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Atlanta’s Residential Real Estate Index Hits Record High

SEM News: February 14th, 2017

The first Cal-Culator reflecting the current data of 2017 shows a 0.1-point increase, bringing the monthly Atlanta residential real estate index to an 8.0 – a new record high in the index’s three years of publishing. Home prices and continued low rates gave the index a boost, while stagnant homeownership levels and the possibility of higher rates obstructed a higher rating.

Mortgage Rates Still Low

Mortgage rates for the 30-year fixed-rate mortgage increased January 26 for the first time in nearly a month and for the first time in 2017, according to Freddie Mac Primary Mortgage Market Survey. With a strong economy and Janet Yellen teasing higher mortgage rates, the time to purchase is now while historically low rates are still in play.

“While rates are increasing, they remain very low from a historical standpoint. In contrast, meaningful gains in wages help offset some of the decrease in affordability. Even as rates rise above four percent, housing, on a purchasing-power adjusted basis, continues to be as affordable as it was almost 18 years ago in April 1999,” said economist Mark Fleming.

Home Prices Still Increasing

Home prices are on the rise throughout the country and especially in Atlanta. Buyers’ homes are quickly building equity, sometimes as much as double-digit increases in just a few years. Eight of the 40 largest metros saw new home price peaks in 2016 with St. Louis as the sole metro area that saw negative year-to-date home price movement.

The latest date (data?) from 2016 shows that home prices increased 7.1 percent year-over-year, 6.1 percent in Georgia, and 1.1 percent month-over-month. CoreLogic’s Home Price Insight found sales are expected to reach a new peak level in October 2017.

“Last summer’s very low mortgage rates sparked demand, and with for-sale inventories low, the result has been a pickup in home-price growth,” said CoreLogic Chief Economist Dr. Frank Nothaft. “With mortgage rates higher today and expected to rise even further in 2017, our national Home Price Index is expected to slow to 4.7 percent year over year by November 2017.”

Homeownership Rate Stagnant

Unfortunately, homeownership levels remain unchanged from last year. The U.S. Census Bureau revealed that the homeownership rate in the fourth quarter of 2016, 63.7 percent, was not statistically different than the fourth quarter of 2015.

However, the Redfin Housing Demand Index increased 15.1 percent and homebuyer demand increased by 26.3 percent, fueled by a 36.4 percent year-over-year increase in homebuyers requesting tours and 10.2 percent year-over-year increase in buyers making offers.

“In general, buyers are attracted to brand-new listings,” said Redfin Chief Economist Nela Richardson. “In December, we started seeing homes that spent time on the market, perhaps because they were not in the hottest neighborhood or needed renovation, finally get offers. Based on the number of sellers who’ve contacted Redfin this month, we expect a sizeable increase in new listings in the next two months. With new listings on the way and this year’s buyers willing to take a look at older inventory, we anticipate that sales in early 2017 will be strong.”

The next Cal-Culator will be released March 13th.

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