estate. In this video, we will talk about whether house prices in the metropolitan Atlanta area will continue to rise. And if so, how should you respond? The short answer to that question is, yeah, they're going to keep going up. But if it comforts you, not at the pace that they went up last year.

In 2021, house prices in the Atlanta area went up by 21%. So let's look at numbers with that. If you went into 2021 owning a home worth $500,000, well, you went into 2022 owning a home worth $601,000.

That's great news for home ownership. But if prices continued to go up at that rate year over year, unfortunately, many of us wouldn't even be able to afford the neighborhood we currently live in. So you might be thinking, well, exactly who can afford this?

Well, listen to this statistic from the Federal Reserve Bank. Did you know that one out of every four buyers in the Atlanta market is coming from out of state? And what states exactly? Well, the list probably won't surprise you.

One out of every four buyers in the Atlanta market is coming from out of state.

-Federal Reserve Bank

The top five on that list are New York, DC. California, with the LA and Bay Area, represented Chicago and Miami. So now, just hearing that list, what do you think they all have in common? Yes, they are major metropolitan areas like Atlanta, but their house pricing is already much higher than Atlanta.

When they arrive here, they not only have more money to spend, but they also think that the prices we believe are high are low for them. So imagine if you're in a multiple offer situation and there are four bidders on that one house. One of those four bidders is this person that's from out of state.

So now think, are they worried about bidding $10,000 over the asking price? Probably not. To them, going 10% over the asked price is probably still a reasonable number. And unlike you, they're not moving across town; they're coming across the country. So finding a house that's available and meets their timeline is essential.

So with this influx of people, Atlanta is joining the ranks of cities where the average income earner cannot afford the average home. I want you to think of cities like New York, Los Angeles, San Francisco, and San Diego. You see, in those towns, you're more likely to meet someone who rents than someone who owns.

Well, the Federal Reserve does monitor affordability through a metric that they ironically call HOAM, but it stands for Home Ownership Affordability Monitor. It uses the average income in the metro area to calculate the affordability of the average home in that area. It results in a whole number ranging from 3 to 196, with 100 being considered the affordability benchmark.

You see, the lower the number gets, the more unaffordable an area is, and the higher the number is, the more affordable. In the past seven years, the Atlanta area has hovered between 115 and 136, meaning this was the land of opportunity. If you could find employment here, it was highly likely that you could afford to buy a home. Well, that tide, unfortunately, now is changing.

HOAM stands for Home Ownership Affordability Monitor. It uses the average income in the metro area to calculate the affordability of the average home in that area. - Federal Reserve Bank

As a result of the increasing prices, during COVID, our home ranking has gone down to 85.5. Yes, we finally went below 100 this year at the start of 2022.

Well, precisely what does that mean? Well, it means that the goal of homeownership is falling out of reach for some. You see, the exact person who needs to act right now, but is scared to, might not be able to afford anything in the current metro area if they continue to wait.

So if you're what I call home scarce, meaning you've been renting for a while, trying to save up your down payment, maybe you've just been delaying the decision. Act now before opportunities become scarce here in Atlanta, which was once the land of affordability. So you see, that feeling you've had that something is changing in the Atlanta real estate market is true. Affordability is going down, and now you know how and why.

Well, that's real estate advice from your real estate friend, Itanza.

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Thanks so much.

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