We are often asked, why is inventory so low? Marci Rosell, formally chief economist for CNBC and now chief economist for Leading Real Estate Companies of the World, points to demographics.
The continued slowdown in Atlanta home sales along with the unabated year-over-year surge in average home sales prices are the biggest takeaways in the recently-released summer issue of The Beacham Insider. However, the market results from the first part of 2018 bely a complicated story about the factors and facets of the Atlanta real estate market right now.
A persistent lack of housing inventory priced less than $750,000 (higher in some areas like Buckhead)along with a surplus above that threshold continues to play havoc with the market and create vastly different scenarios for buyers and sellers. The reason for this divergence has a lot to do with populationdemographics. Marci Rosell, formally chief economist for CNBC and now chief economist for Leading Real Estate Companies of the World of which Beacham & Company is a member, says to think of America’s population as a “barbell” with Baby Boomers on one side and Millennials on the other (with Gen X the tiny handle in-between). Nearly 7 out of 10 homes in U.S. are bought or sold by either a Millennial or Baby Boomer. Millennials and Boomers are, in many cases, pursuing the same type of housing (albeit for different reasons) which is extending an unprecedented housing inventory shortage – and making the inventory of larger more expensive homes rise. Until more Millennials age into the market for homes affluent Boomers want to sell, inventory of $2 million-plus homes will continue to rise.
“The data shows that a (luxury) property either sells very quickly out of the gate for a high percentage of its asking price, or it lingers on the market and sells at a much later date for a much lesser percentage of the original listing price.”
-Wall Street Journal article describing the “off the top”nature of the luxury real estate market / May 3, 2018
Number of years it would take to sell every home in Atlanta priced more than $3 million at the current rate of sale if no new listings were added.
TAKEAWAY: The luxury market “barbell” is unbalanced to the Baby Boomer side and that is likely to continue to be the case for the immediate future.
The percent of single family housing inventory as a percentage of U.S. population – an all-time low.
TAKEAWAY: Without more new construction and renovation/ regentrification, this number isn’t likely to materially improve in the near term.
What do local experts predict for Atlanta real estate in the second half of 2018 and beyond? Read the Insider to find out.
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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The firm has 100 agents who average $7 million in sales per agent, more than any other Atlanta real estate firm.