By Kathy Dean
The key phrase for the Intown real estate market in 2017 seems to be “more of the same.” That’s not a bad thing, since last year’s market saw growth in many areas of the city. Even a bump up in interest rates isn’t expected to dampen interest in Intown homes.
“The Atlanta residential real estate market broke sales records in 2016,” said Dan Parmer, President and CEO, Harry Norman Realtors. “We think that 2017 will look similar to 2016 with a modest increase in the number units and average sales price.”
Parmer added that since real estate is an extremely local business and metro Atlanta is a very large market, he expects to see some pockets outperform others. “It’s exciting to see numerous condominium projects in the planning phase, something that’s been out of the mix for a few years. We also saw the return of luxury infill spec homes in 2016 and there are no signs of that market slowing down.”
Scott Askew, President of Engel & Völkers Intown Atlanta and Engel & Völkers Brookhaven Atlanta, noted that the last year had been a rather irregular year with metro-wide prices YTD (year to date) through Oct. 31, rising 5.7 percent for attached homes and 4.5 percent for detached homes, when compared to 2015 sales.
“Our Intown market fared better during 2016, with attached home prices climbing 18.4 percent and detached homes at a 7.4 percent rate,” Askew said. “But when looking at the numbers, the Westside really confounded us. Our records show that the average sales price of detached homes in that market has climbed an impressive 46.8 percent over 2015 sales prices…but attached home values have declined 2.9 percent on average.”
Askew predicted that 2017 will bring a continued rise for both detached and attached home prices in metro-Atlanta at about a 4 percent rate, and that the plethora of new, high-end ‘attached’ units will cause a stagnation in pricing for many of the higher-priced, pre-owned units as they compete for buyers.
“We’re bullish on the coming year, even though 2017 should bring us higher interest rates for mortgage loans. For far too long, we’ve enjoyed artificially low interest rates, so a normalization is warranted,” Askew said. “Will this affect the real estate market? In our opinion, it will for a few months, then sales will climb as consumers recognize ‘It is what it is.’ Don’t forget, while younger buyers and sellers haven’t witnessed this, the real estate business experienced some of its strongest years when we had mortgage interest rates above 10 percent.”
David Boehmig, President and Founder, Atlanta Fine Homes Sotheby’s International Realty, said that he expects the number of home sales to grow by 7 to 10 percent and for average pricing to increase by 5 percent in the coming year. “I believe that the general optimism about our local and national economy will drive higher home sales in each market segment.
“Atlanta is still underserved in terms of new home construction,” Boehmig continued. “I estimate that with the stability in the financial sector continuing, more small to medium sized local builders will be able to garner favorable construction financing, generating more new home construction activity. This activity will focus heavily in the Intown area, as well as the northern suburbs, especially between I-75 and I-85.”
According to Vic Miller, Managing Broker, Coldwell Banker Residential Brokerage, Intown, the one thing that’s constant in residential real estate is change. “Right now, the Atlanta residential real estate market appears to be holding steady, but we’re starting to notice some small but perceptible shifting,” he said. “We’re seeing more inventory hit the market and buyers are taking longer to purchase as they have the opportunity to explore more available homes.”
Miller shared statistics for single-family homes, townhomes and condos in all price ranges in the Atlanta metro area, including Cherokee, Clayton, Cobb, DeKalb, Douglas, Forsyth, Fulton, Gwinnett and Paulding counties. The November 2016 figures were supplied by the First Multiple Listing Service.
The number of sales and sale prices increased. YTD November 2016 sales were up 9.4 percent over YTD November 2015. However, November 2016 sales were down 7.8 percent from October 2016 sales. The average sales price in November 2016 was up 7.7 percent over November 2015, and up 1.8 percent over October 2016.
Inventory and days on the market decreased. In November 2016, property inventory was down 10 percent from November 2015, and down 5.4 percent from October 2016. November 2016 DOM (days on the market) was down 11.3 percent over November 2015, and up 2.2 percent over October 2016. Miller explained that an upward trend in DOM tends to indicate a move towards more of a buyer’s market.
“For the most part, we’re seeing a continuation of trends we’ve been seeing all year: low inventory, rising prices and an increased number of sales year-to-date,” Miller said.
“Overall, I expect the in-town markets to continue the upward trend, especially the Midtown condominium market,” stated Kerman Haynes, Vice President, Berkshire Hathaway HomeServices Georgia Properties—CITY HAUS Development Solutions. CITY HAUS Development Solutions is representing three new construction condominium towers that will be opening for sales in 2017.
“We just completed an owner equity analysis on all Midtown high-rise condominium buildings and found that on average, homeowners have approximately $283,000 of positive equity (the difference between the recorded mortgage and market value today). With a five-day supply of inventory in most buildings, there’s just not enough for-sale condo housing to meet the demand.”
There are several Intown hotspots of real estate activity. Not surprisingly, the Atlanta BeltLine is at the center of much of it. “As the development of the Atlanta BeltLine grows, so do the neighborhoods around it, such as Adair Park, Washington Park and the West End. Certain neighborhoods fraught with mortgage fraud were slow to recover but now offer excellent, affordable housing opportunities for first-time buyers, millennials and investors,” Miller said. “I like Adams Park and Sylvan Hills.”
Miller pointed out the area buyers can get help through down payment assistance (DPA) programs through city development authority, Invest Atlanta, and The Atlanta BeltLine Housing Initiative Program. He said that another area, East Point, offers a great opportunity for investment or starter homes; it’s near the new Tyler Perry studios at Fort McPherson and the Porsche headquarters.
Askew agreed that everybody wants to claim a connection to the Atlanta BeltLine, and he believes the east, southeast, west and southwest corridors will see a vast improvement in housing stock as developers continue to enter those markets because of the attractive opportunities to develop mixed, housing and retail, communities. “The high level of demand from our growing, younger workforce is the driving force in the BeltLine market,” he said.
“With the success of projects like Avalon, in Alpharetta, I can see future similar projects that are coming to fruition being popular,” Boehmig explained. “Also, higher end condominium projects, like The Charles in Buckhead, will be popular with buyers interested in a high-end home located in a thriving area.”
According to Haynes, millennials are driving demand in the Midtown condominium market for entry-level product, causing a traffic jam in the middle and the top. “Most homeowners are aspirational and want to move up to a larger home with new finishes in a new building,” he said. “The challenge we’re facing now in market starts at the top. These owners are not moving; they’re waiting for new product to be launched. Until they move, the owners in the middle have nowhere to go, so the market is stuck. This bottleneck has led to substantial price increases on entry level condominiums, which has seemed to give high-rise developers the confidence to start building again.”
Inside the perimeter has been an especially popular location in 2016 and Parmer said he expects it will continue into the immediate future. He credited two factors – jobs and traffic. “The technology sector is growing exponentially in Atlanta, particularly around Georgia Tech. Thousands of new jobs are being created and home sales closely follow job growth. Therefore, we anticipate that neighborhoods near these jobs – Midtown, Virginia-Highland, Old Fourth Ward and East Atlanta to name a few – will benefit from this growth,” Parmer explained. “Our clients are likely to want to live relatively close to work to better manage the amount of time spent commuting.”
Parmer also noted that the move of the Atlanta Braves to Cobb County has had an impact on residential development close to the new stadium, and the market is showing interest in the opportunities around the repurposing of Turner Field. The same goes for the potential impact around the new Atlanta Falcons stadium and the increased interest in the surrounding neighborhoods.