The positive change in the Atlanta housing market over the past year is no joke, and hopefully here to stay. According the NAR (National Association of Realtors), nationwide existing home sales are up 10.7% from September 2012 and have maintained above year-ago levels for the past 27 months.
A few factors that indicate the housing market is on the upward swing are the new developments in residential neighborhoods, higher home prices, and increasing mortgage and interest rates. Home builders have a renewed confidence now that they haven’t had in almost 8 years. In effect this has given new housing starts a whopping 19% increase from last year to now.
Home prices have gone up a noticeable amount since 2011, yet they still remain affordable and well below the values during the Real Estate boom of 2004-2007. Remember, all markets are cyclical and that includes Real Estate, so there will always be ups and downs. Real Estate is typically the most predictable market (although the crash in 2008 certainly caught almost everyone by surprise). That’s also why a smart investor can always make money in Real Estate. Reference the chart below to see the exact point where we reside in our current Real Estate cycle – the red arrow marks our current location. This tells me that we can only go up from here!
Now, please do this with me… let’s cross reference the above chart (specifically how the red star corresponds with our current place in the cycle) with the chart below. The chart below is our actual data on home prices since 1997 and it also forecasts potential home prices moving forward out to 2017. This certainly makes the future look bright doesn’t it! Would you agree that now is a great time to purchase?
Lastly, mortgage interest rates have increased and people’s average income is on the rise. The number of new jobs being created each quarter has a direct effect on home buyers in Atlantaand the nation. More people with stable jobs, equals more home purchases. That number could definitely use a boost and I think that the rising average income levels have compensated for the lack of new jobs being created just enough to stabilize the housing market. The economy is seemingly able to support the rising interest rates too which is also a good sign.
I think there could be a course correction if inflation rises too quickly or too much (rising inflation directly effects mortgage interest rates), so that is something to watch for. Also, if the new Health Care reform affects job creation at all then that could lessen the amount of buyers in the market.
Overall, these are all good signs that we are heading in the right direction to get back to a stable and appreciating housing market. And, most importantly sellers are finally starting to regain their faith that they will get back their initial investment in their home.