The US housing market in 2018 will cool down, according to analysts and recent predictions. For the past several years, the real estate market was characterized as a seller’s market where property sellers had more leverage than property buyers. The short inventory of homes and heightened demand provided property sellers with strong bargaining power within the United States and its local housing markets. The bargaining power in the United States for 2018 is expected to remain with property sellers. As home prices and costs continue to rise, and new more rigid taxes are being enacted, buyers are less encouraged to buy properties.
However, when considering buying a real estate property, one should remember that local housing markets within the US are highly diverse. Thus, you should take a detailed look at a specific market before deciding whether to invest there or not. Here we will take a look at the Atlanta real estate market and its predicted performance in 2018. In specific, is Atlanta a seller’s market too? How’s Atlanta real estate looking amidst such a shift?
Today, our team of experts at Mashvisor has assessed the Atlanta real estate market and concluded on three important issues. As we explain the viability of investing in Atlanta real estate at the beginning of this year, we propose two neighborhoods that, if you were to invest in Atlanta, you should consider.
Property Inventory Is Lagging
Atlanta investment properties are scarce, while inventory continues to be very low. According to a reputable brokerage, the Atlanta housing market had only a three-month supply of homes in 2017, which is three months less than the recommended. Consequently, the increasing demand that is not being met and the very limited supply of homes have contributed to an increase in home values. Suppliers, or property sellers, are enjoying more leverage and consequently raising prices. Despite just a 3-month supply of homes on the market, Atlanta existing home sales hit an 11-year high. Despite the excruciatingly high prices, real estate investing in Atlanta remains to be among the best performing.
Mortgage Rates Are Increasing
Home values will continue to increase in 2018, according to analysts. This will certainly incur more costs for real estate investors who are looking to buy property. Besides the rising home values, mortgage rates will be burdensome on many buyers’ budgets. Analysts suggest that mortgage rates will continue to rise throughout 2018, reaching above 5% for a 30-year mortgage loan. This increase is mainly due to the Federal Reserve’s plan to reduce the size of its $4.5 trillion asset portfolio, which includes $1.7 trillion in mortgage securities. Thus, the rising mortgage rates will most likely discourage prospective sellers from selling their houses and instead hold on to their tax savings.
Home Prices Are Rising Too
From 2016 through 2017, home values in the Atlanta real estate market rose by nearly 10%, which is a lot higher than the national average for annual price appreciation. Home prices in the Atlanta real estate market will rise even further in 2018, analysts predict. According to analysts, from the summer of 2017 throughout the summer of 2018, median home values will rise by 5.3%. We conclude then that purchasing a home now is a more viable option than to buy a house in June of 2018, when prices will be 5.3% higher. If you are not very keen on buying a house in the Atlanta real estate market, we advise that you hold off your purchase here until home values decrease and the market becomes a buyer’s market and look into other more profitable real estate markets across the US.
Top Neighborhoods in the Atlanta Real Estate Market
This section explores two neighborhoods in the Atlanta real estate market with a high potential for real estate investing. Amidst a low inventory and a high demand for housing, finding a home to align with your budget can be burdensome. Below we facilitate this process for you.
- Median Home Value: $270,000
- Median Rent: $1,300/month
The name Grant Park refers to the oldest city park in Atlanta, GA. Grant Park is a residential district that houses many Victorian mansions and craftsman bungalows. Only minutes away from Downtown Atlanta, Grant Park is a quiet neighborhood and is in close proximity to major amenities. About 55% of the population owns their homes, with more people opting for homeownership given the high rent. If you are looking for a home that is close to Atlanta Downtown and is yet affordable, consider Grant Park. If you are a real estate investor and looking for a high cash on cash return, consider investing in an investment property to rent out in this neighborhood.
- Median Home Value: $220,000
- Median Rent: $1,100/month
Of the most elegant of Atlanta real estate is Hanover West. Located along the Peachtree Creek, Hanover West houses about 100 homes that were originally developed in the 1960’s. With a very small population of about 3,000, Hanover West offers its residents excellent amenities and various entertainment activities. The median home rent is almost equal to the national average, while the average home value continues to be a little higher than the national average, at around $220,000. According to Niche, Hanover West ranked top 1 of the best places to buy a house in the Atlanta area. About 75% of the population, however, continues to rent their homes. This is because the majority of the population is college graduates, and young professionals have yet not settled in. If you are looking for a rental investment with high returns, Hanover West might then be your destination.
Overall, the Atlanta real estate market will foresee some hurdles as mortgage rates and home prices continue to increase. The rising home prices and mortgage rates will pose some problems to real estate investors. Despite such turbulence, investment opportunities in the two aforementioned neighborhoods are looking promising in the Atlanta real estate market today. We advise that you further look into these neighborhoods if you are keen on expanding your real estate investment business to Atlanta.
For more information about Atlanta real estate, visit Mashvisor.