ATLANTA — After a whirlwind year for the Atlanta housing market, prospective home buyers may find stability in 2022, according to reporting from Atlanta Business Chronicle.
Metro Atlanta's annual median price for existing homes is expected to rise 3.6% next year, according to Realtor.com's 2022 housing forecast. That would be a far departure from 2021, which has seen home prices reach record appreciation.
Realtor.com forecast model uses data on the housing market and overall economy to estimate values for the year ahead.
Prices soared over the past year due to effects created by the coronavirus pandemic. With more people working from home, some sought new homes with more space or, no longer tethered to a physical office, decided to move to less expensive markets. Meanwhile, many millennials entered the housing market for the first time. All of this resulted in a spike in demand that overwhelmed supply.
Inventory may rebound somewhat over the coming 12 months.
Reported housing starts and building permit applications indicate more new construction could come to market next year, according to George Ratiu, manager of economic research for Realtor.com. He added that some potential sellers delayed their plans in 2021 for fear of becoming buyers in a hot market, but they may soon decide to move forward.
Retirees hoping to downsize, young couples ready to upgrade from starter homes, and parents looking to move into new school districts: These types of buyers put off plans amid the pandemic. Now, they may be tired of waiting.
Last spring, roughly 10% of homeowners said they were planning to sell within 12 months, according to Realtor.com surveys. By fall, that number jumped to 26%.
"That's significant," Ratiu told Atlanta Business Chronicle. "We see that really having a positive impact."
Home sales are expected to rise 10% year over year, which ranks 15th out of the 100 metro areas included in the forecast. While the majority of buyers may be locally based, corporate expansions and Atlanta's relative affordability compared to other big metro markets should continue to draw transplants. As of the third quarter, roughly 30% of prospective buyers looking for homes in Atlanta were based outside the metro area, Ratiu said.
Affordability is a growing challenge locally. The Federal Reserve Bank of Atlanta's home ownership affordability monitor rates the metro area as affordable for households earning the median area income, but that is changing quickly.
The issue will remain prevalent in 2022. While home prices may cool, it is unlikely that they will decline. On the other hand, interest rates are going up and could hit 3.6% by the end of next year. That takes a chunk out of any prospective buyer's budget. If significant inflation continues through part of next year, that will add pressure.
The best potential countermeasure to boost affordability would be an increase in wages to match inflation. It remains to be seen if continued labor shortages across some industries will result in meaningful pay increases.
"I think that might put some pressure on wages, but I'm not sure it will be enough," Ratiu said. "I think affordability will very much be a central challenge for housing in 2022."