Published on January 26th, 2017 |0
Atlanta’s Residential Real Estate Market Expected To Continue Upward Trend In 2017
John Hunt (market analyst, ViaSearch), Jere Metcalf (realtor, Atlanta Fine Homes), Dana Barrett, the facilitator (Biz1190), Peter Pasternack (Foundations LLC), Keith Spain (BankSouth)
When Atlanta real estate analyst John Hunt looks to the months ahead, he likes what he sees. And what he sees is steady long-term sustainable growth in the metro area.
His forecast was good news to the roomful of real estate professionals at the Capital City Club Brookhaven on January 19, who gathered for a panel discussion about the direction of residential real estate in the new year.
In addition to Hunt, who is with ViaSearch, the panelists included Atlanta Fine Homes realtor Jere Metcalf, builder/investor Peter Pasternack of Foundations LLC, and BankSouth mortgage banker Keith Spain. Biz1190 radio talk show host Dana Barrett moderated.
Hunt cut right to the chase. The future looks bright, he said, but different. “We’re in a new normal.” The market will continue to recover from the bruising it took in the recession, but it will not look the same. There’s been a paradigm shift precipitated by millennials, empty nesters and a growing preference for urban living.
“Millennials watched their parents lose their homes or go underwater,” he said, “and they are renting longer and holding off on buying. The first-time buyer used to be 25-years-old. Now, it’s 33 or 34.”
The delay has significant ramifications. Under the “old normal” scenario, the average person bought and sold four to five homes in their lifetime: a starter followed by several step ups. A later start means fewer home purchases; most likely, no more than three.
Metcalf sees a similarity between her millennial clients and those who lived through the Depression. “My grandmother, at 90-years-old, was in hospice and still worried about what the air conditioning was set to.” She believes that millennials are experiencing a similar after-effect. Many are also burdened with student loan debt, making it hard to qualify for financing.
The later entrance into home ownership is not the only characteristic of the new normal. “When they [millennials] do decide to buy, they’re not moving out to the ’burbs,” Pasternak said. “They’re staying intown.” Empty nesters looking to downsize are also feeling drawn to a city lifestyle.
Hunt recalled the initial reaction to the intown trend. “In 2013, there were a lot of cheap lots and not a lot of competitive resales. New homes started shooting up. But then, lot prices exploded and quality resales started coming out from under water.” Builders and developers were getting hit from both sides. The answer was to go vertical, with townhouses and condos.
The demand for housing that offers an urban style of living is expected to continue into 2017 and beyond. Growth is southward, and the panelists agreed that Reynoldstown is the latest target for investors chasing cheap lots and obsolete property.
In addition to millennials buying later and then not moving out to the suburbs, and baby boomers downsizing and moving in from the suburbs, the new normal includes another break from tradition. In the past, the number of new construction sales and resales always tracked each other, traveling the peaks and valleys of the market together. That changed dramatically after the downward dive of 2006. They went down together, but resales rallied as the recession passed, surpassing new home sales. The gap remains, with resales the leader by a longshot.
That said, Hunt indicated that permits have been steadily rising “since the near-rock bottom hit in ’09. The number has gone up at a very consistent level, so we’re all feeling good.
“There was a 90 percent drop from the peak to the trough. Nothing that survives a ’90 percent drop comes out looking the same as it did before the drop. In 2016, we were 60 percent off where we were at the peak. We’re coming back, and I think it will be sustainable.”
Sales are also continuing to climb. Hunt says new homes and resales were up 10 percent in 2016. That is double the national increase of new home sales, which comes in at 5 percent.
As for the changing political climate, Hunt suggested a lessening of regulations might lie ahead, which would ease the burden on developers. “In the past five years, the cost for developers has gone up 50 percent as the levels of regulation have gone up and up and up.”
All told, 2017 is looking good for Atlanta’s residential real estate market.
The event was sponsored by Simply Buckhead, BuckheadView, Bisnow, PlanOmatic, Elaine Bylos of Cruise Planners American Express and WAFS 1190 AM.
Proceeds were donated to Giveback Homes.
Story by Laurel-Ann Dooley