Coming off a year where home price appreciation climbed 20 percent, or even more in some areas, you wouldn’t be alone in wondering what’s on the horizon as we edge closer to the spring housing market. Much has been published nationally demonstrating that we are not in a housing price bubble, and the growth outlook for Atlanta is likely even better than national levels again in 2022.
Atlanta was identified as one of the top 10 Markets to watch in 2022 by PwC Emerging Trends in Real Estate report where Atlanta was recognized as a magnet market. Magnet markets are defined as “destinations for both people and companies and growing more quickly than the U.S. average in terms of both population and jobs.”
2022 is expected to be a continuation of the year prior, but with greater signs of market seasonality making a return. Inventory levels are expected to improve as sellers take advantage of the opportunity to capitalize on equity growth. These inventory improvements will only be moderate relative to strong buyer demand driven by historically favorable interest rates.
As a magnet market, Atlanta will see high levels of investment property and second home purchase. The wealthy accumulated more wealth during the pandemic and during a time of volatility and travel restrictions, real estate became a favored outlet for investment. Atlanta is one of the most robust investment markets in the U.S., and in the third quarter of 2021 investor share of Atlanta home sales topped 30 percent.
Price appreciation is expected to be moderated by measures to address rising national inflation and housing affordability challenges. This will result in home price growth deceleration, meaning home prices will continue to increase, but the rate of growth will be lower than experienced in 2021. With strong population growth and overall appeal, Atlanta price appreciation will be at the higher end of the national spectrum with market-wide averages in the range of 7 to 10 percent.
Demographics will influence market dynamics. Many baby boomers, with strong home equity, will move to retirement. This is expected to free up traditional single-family home inventory, while at the same time increasing demand for higher-end, lifestyle-focused retirement communities. Millennials, who are the largest home-buying segment, moved back home in record numbers during the pandemic, creating opportunities for savings. These accumulated savings are expected to drive increased demand in areas and price brackets with a large share of first-time Home Buyers.
The desire for a home that offers more is expected to be a permanent shift, regardless of the future of the pandemic. People will return to offices but the demand for home offices will continue as it is estimated that about 15% will remain permanently remote, with about 25% in some form of hybrid situation. The greatest design trend will center around bringing the outside in. As people spend more time at home, they want to stay connected to nature. Expect to see a lot of green colors, indoor gardens, and patios as a direct extension of living areas.
For a more detailed look at the trends driving the market, the Harry Norman, REALTORS® Metro Atlanta Residential Real Estate Forecast has it all.
