North Metro Atlanta is in the middle of a Quickly Shifting Real Estate Market, including Marietta, Woodstock, Canton, Roswell, Alpharetta, Jasper, Kennesaw, Ball Ground, Acworth, and many other local communities.
What does a shifting real estate market mean?
The status quo has changed and trends are changing direction. Home prices exploded the past 2 years because of cheap money. Low mortgage rates due to Fed monetary policy may have a lasting impact on home prices, see more on this thought. Recently, the Fed has shifted its monetary policy and mortgage interest rates have doubled since our January Market Outlook.
The short-term trend we can be confident about is that high mortgage interest rates will shrink demand. High prices & high interest rates are impacting affordability and will ultimately reduce demand in the short term. This does not mean sales will go to zero, but the total number of transactions will go down.
What are the key stats to watch in a shifting market?
Market Action Index (MAI)
Market Action Index is an at-a-glance measurement of market conditions. Primarily, it shows whether it’s a Buyer’s or Seller’s market. The Index is a barometer of real estate supply and demand. A value above 30 indicates demand is relatively robust, which is referred to as a Seller’s Market. Below 30 is a Buyer’s Market.
Months Of Supply (Inventory)
Months Of Supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.
Where do prices go from here?
We don’t know for certain and quite frankly nobody really knows, so be leary of clickbait headlines. We can say with some degree of confidence that prices will not be trending up in the short term. Whether prices decline or flatten in the future will depend a lot on how balanced the market becomes. Inventory will need to rise to pre-pandemic levels before predicting price declines with confidence. See Months Of Supply chart above.
What does this mean for Buyers & Sellers?
Selling your home during this shifting market may feel like catching a falling knife. Every week that goes by will see a shift towards buyers gaining more leverage.
- Getting showings will be harder as rising mortgage rates will decrease demand.
- Getting full price will be harder as rising inventory will give buyers more options.
- Getting offers without contingencies will be harder as rising rates will create less competition.
Buying a home will be easier, but will come with higher payments if you purchase with a mortgage. Monitoring mortgage rates and staying pre-approved will be critical to ensure you understand your buying power during this shifting market. Cash buyers will maintain their advantage.
- Getting more choices will be the biggest difference buyers will see immediately as inventory grows and seeks to return to a balanced market.
- Getting approval for a mortgage will be a critical first step to prove you can buy in this market.
- Getting terms that are more favorable will be easier than before, such as Due Diligence periods, Finance & Appraisal contingencies.
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