Woah! What's the deal with this market?

It has certainly been a crazy first quarter in the real estate market! Houses are going under contract before the ink is dry on the listing agreement. People are trying to do everything to win the bid even if it means taking financially risky steps and occasionally being not so fair with the competition.

Is this a bubble? The market is going to crash and these people paying over value are going to lose out... Aren’t they?

Unlikely. There are a lot of reasons that a market can take a dive, but based on what we are seeing now, it doesn’t look like a bubble market here in the Atlanta area. There are a number of contributing factors to real estate value and where the market heads next. To start, there is a tremendous lack of supply. Builders can’t or won’t build homes in lower-priced categories so homes in that sector are being bought and updated. People are moving to Atlanta suburbs at a crazy pace driven by jobs, weather, family, and lower cost of housing. We’ve been in an inventory shortage for years, but now it’s extreme. Last week we had fewer than 3 weeks of inventory (6 months is considered ideal).

This chart above shows the number of homes listed per month for the past 10 years. You can see little spring/summer spikes in the middle and drop-offs toward fall and winter. That’s normal. Notice 2011 about 7500 people per month were listing their home for sale in the spring and summer. That average has been on an overall decline. Supply is low and demand is high. At least for the foreseeable future, home values should stay strong.

Meanwhile, the population of Gwinnett keeps on growing. Currently, Gwinnett County is home to more than 950,000 residents. It's projected to have 1.5 million residents by 2040 and become Georgia’s most populous county. People are getting savvier with their finances and see real estate as a way to grow their wealth and secure a more reliable retirement plan. More millennials are living at home and skipping the rental market completely. They pay mom and dad low rent and save for their first home. Smart parents are co-investing as a means of padding their retirement AND getting the kids out of the house. If that wasn't already enough, did I mention years of record-low-interest rates?

These are just some of the factors that are in play in our current market. Can it change? Of course it can. There is always risk in any investment. However, unlike the stock market, when you invest in real estate, you always have something to show for it. No matter what happens, you have a roof over your head, a place to call home, or an income generator and safety net.

1 view0 comments

Recent Posts

See All