If you are returning, welcome back! If you are new here, welcome!
In case haven’t read recent news article headlines – both the stock and crypto market took a huge hit yesterday, the S&P 500 is now in bear market territory (down -20% from January and most cyrpto coins are down -60%). This is mostly in part due to the reaction to inflation news, May inflation hit a new 40-year high of 8.6% when it was expected to go down.
Just a few moments ago the Fed announced they will increase rates 75 bps (basis points) in hopes to stop inflation. The anticipation led to a sharp increase in mortgage rates, for 30-year mortgages they are up from 5.5% to 6.3%, which has definitely slowed down mortgage demand drastically, to about half of what it was a year ago.
Lots of markets nationally have been feeling a cool down, I have experienced it in Metro Atlanta over the last couple of months, particularly in Cobb and Gwinnett County, where there have been multiple price drops on new listings. I believe that this is mostly due to sellers anticipating the same white hot growth we’ve been experiencing and pricing above comps, hoping to get the same multiple offers on the home. There is less competition, but there is still high demand and not enough supply, especially in Atlanta.
Migration is also not slowing in Atlanta, we will continue to see people move here both for remote work, along with major companies continuing to relocate here, which will increase prices. We also haven’t built homes for a decade, and are barely building any now due to material and labor constraints. Another inventory issue is that hedge funds are aggressively buying (mostly in Metro areas like Marietta), and once they buy a home – it is off the market basically forever. Instead of relisting the home, they usually will hold it for 5-15 years, then sell their portfolio to another real estate giant.
Home prices may not rise at 30, 20, or 10% this year, but they will likely go up at least 5% and will continue to. It is still a great time to buy if you are planning to stay in a home for at least two years.