Analysis says Metro Atlanta housing is overpriced
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Metro Atlanta's housing market is overpriced. But hey, at least we're no longer No. 1 nationwide, according to a new analysis.
Why it matters: Two Florida economists said overvaluation could make the housing market unaffordable for some — and it could put sellers at risk of losing wealth if and when their home's value levels out.
How it works: Researchers from Florida Atlantic University and Florida International University review new Zillow data each month and study it in comparison to data going back to January 2000 to develop a ranking of the top 100 housing markets around the country based on their degree of overpricing and underpricing.
By the numbers: Metro Atlanta's expected average home value stood at $276,033 in May, but the actual sales price was on average $387,471.
- Metro Atlanta's housing premiums are 40.37% overvalued, according to the analysis, which is the second-highest overvaluation in the country, behind Detroit.
- 98 cities in the study are selling the average property above its historical implied price in their area. Only two, Honolulu and New Orleans, are selling below the historical implied price of property in their area.
Threat level: The economists said they think housing prices will stabilize again.
- But FIU economist Eli Beracha said he wonders if there will be "a precipitous fall" in home prices, or if prices will slowly flatten and sustain equity values at the risk of creating affordability problems.
What they're saying: The researchers recently found that Atlanta's housing premiums are double or triple what they were before the peak of the last housing cycle.
- They suggested that renting and reinvesting the monies they would have put into homeownership might be the wiser option for many households.
Context: The housing cycle is a recurring pattern of economic recovery, expansion, over-supply, and recession in the real estate market.
- The last housing cycle's peak was in 2006 nationally and 2007 in metro Atlanta.
Reality check: Metro Atlanta realtor Zoey Williams told Axios that no one truly knows where the market will be next year or in 2026.
- But we know people need housing, and some sellers will contribute to closing costs to help homebuyers, she said.
Behind the scenes: Williams added that renting isn't necessarily more affordable than buying a home in the current market.
- For instance, Williams said she's working with a household that will pay $1,800 a month for a three-bedroom, two-bathroom home in Stone Mountain with half an acre. She said some Atlanta apartments charge that same price for a two-bedroom unit.
The bottom line: Atlanta's housing market is slow and expensive, Williams said, but in comparison to other places, there are still deals that can be made.
- "A lot of people just give up, and you can't. You have to be tenacious when it comes to real estate."