2024 Market Forecast - Jon Howard

Metro Atlanta Residential

REAL ESTATE FORECAST

2024

Georgia is the #1 state to do business in for 10 consecutive years

By Area Development Magazine

U.S. SOCCER HEADQUARTERS MOVING TO METRO ATLANTA1

Fayette County named home of the U.S. Soccer National Training Center

YOUR GATEWAY TO THE WORLD2

Atlanta Hartsfield-Jackson International Airport is the world’s busiest global airport with more than 104.7 million passengers in 2023

POPULATION GROWTH3

Atlanta’s population is the 8th fastest among large cities and expected to grow to be one of the largest in the nation by 2040

CLEANTECH POWERHOUSE4

Cleantech investments in Georgia in 2023 surpassed $15 billion and created over 16,000 new jobs

#5 MOST AFFORDABLE STATE IN THE U.S.5

Ranks fifth with significantly lower than average costs for housing, typical transportation, and utilities.

#5 TECH CITY IN THE U.S.6

In Atlanta, tech workers made up nearly 8% of the total number of employed residents

BIG COMPANIES ARE MOVING HERE7

18 Fortune® 500 companies and 32 Fortune® 1000 Headquarters have chosen to locate their worldwide headquarters in Georgia

#1 PLACE FOR YOUNG PROFESSIONALS TO START A CAREER8

76% of young professionals believe Atlanta is the business hub of the South

#2 MOST LIVABLE CITY IN THE U.S.9

Atlanta has been consistently listed as a top ten North American city in the index for more than a decade

#2 MOST EDUCATED CITY IN THE U.S.10

Atlanta has nearly 60% of its residents holding a bachelor’s degree and over 25% with a graduate degree

2023 RECAP

There were substantial shifts in the 2023 market, underscored by the impact of higher interest rates and constrained inventory. These factors collectively contributed to a 17% decline in the number of home sales compared to 2022. The Average Days on Market (DOM) emerged as a telling metric, tracing the ebb and flow of buyer-seller interactions. Following 2022, which ended with six consecutive months of DOM growth, 2023 started slow for sellers with 44 DOM in February. However, as the traditional summer market unfolded, the market warmed up considerably, illustrated by a notable reduction to 24 days in August. December closed the year out with a substantial 18.6% decrease from the outset of 2023.11

AVERAGE DAYS ON MARKET 2023

HOME INVENTORY OUTLOOK

Despite a relative lack of home sales in 2023 compared to typical market conditions, there’s an optimistic outlook for increased activity in the coming year.12 The current housing market in Georgia is characterized by high demand and a shortage of available homes. The impact of higher interest rates is particularly notable, contributing to the housing shortage by dissuading potential sellers from listing their homes, thus reducing the overall housing supply.13 Interestingly, falling interest rates don’t necessarily translate to a surge in inventory, given that a significant portion of sellers transition to become buyers, and additionally, first-time homebuyers, who don’t contribute new inventory, tend to absorb whatever is available. To meet the sales projections of 2024 we would expect to see an increase of about 14-15% in listings in 2024.14 Even with this increase in listings coming to market, based on the level of demand, it is expected that homes will continue to sell fast and the amount of available inventory will remain tight for much of 2024.15

ONGOING HOME PRICE APPRECIATION

Despite the challenges posed by the restricted supply, the housing market in Atlanta remains robust. The demand, fueled by both demographic factors and a growing population, has contributed to the ongoing appreciation of property values in 2023.

The market saw a notable annual increase in housing prices, with an average sold price growth rate of 3.2%16 across all combined counties in FMLS compared to 2022. This trend is a return to more normalized pre-pandemic appreciation levels, and a more sustainable rate than the double-digit appreciation of 2021 and 2022.

2024 NATIONAL HOME PRICING PREDICTIONS

The real estate landscape in 2024 is expected to continue along a positive trajectory, with the additional influence of mortgage rates showing signs of easing and a more accommodative stance from the Federal Reserve.17 Price appreciation at a national level is expected to be modest, and as the variance in projections to the left demonstrate, challenging to predict. In Greater Atlanta, due to pent up demand and market growth, price appreciation is expected to outpace national averages, in the range of 6-8% in 2024. This would deliver Atlanta 13 years of consecutive price appreciation.

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2023

MORTGAGE INTEREST RATES

In the past 18 months, mortgage rates surged to historic highs due to the Federal Reserve’s robust interest rate policies aimed at curbing inflation. However, a recent shift has seen rates steadily decline following pauses in the Fed’s rate hikes and subdued economic data. While refinance activity has been slow amid high rates, recent data from the Mortgage Bankers Association indicates a revival. Experts anticipate a further surge in refinance volume in 2024 if the Fed decides to cut rates, providing an opportunity for borrowers with high mortgage rates to reduce their monthly expenses. The Federal Reserve has signaled the intention to implement three rate reductions in 2024.18

NEW CONSTRUCTION

Economists anticipate 2024 to be a slightly better year for homebuilders than 2023, despite persistent challenges. Improved builder confidence is attributed to strong demand and declining construction costs nationwide, which, while not yet registering a year-overyear drop, have substantially decreased from their peak in November 2022.19 With the scarcity of existing homes for sale, buyers with the means are increasingly turning to new construction.

The homebuilding industry, comprising around 30% of new-home sales as a share of the entire housing market, is likely near its peak level, but the trend is expected to continue. NAR Chief Economist Lawrence Yun forecasts 1.48 million housing starts in 2024, encompassing 1.04 million single-family and 440,000 multifamily units.20 Home sellers are expected to face heightened competition from builders in 2024, as builders adapt to market conditions, focusing on lower-priced homes and making necessary price adjustments.

NATIONAL VS LOCAL ECONOMY

In 2023, the GDP has returned to its pre-pandemic level, signaling economic recovery. Core inflation has decelerated, yet it falls short of the desired target. Demand contributions persist above pre-pandemic levels, indicating some overheating. The normalization of supply chain disruptions is mitigating their impact on inflation.

The outlook for 2024 anticipates increased economic momentum and a decrease in inflation. This trend aligns with a broader pattern, as most of the industrialized world contends with a slowdown in growth. The housing recession is believed to be over, but affordability challenges will likely constrain the recovery.

Fortunately, Georgia is well-equipped to endure an economic downturn, potentially even a mild recession. Georgia’s GDP, adjusted for inflation, has completely bounced back from the effects of the pandemic-induced recession. There has been growth in total employment, and significant economic development initiatives are in progress. It is anticipated that Georgia’s economic performance will surpass that of the broader U.S. economy. 21

PEOPLE ARE FLOCKING SOUTH

Georgia is on the cusp of significant and sustained long-term growth, with projections indicating a remarkable increase of over 2 million people, taking it from just over 11 million currently to over 13 million by the year 2040.22 This growth trajectory positions the state to become the fifth largest in terms of population size. The city of Atlanta, a key player in this growth, added 14,300 residents in the past year, aligning with broader regional trends.23

The southern markets, including Georgia, are anticipated to outperform other regions, driven by faster job increases. Noteworthy is the influx of residents from California, constituting the largest group of 12.5% relocating to Georgia. The allure lies in the state’s reasonable tax rates and the availability of expansive living options. Georgia as a state is poised for sustained growth and increased prominence on the national stage.24

DEMOGRAPHICS

In 2023, first-time homebuyers constituted 32% of the national market, witnessing an increase from the previous year’s 26%, although still below the historical average of 38%. The typical age of first-time buyers slightly declined to 35, while repeat buyers’ median age also saw a small decrease to 58. Notably, 14% of homebuyers opted for multigenerational homes, motivated by caregiving, cost savings, and the return of adult children or relatives. The median distance between the purchased and previous homes decreased to 20 miles, indicating a shift from the previous year’s 50 miles and aligning with the historical norm of 15 miles.

For buyers, neighborhood quality was the most crucial factor at 60%, followed by convenience to friends and family (45%) and overall home affordability (39%). The typical home search lasted 10 weeks, with buyers visiting an average of seven homes, with four viewed exclusively online, mirroring patterns observed in 2022. In 2023, 80% of buyers secured financing, a slight increase from the previous year, but still below the 2021 figure. The typical down payment for first-time buyers reached 8%, the highest since 1997, while repeat buyers had a median down payment of 19%, the highest since 2005.25

THE LUXURY MARKET

In retrospect of 2023 and the outlook for 2024, the luxury real estate market in Greater Atlanta exhibited nuanced shifts and emerging trends. Despite a slight decrease in total sales to 3,034 units priced over $1M, indicating a discerning market, there was remarkable price resilience with a 3.3% increase in the average sale price to $2,642,637. This resilience was particularly pronounced in the higher price brackets, underscoring a sustained confidence in the luxury segment’s inherent value.26

Luxury homebuyer trends revealed a diverse profile, with younger buyers entering the market and a surge in female homeownership. The demand for eco-luxury properties aligned with global sustainability trends, and technological integration was evident across all market segments.

Key takeaways for 2024 include expectations of balanced growth across different price segments, a solidification of eco-luxury in the market, a diversifying buyer base, and sustained emphasis on sustainability and technology. Mortgage rates and economic outlook will continue to influence the market, and investment opportunities may arise, particularly in properties meeting evolving demands for eco-consciousness and modern luxury.27

Guest Contributor

Valerie Garrett

Principal

& Lead

Designer of Valerie Garrett Interiors

Color Trends

TRENDS IN THE WORLD OF INTERIOR DESIGN 2024

The expansive topic of trends often unfolds with many subtopics. Regardless of prevailing trends, their application must invariably take on a personalized, customized form that seamlessly aligns with the distinct individual preferences and requirements.

Customizing trends post-sale, contributing to a residence’s unique character, while witnessing clients derive joy from tailored living experience within their new home is a gratifying testament to the meaningful impact of design.

Designers are embracing warm and earthy tones as well as dark and moody colors

Wellness

There continues to be a strong focus on wellness features becoming the norm rather than the exception

Sustainability

There is a growing emphasis on using environmentally friendly materials and practices

KEY TAKEAWAYS

The National Association of REALTORS® (NAR) predicts a significant increase in existing-home sales, reaching 4.71 million, a 13.5% rise from the anticipated 4.1 million in 2023

Wallcoverings

Wallpaper remains popular with a variety of trendy options

Bringing the Outdoors In

From larger windows to living plants there is a high focus on embracing biophilia

For a more in-depth look at these and other trends, read our blog.

In Greater Atlanta, due to pent up demand and market growth, price appreciation is expected in the range of 6-8% in 2024

The Federal Reserve has signaled the intention to implement three rate reductions in 2024

To understand the value of your

or your neighborhood, reach out today for a customized market update.

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