After a year where home price appreciation soared 20% or even more in some areas, you wouldn’t be alone wondering what’s on the horizon as we inch closer to the spring housing market. Many nationwide publications demonstrate that we are not in a house price bubble, and growth prospects for Atlanta are likely even better than national levels in 2022.
Atlanta has been 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. Magnetic Markets are defined as “destinations for people and businesses and are growing faster than the US average in terms of population and jobs.”
2022 should be a continuation of the previous year, but with greater signs of market seasonality making a comeback. Inventory levels should 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 pull market, Atlanta will see high levels of real estate investment and second home purchases. The wealthy have accumulated more wealth during the pandemic and during a time of volatility and travel restrictions, real estate has become a preferred outlet for investment. Atlanta is one of the strongest investment markets in the United States, and in the third quarter of 2021, the investor share of Atlanta home sales exceeded 30%.
Price appreciation should be moderated by measures to address rising national inflation and housing affordability issues. This will cause house price growth to decelerate, which means house prices will continue to rise, but the growth rate will be lower than in 2021. With strong population growth and general appeal, the Price appreciation in Atlanta will be at the high end nationally with market-wide averages in the 7-10% range.
Demographics will influence market dynamics. Many baby boomers, with high equity in their property, will retire. This should free up inventory from traditional single-family homes, while increasing demand for high-end, lifestyle-focused retirement communities. Millennials, who make up the largest segment of homebuyers, have returned home in record numbers during the pandemic, creating savings opportunities. These accumulated savings should lead to increased demand in areas and price ranges with a large share of first-time home buyers.
The desire for a home that offers more should be a permanent change, 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 around 15% will remain permanently remote, including around 25% in some form of hybrid situation. The biggest design trend will be to bring the outdoors in. As people spend more time at home, they want to stay connected to nature. Expect to see lots of green colors, interior gardens and patios as a direct extension of the living areas.
For a more detailed look at the trends driving the market, Harry Norman, REALTORS® Metro Atlanta Residential Real Estate Forecast has it all.