Written by Hunter Boyce
This time last year, many real estate experts expected a tough 2023 for the housing market. Inflation, supply chain disruptions, and soaring fuel prices harassed home buyers last year, leading to Georgia residents needing a whopping $139,831 salary just to meet market demands.
Luckily the housing market saw a steep drop near the end of the year, and inflation has been slowly cooling too. As seen in Realtor.com, “National Housing & Economic Forecast 2023 Mid-year Update,” housing is still costly this year. However, mortgage rates could drop to nearly 6% by year’s end.
In late Sept. 2022, as a consequence of the Federal Reserve’s third consecutive rate hike for the year, mortgage rates closed around a historic 7% — a mortgage rate high not seen in the U.S. for 20 years.
“High inflation and the Fed’s actions to curb it have had a significant impact on the housing market this year. And while inflation has begun to ease, the sustained spike in mortgage rates was enough to stifle the housing market after several years of low rates and strong activity,” Realtor.com chief economist Danielle Hale said in a news release. “The housing market has really seen a double whammy in 2023, with a retrenchment in the number of homes for sale coupled with still-high prices and mortgage rates that have kept both first-time and repeat buyers on the sidelines.”
According to the National Association of Realtor’s housing affordability index for April 2023, the national median price for a home in the U.S. has been steadily increasing this year. In April, the most common price seen on the market was $393,300. The median mortgage rate, however, has seen some fluctuation this year. The index reported a median of 6.35% in January, 6.34% in February, a soaring 6.62% in March and a cooling 6.42% in April.
Modern home buyers should consequently expect to shell out around 26% of their income for a median $1,972 monthly mortgage. These prices are a stark reminder of a more welcoming pre-pandemic housing market. In 2020, before the full effects of the pandemic had taken hold in the market, the median sales price of a U.S. home was $300,200. The most common mortgage rate was an incredibly low 3.17%, and homeowners were only spending roughly 14.7% of their income on $1,035 monthly mortgage payments.
While mortgage rates remain a tough challenge for 2023′s housing market, real estate is also facing another challenge — inventory.
“Available inventory strongly impacts home sales, too,” National Association of Realtors chief economist Lawrence Yun said in a news release. “Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019.”
In May 2023, total housing inventory reached 1.08 million units. While the total represents a 3.8% increase in inventory from April and a positive direction for the market, these numbers are still experiencing a steep decline (6.1%) year over year.
Atlanta Metro Stands Out Among Georgia Markets
As Georgia workers earn less than the national average, the Peach State saw much lower home prices in May 2023. According to the Georgia Association of Realtors, the Georgia housing market featured a median sales price of $356,000 for the month. Prices remained steady, having increased by less than a single percentage, and inventory shot up by 19% to a total of 23,613 units. The Georgia Multiple Listing Service May 2023 market report of the metropolitan region, however, tells a slightly different story.
According to Georgia MLS, the median sales price for Georgia real estate in May 2023 for Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding, and Rockdale counties was $400,000 — a higher price than the national average. While Georgia’s bustling metro is seeing much higher prices than its overall state average, the capital city is seeing even higher numbers.
The median sales price for an Atlanta home in May 2023 was a whopping $420,000, according to the Atlanta Realtors Association May 2023 Market Brief. While that represents a 2.3% price decrease from last month, the May 2023 Atlanta housing market’s staggering average $523,500 home price also represents a 1.2% increase year over year. Inventory in the capital city increased by 4.5% year over year, totaling 9,195 units.
Overall, the housing market has taken a beating throughout the entirety of the pandemic. Mortgage rates soared from historic lows to historic highs. Inventory plummeted, leaving many potential home buyers frustratingly waiting for a chance to fulfill their homeowner dreams. Prices rose to unaffordable levels, and workers have been facing crippling inflation all the while.
But mortgage rates are finally dropping, albeit at a sluggish pace. Prices are still high but cooling down. Inventory is still tight in many areas but improving. The housing market is in a sensitive state this year, but signs are looking good for its future.