Booming Real Estate Market in Atlanta
Posted on December 16, 2019 by Nancy Liu | Category: Real Estate
While the nation is slowing down, Atlanta Real Estate is Booming
Since the peeking of the price appreciation in housing in the second quarter of 2005, it has been decelerating due to Federal Reserve’s sixteen times hike of interest rate and ever higher price of oil and gas. According to the National Association of Realtors (NAR) existing housings will have the appreciation of 5.3% in the US during 2006, and this is not even half of the 12.1% which we experienced on average last year. In some high priced metro areas where the price of the housing has been the hottest in recent years, it has been showing a sign of slowing down, and this is making a lot of people nervous. Some even suggests that a housing crash is inevitable. Many of investors in Atlanta is curious to know how this nationwide housing market’s slowing down is going to affect the booming housing market in Atlanta.
According to the analysis on real estate market released by the Global Insight under the title of “National City Housing Valuation”, 39% of all single family housing in the US may be “extremely overvalued”. The study was made in association with National City, a lender, and the nation’s 317 biggest housing markets were examined. Among these 317 housing markets, 71 fell under the threshold of ‘severely overvalued’, indicating that at least 34%of the housing are predicted to be overvalued. During the first quarter of 2006, the 50 most overvalued housing markets experienced a 10.1% annual rate of price appreciation. This study attempted to predict what the price should be by taking the differences in population density, relative income levels, interest rates, and historically market premiums or discounts into consideration. Taking about 66 known markets that had price declines since 1985 as examples, the researchers tried to identify the common characteristics that are preceded by those declines. By finding those leading indicators, the study hoped to be able to predict the future declines. From the study, the researchers concluded that when a local real estate was found overvalued by 34% or more, it was at significant risk of some price reductions in the future. Recently, Naples has ranked number one in the top 20 most overvalued markets. According to the study, a median priced single family home in Napes, which has been sold for $383,000, about 102% more than it should have been – $189,600.
In contrast, the same study showed a very different result in Atlanta. In case of metro Atlanta area, housings were appraised for a value almost the same as that of predicted value, and the difference was less than 1%. During the first quarter of 2006, the housings were sold for a median price of about $175,800 in metro Atlanta area. This price seems to be a bit higher than the price predicted for Atlanta housings, but in sum, the difference was found statistically insignificant since it was by less than one percent. In addition, the median price of Atlanta housings continued to be favorable when compared to the national housing median price reported in April by the NAR – $223,000.
Looking back in the past five years, while national average price appreciation ratio soared to 10-20%, the average price appreciation ratio in metro Atlanta fluctuated from 3 to 5%. In metro Atlanta area, no sign of bubbles seems to be found in real estate market. Moreover, it is worth noting that Atlanta has rapidly growing since the 1996 Olympics. The city of Atlanta had become the economic center of Southeast USA. Thirteen of 500 Fortune Companies, including Coca Cola, CNN, UPS, etc., have headquarters in Atlanta. More than 1,000 international businesses are operated here in Atlanta, and more than 50 countries have presence through consulates, trade offices and chambers of commerce in Atlanta.
Atlanta has become one of the fastest growing big cities within the top ten metropolitan areas. In the past 10 years, more and more young and high-tech skilled immigrants have settled here in Atlanta. The Atlanta Regional Commission is predicting around 2.5 million populations will immigrate into Atlanta in the following 25 years, which will have a significant and positive impacts on Atlanta economy, especially in the housing, traveling, and logistic industries.
There is no doubt that a nationwide housing market’s slowing down will have some impacts on Atlanta real estate market. Nevertheless, considering Atlanta’s population growth and its brisk economic growth, instead of seeing market crash, Atlanta real estate market will continue its healthy growth and is well on its way of becoming the star city of the USA in the coming decades.
Who would want to miss such a good opportunity to invest in Atlanta?
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