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SEM News, thinkMortgage™

May 2017 Cal-Culator

SEM News, thinkMortgage™: June 19th, 2017

Atlanta Housing Market Experiences Promising Rates, Sales and Prices

What a month for home sellers and buyers! Though home prices continued to rise impacting the affordability of homes and pricing some buyers out of their desired areas, buyers continued to reap the benefit of lower mortgage rates while homeowners saw a big increase in their home equity. Despite the ongoing imbalance of supply and demand, Atlanta’s residential real estate index rose for the fifth straight month in a row from 0.1 to a record 8.4.

Mortgage Rates

Freddie Mac’s Primary Mortgage Market most recent survey revealed the 30-year fixed mortgage hit its lowest level in nearly seven months. The 30-year fixed-rate mortgage averaged 3.89 percent, down from last week’s average of 3.94 percent. 

Home Equity

Homeowners with mortgages enjoyed a year-over-year equity increase totaling $766.4 billion in the first quarter, according to new data from CoreLogic. On average, homeowners gained approximately $13,400 in equity from the first quarter of last year to the first quarter of this year.

“Homeowner equity increased by over $750 billion during the last year, the largest increase since mid-2014,” said Frank Martell, president and CEO of CoreLogic. “The rising cushion of home equity is one of the main drivers of improved mortgage performance. It also supports consumer balance sheets, spending and the broader economy.”

Home Prices 

The latest S&P/Case-Shiller House Price Index revealed Atlanta prices rose 0.9 percent for the month of March, 5.5 percent higher than one year ago. Atlanta had the 12th largest price gain among the 20 largest metro areas. However, the report also commented on the continued inventory shortage that is plaguing Atlanta and the the rest of the nation.

“Sales of both new and existing homes, housing starts and the National Association of Home Builders’ sentiment index are all trending higher. Over the last year, analysts suggested that one factor pushing prices higher was the unusually low inventory of homes for sale,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.“People are staying in their homes longer rather than selling and trading up. If mortgage rates, currently near 4%, rise further, this could deter more people from selling and keep pressure on inventories and prices. While prices cannot rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing.

According to the Atlanta Journal-Constitution, Atlanta prices are just 1.2 percent below the peak of mid-2007.

Unfortunately, inventory, especially in the Atlanta area, has significantly limited opportunities for potential buyers interested in taking the plunge into homeownership as well as for buyers looking to move. Typically, a healthy market boasts a six or seven month inventory supply. Metro Atlanta has consistently been at roughly half that level or even lower, according to Inventory levels have decreased year over year by 28 percent in Clayton County, 21 percent in DeKalb County and 17 percent in Fulton County. Only Cobb County reflected no change in inventory levels.

If this multi-month pattern persists, next month’s Cal-Culator will reveal robust home prices and sales with limitations put in place by the inventory shortage.

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