All our lives, we’ve been told that “hindsight is 2020.” That might be true, but the Year 2020 is a great opportunity to look both backward and forwards for clues as to what to expect in Georgia real estate in the coming months.
Even as our real estate focus tends to be more localized, what happens on the national stage certainly has its impact and should be considered.
In October, the Fed cut interest rates for the third time in 2019. Most Federal Reserve officials are on record as saying that they believe that will be sufficient unless the economy were to weaken significantly.
The low-interest rates we presently enjoy do seem to encourage the mood and activity of home buyers. They likely understand that this is not the time to be sitting on the sidelines, hoping for even better rates.
Uncertainty, But Optimism
2020 is a year with a lot of question marks attached to it.
The results of the U.S. presidential election could have a big impact on the economy. Add to that, economists have been predicting an economic slowdown for several years that has so far failed to materialize.
Even in the housing sector, which tends to see a seven-year boom and bust cycles, it is overdue for a correction, having been on an upswing since 2008’s mega-crash. Nobody knows for sure when that correction will happen and to what degree a national slowdown will impact our local market.
In most regards, the economy looks strong. However, there are a few dark clouds hovering that you should be aware of, including that of household debt, which has been on the rise for the past five years. In fact, it is presently higher than it was at the peak of the financial crisis of 2008.
Even if delinquency rates across loan types remain flat (as they presently are), increasing household debt levels can depress buying activity, particularly with respect to larger purchases. And that can negatively affect the national and local housing market.
Georgia Real Estate: Key Metrics
Now that we’ve addressed what’s happening at the national level, let’s look at several key state-level metrics influencing Georgia real estate.
When providing year-to-year comparisons, we’ll use the latest numbers available (thanks primarily to our friends at the Georgia REALTORS® website).
2019 vs. 2018 - Fast Facts
Total New Listings increased by 5.9%
Total Closed Sales were up by 3.5%
Average Days on Market decreased by 6.8%, from 59 days to 55 days
Average Sales Price increased by 3.6%, from $261,204 to $270,608
As of November 2019, the Georgia median household income was 177% of that required to qualify for the median-priced Georgia home, given available interest rates at the time.
While that sounds impressive, this measure of housing affordability was actually much higher earlier in the decade.
In the first months of 2012, median household income was 450% of that required to purchase a median-priced home. Since that time, however, housing affordability has been on the decline, settling in recent years close to the November 2019 figure. While not a problem presently, it’s certainly something to watch.
It is expected that home inventory would fluctuate throughout a calendar year, typically higher during the spring and summer months. A look back at 2019 confirms this pattern, with Georgia’s November numbers down from mid-year highs.
But on a year to year basis, there has been an uptick in an inventory of 4.3%. The 12-month average for 2019 was 43,962 available homes compared to 42,168 in 2018.
The number of homes available (inventory) provides a partial picture of market conditions but is best understood when looked at relative to the average monthly pending sales (for the previous 12 months). Why? Because that is how you get a picture of how long it would take to exhaust the current supply of inventory.
The November 2019 inventory (listed above) represents a 3.6 month supply, given the average monthly pending sales for the past 12 months. To put this number in perspective, the middle of 2014 saw a high of seven month’s worth of inventory.
Taking all of the above into consideration, many industry observers are predicting a continued sellers market in Georgia, although most expect there will be a gradual slowing down of the rate of increase in home prices. Zillow, for example, is predicting an increase in home value of 2.5% for 2020 over the previous year.
Without a doubt, the state- and national-level information is useful. But you’ll want to dig further into the numbers and metrics for the local markets of interest to you within Georgia — because they will vary from one to another, and they’ll differ from the state average.
According to Zillow (whose numbers vary slightly from ours), the median price of a home in Georgia as of November 2019 was $210,294. At the same time, their “Zestimate” price for the median home in Cumming, Atlanta, and Macon markets came in at $281,800, $208,100, and $70,400 respectively.
Again, if you’re a buyer, seller, or real estate professional, you need to focus primarily on your market while keeping an eye on what’s happening at the state and national level.
It’s a Great Time to Get into Real Estate
Overall, the 2020 outlook for the Georgia real estate market conditions are quite good. But the truth is that, whether it’s a buyer’s or seller’s market, competent real estate agents are always in demand.
Ready to get it on the action? Find out how to get your Georgia real estate license today!