Market Demand, Inventory and New Construction

Q: What do you see happening to housing market demand over the next 12 months?

Lane Jones: The greater Atlanta market has a regular seasonal pattern and even during the turmoil of the last decade, it’s been present and will continue. The spring market should be busy with families looking to move for the upcoming school year, this is consistently the most active part of the year. Overall the next year is likely to be neutral. The economy is not fundamentally healthy and much of the positive growth in the real estate sector was due to institutional investors. When their activity is removed from the data, the “normal market” tends to show the expected ebbs and flows. Things have stabilized but with rates estimated to rise around the 5% level and uncertainty on “main street”, many seem to be sitting on their hands.

A big wild card will be the influence of new construction and this segment may have heated up far to fast. Builders enjoyed very nice rebound from later 2011 through early 2014 as lenders liquated lots and communities abandoned during the crash. This period coincided with a huge increase in institutional investors buy anything and everything; it was a perfect storm for builders and buyers.

Because these homes were built on established lots, builders had a far lower cost basis and many times the savings were passed to buyers. Now we see an onslaught of brand new development in most parts of the market, and prices that are often well into the 400Ks and in many areas over 500K. We also see builders aggressively pursuing buyers with offers of free basement finishing, thousands in incentives and even significant agent bonuses. It is possible – and even likely – that there will be a sag in this segment; there is just so much being built and at prices that seem to be more than many wish to or can spend.

Holly Walther: It will increase at an unknown rate.

Jessica Jakulski: As opposed to previous years, 2015 is increasing as a builder market. Builders were able to capitalize on inexpensive land and as the US economy has improved, new construction has increased. Also as home values increase more people will list their homes which will create more inventory and more buyers.

Q: How will inventory move? What will buyer/seller markets be like next year?

Lane Jones: We will see the expected seasonal activity and the sellers that present appealing, well priced homes will find success. Buyers are out there and move forward with purchasing if they feel value is present; they have to feel good about the purchase. The wild card remains developing strength in the first time buyer segment that has to improve as it’s the foundation for a healthy market. Investor activity has waned; it will not be a major influence in 2015. Builders must be responsive to buyers; if sales are slow they need to act and find the level that buyers are at, if they don’t we will see a large inventory of new home again.

Marsha Sell: Inventory is still down and every property is different, but if it’s in right school district, location and price, I think we’ll still see multiple offers and strong interest. But it all varies, and still will next year, depending on locations. I still think multiple offer situations will go on next year. It all hinges on location and the condition of house, but many times, offers will still come in below asking price.

Q: Investors have been leaving the housing market for more secure and lucrative options. Do you expect this trend to carry over into 2015, and if so, is that good or bad or both for the market?

Jim Smith, 2015 President of Georgia REALTORS: Investors stepped in and purchased a lot of the foreclosed housing inventory when foreclosures and inventories were high. Foreclosures and housing inventory are lower now so I do not expect as much activity from investors.

What do you see happening with new construction?

Marsha Sell: It’s busy. If it’s in the right location, there’s a strong market for new home construction. Next year, projections are that it will be a better year. More first time buyers will entert he market and all indications say it will remain strong.