We will review the Georgia real estate market for the last 24 months to find out what is driving the soaring price of homes. And can we expect those trends to continue in 2022?
First, prices are steadily marching higher. The average home price is $393,000 which has risen from $291,000 two years ago. That's a 35% increase or $102,000, with $60,000 in the last 12 months!
So prices are definitely up and still climbing with October and November hitting more than 17% growth compared to the prior year.
So, what is propelling the real estate rocket ship in Georgia? Low Inventory. When we look at the number of active listings (homes for sale and ready to be purchased) there is a dropping supply of homes. In 2020, there was on average 30,000 homes available per month. In 2021, the number of homes for sale has shrunk to 20,000 per month. Fewer homes available push prices higher.
Are more homes coming to market soon? Low inventory can only be overcome when more homes are brought to market. But in Georgia, the numbers do not indicate a flood of new or resale homes available. New listings picked up a little bit of steam in summer, but have since leveled off.
There is a cooling period in real estate as we set into winter and it's not the weather. The number of pending sales is on the decline. So fewer people are buying. And the number of houses sold has declined sharply in the last six months. Fewer buyers might slow the rise in home prices.
So where does that leave us for 2022? The sharp increase in prices will continue to slow the number of buyers in the market. However, the lack of inventory will continue to keep prices high through the first six months and possibly all year in 2022. The two main drivers of inventory are new construction, resales and foreclosures. New construction will continue to expand in 2022 which will bring more resales to market as people trade up, but foreclosures being brought to market declined for all of 2021 except for a spike in November. Without a steady supply of foreclosures to lower comparables for appraisals, expect prices to increase or hold the current position.
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