2019 Market Outlook

EMPLOYMENT

Metro Atlanta remains the economic engine for the state of Georgia. Approximately 70% of all job growth occurs in this region. The influx of start-ups, technology innovation centers, and significant inbound moves by existing national corporations will result in job growth of approximately 48,000 new jobs in 2019. Unemployment is expected to remain flat at around 4.1% for the metro Atlanta region throughout 2019.

INTEREST RATES

The typical home mortgage is the 30-year fixed rate loan. The interest rates for these remain at historic lows, but there is an upward trend. CoreLogic forecasts that the 30-year rate will be around 5.2% by the end of 2019, while other organizations predict that it will be closer to 5.5%. We believe that it will be closer to 5.2% based on the related factors impacting mortgage rates.

PURCHASING POWER

Metro Atlanta will remain among the most affordable major cities in the U.S. Given the upward trend in average home prices and interest rates, real wage growth will be needed to keep the affordability index in check. Our forecast is that more home buyers will consider alternative loan products, such as adjustable rate mortgages, to keep their monthly paymentswithin budget.

AFFORDABILITY

Among major U.S. cities, Atlanta remains one of the most affordable housing markets. Affordability is a measure of whether a typical household earns enough income to qualify for a mortgage loan on a typical home. An increase in personal income was just slightly behind average home price increases in2017 and is expected to be on par in 2018.

Listed by: Jennifer Key

INVENTORY

The number of active listings is on an upward trend. We expect this to continue into 2019 with inventory levels reaching closer to six months by the end of the year. With three to six months of inventory, we will remain in a neutral, or balanced, market for the entire year. This will place some downward pressureon the rate of average price increases, which will result in a higher affordability ratio.

We are also watching for the potential start of high-rise apartment to condominium conversions. These have been non-existent for many years, but there is high demand in the under $500,000 price range especially first time home buyers who wish to live closer in the various city cores. This could be a realistic occurrence because 6,300 multi-family units were delivered in 2018 and another 18,382 units are under construction.

TRENDS

Focus on improving transportation will continue into 2019. The multi-county agreement to coordinate public and rapid transit systems under the ATL umbrella will begin to show some much-needed progress in reducing the number of cars on our highways and surface streets. For housing, consumers are seeking high levels of integrated technology, purposeful functionality, and sustainable building materials and construction methods. Green is no longer a fad, it is the new normal. Neighborhood village design will continue to grow in popularity as more consumers are looking for ways to connect with their community without driving.

Listed by: Cathy Boston

LIFE EVENTS

Residential real estate movement tends to follow life events. First jobs, first homes, marriages (and divorces), household growth, and eventually “rightsizing”. We are experiencing some restraint of first-time homebuyers due to the rise in home prices, the lack of entry-level purchased housing options, and the weight of student loan debt. Today’s buyers are seeking homes closer to their work and where they want to play. This often means there are limited options for the first-time homebuyer closer in the city. However, we believe that many of the newer high-rise apartment buildings will be ideal candidates for condominium conversions starting in 2019. If priced to attract first-time homebuyers (approximately 45% of units sold), this will start the move-up chain reaction and all price sectors will benefit.

JOBS

The metro Atlanta area accounted for approximately 70% of the 90,000+ jobs created in Georgia in 2018. Many of these 60,000+ jobs were filled by employees moving into the region, thereby increasing housing demand. While not all of these positions resulted in a home purchase, new housing permits in the region increased 10.8% versus 2017.

According to the Georgia State Economic Forecasting Center, job growth in Georgia will slow in 2019. However, they project that approximately 48,000 new jobs should be created in metro Atlanta. This trend will continue into 2020 and the unemployment rate is expected to remain steady at around 4.1%.

Metro Atlanta has been and will continue to be the beneficiary of numerous jobs created by the relocation of major corporate divisions or headquarters, such as thyssenkrupp, Norfolk Southern, and NCR, to our area. In addition, Atlanta is now considered one of the top five up-and-coming tech meccas in the nation and our region is considered one of the largest producers of feature films in the world.

AFFORDABILITY

Atlanta remains one of the most affordable major cities in the United States. Affordability is a measure of whether a typical household earns enough income to qualify for a mortgage loan on a typical home. As home prices and interest rates rise, home affordability declines. In 2018, average home prices in metro Atlanta grew approximately 7% to around $311,000. Interest rates for a 30-year fixed mortgage rate grew from approximately 3.8% to approximately 4.7% during 2018. CoreLogic is forecasting average home prices will increase 5.1% and 30-year fixed rate mortgages will increase to 5.2% in 2019. Both of these factors will impact housing affordability. Prices are expected to increase in 2019, but at a more modest pace than the last two years. Our market will still be better positioned than other major markets as they will also be impacted by these trends.

* Variances exist by geography and price point