Today, I’d like to share my opinion about what I expect to see in the market in the coming months with key data points, being unbiased as possible. We’ve been in a scorching market for so long, with recent headlines reading “Housing Bubble 2.0?” and stating Atlanta as one of the nation’s most overpriced markets at 60%, it can seem scary.
We haven’t really seen mortgage applications drop much, but I expect them to go down while interest rates could rise much higher to 7% levels by the end of the year. Rates rose higher and faster almost higher than ever before in recent history, as well as inflation. Home buyers have been sacrificing their inspection contingencies (which I never recommend) and paying an enormous amount over asking to get into properties.
Most of us understand the basic economics law: supply and demand. My headline likely caught your eye: We are at the peak of the market. I say that, because in terms of demand, I don’t expect to see as many buyers willing to pay anything and everything over list to get into properties. In my opinion, home prices in Atlanta will not go up nearly as rapidly as they have, but should continue to rise a healthy 4-6% this year. Even if they go down 2-10% which could happen in other metro markets in the US, it’ll be more expensive to own because of the rising interest rates.
Sellers are becoming more restricted in trading up, they will not be able to afford more for less when the interest rate payment outweighs equity, which I think could lock them into their homes. Who would trade a 3% rate for a 6%?
We are at the peak of the market in buyer demand and should see it continue to slow down from the insane levels it’s been at, which will be healthy overall for our market. However, there is so little inventory and even though buyer demand could be cooling (which it is not showing signs of), there is and will continue to be a gigantic amount of buyers in the market.
I believe we will continue to see the market stay hot here going into next year even with a bigger rise in rates. We may feel a slight cooling from rates soon, long term though, lack of inventory combined with decades of under building, it’s safe to say prices will continue to rise. This is all without mentioning inflation, which is at +8.3% for April.