How is the Atlanta Real Estate Market? “FANTASTIC” (Always)
By Mary Anne Walser, Realtor & Attorney, 404-277-3527, firstname.lastname@example.org
EVERYONE, it seems, is interested in real estate, and the most common question I get is “how’s the real estate market?” I always say, “IT’S FANTASTIC.” Because when you think about it, the market IS always fantastic for SOMEONE. Sometimes it’s fantastic for buyers. Sometimes for sellers. Sometimes it is a fantastically BALANCED market. Right now, as you are likely aware, we are in a strong seller’s market in most locations (since real estate is very local, the “market” varies widely from one location to the next, even within Atlanta, but generally speaking we are in a recovery phase where prices continue to rise).
So given the fact that any real estate market can be “fantastic” in some respect, at a cocktail party if I say the real estate market is “fantastic” I also have got to go beyond the “fantastic” and explain. Right now we’re in an expansion phase in Atlanta. Generally, we are in a fantastic market for Sellers. But eventually and inevitably we will again be in a fantastic market for Buyers.
But our human tendency is to think that when things are good, they will stay good, and when things are bad, they will stay bad. That explains those clients in the years from 2008 to 2012 who would say “I don’t want to buy now – the market is bad.” In that time frame, prices were extremely low and inventory was high. Those buyers were correct that the market was bad…for SELLERS. It was great for buyers. The market has steadily improved since, and those who did buy in that time frame are now reaping the benefits if they are selling, since right now we are in a seller’s market – the market now is great for SELLING a home.
Psychologists have documented many logical fallacies and biases to which humans are prone – one of which is the “status quo bias.” The potential buyers in that time frame often fell into this bias. Making great real estate decisions depends upon recognizing any potential bias you may have, looking at the current market objectively, examining trends, and realizing that things will not always be as they are now.
If you look at real estate pricing over the years, starting when the US starting selling land in 1800, real estate prices peak about every 18 years, and the worst downturns are preceded by high prices and great demand. Here are the two most recent 18 year cycle examples. In 1990, we experienced a downturn after the broad expansion of the Reagan years (when tax incentives helped fuel housing increases). 18 years later – in 2008 – another downturn, this time a huge one. It really needn’t have taken us by surprise; the depth of the disaster was due to banks giving away money far too freely, but most experts would argue that some sort of slump was inevitable. The real estate cycle is somewhat predictable.
So the next downturn? If you follow the 18 year formula, should be in about 2026. But of course it’s never entirely predictable, and it depends upon many factors. Interest rates, for instance. If they go up (they have risen a little, and will likely rise again this year), then buying power is greatly reduced. When the real estate market is improving and expanding and prices are increasing, there is pressure on the Fed to increase interest rates. This makes many new developments financially unfeasible and lessens the buying power of the homebuyer. So interest rates are an easy indicator that we watch weekly and sometimes daily. Right now there’s a huge uptick in activity because interest rates went up and homebuyers became nervous that they will continue to rise.
So for now, in Atlanta, the housing recovery continues. Interest rates rising will restrict that recovery, but there are other factors that will come into play in the next few years, both on the national and local levels. Our President Elect is a real estate developer, so while on the one hand, he will likely do what is good for real estate and loosening regulation might mean real estate financing flows more freely, on the other hand, immigration restrictions will likely increase construction costs and trade limitations could stem the foreign dollars for real estate that has helped bolster pricing.
Here in Atlanta, we are blessed with the fact that more and more companies want to move to Atlanta or expand their Atlanta based operations. This population influx gives us a buffer – even when prices go down again (as they inevitably will) as long as we have net population growth our real estate prices will remain strong.
So when asked “how’s the real estate market” – say FANTASTIC. But then dig a little deeper.
Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: email@example.com.