On Thursday, February 4, the Atlanta Realtors Association hosted its sixth annual Real Estate Summit at the Federal Reserve Bank. It was a meeting of the minds, where Bill Rawlings, 2017 president of the Association and vice president/managing broker, North Atlanta Office, Atlanta Fine Homes Sotheby’s International Realty, set the stage and then handed off the program to the esteemed speaker, moderator, and panelists. The attendees were also impressive. Although only a small group of us attended in relation to all of the realtors in Atlanta, the participants seemed as knowledgeable and astute as those who led the event.
The keynote, Domonic Purviance, senior financial policy analyst in the Supervision and Regulation Division at the Federal Reserve Bank of Atlanta, was our numbers man. “The two primary factors affecting the housing market are job growth and net migration.” Whereas Atlanta saw our highest job growth in 2014 with slight declines in both 2015 and 2016, we’re still the 4th largest job growth market in the country behind #1-New York City, #2-Dallas, and #3-Los Angeles. Not surprisingly, Atlanta’s movie industry boom along with its growth in technology and other start-ups attribute to the high percentage here. Business and professional job growth is particularly beneficial to the market as those home buyers are typically able to pay a bit more.
Atlanta’s net migration has not recovered as well as its job market. The number of people moving from other states to the Atlanta area (or anywhere for that matter) dropped dramatically from 2009-2011 or so. 2014 was Atlanta’s first year of dramatic net migration growth since the recession and 2017 is expected to see gains due to the above mentioned job numbers (2016 data was not yet available).
With increased job growth and net migration, comes more homes. Housing starts are finally on the rebound too: Atlanta is the 3rd largest home builder in the country behind #1-Dallas and #2-Houston. Of course, most of those single family starts are in the Metro area, like South Forsyth, South Cherokee, and Paulding counties, yet some of those increases are coming from South Fulton too.
The next segment of Dominic’s discussion covered home prices and its two major impacts, affordability and months inventory of supply. Atlanta is still one of the most affordable states in the country with an affordability index of 129.8 (compared to San Francisco’s index of 49). In other words, 129.8% of Atlanta’s population’s can afford to purchase a home based on Atlanta’s median income and median home prices. Affordability is impacted by factors such as interest rates, inventory, upward prices, and labor costs, all of which except inventory bode well for Atlanta right now. Inventory is still quite low with only about 4 months supply available on the market right now. Good news for buyers and sellers alike – home prices are on the rise, but only incrementally. Sellers, especially those in hot markets like intown Atlanta, can typically get their asking price (or more) and buyers are still able to afford the homes and areas of interest.
Dominic’s charts and graphs deserved a standing ovation. Truly impressive stuff. So was the panel that followed him. Moderated by David Rubinger, market president and publisher of the Atlanta Business Chronicle, Jenni Bonura, president and CEO for Harry Norman Realtors, Dan Forsman, president and CEO of Berkshire Hathaway Home Services Georgia Properties, and Kevin Levent, president and CEO of Better Homes and Gardens Real Estate Metro Brokers and Coldwell Banker Commercial Metro Brokers, these power houses addressed market trends through their company lenses. All of their perspectives reinforced Dominic’s findings.
The panel also talked about the real estate profession. Unfortunately, up to one third of real estate transactions are conducted by what Dan called “hobbyists”. These are the folks who are anything but professional, do not have the distinction of Realtor by being a member of and accountable by a board of Realtors, and are therefore not authorized to use the legal real estate forms that protect consumers and Realtors alike. “It’s critical that consumers understand the value of Realtors and that we convey that value…It’s only by adapting to evolving requirements, being the resources that consumers expect, and retaining our professional status that we can deliver that value.”
Want more information? Read the Atlanta Business Chronicle’s interviews with Dominic, Jenni, Dan, and Kevin before the event in its special publication, Real Estate Summit.