The Booming Roswell Real Estate Market in 2021
The Metro Atlanta real estate market has seen prices increase that are consistent with, if not higher than, many major cities around the country. Today I want to take a few minutes and look at the Roswell real estate market which sits on the north side of Atlanta along the Georgia 400 corridor. We’re going to look at where it is now, where it’s likely to go in 2021 and what outside influences may have an impact on the supply and demand which will ultimately determine if this market is here to stay a while longer or if we are on the verge of a crash like many are predicting.
My name is Ryan Ward and I’m the broker and owner of Premier Atlanta Real Estate and on my channel, we talk about local and national real estate news and we dive deeper into local cities, neighborhoods, and things that make our local real state markets tick like restaurants, things to do and other points of interest. If that’s of interest to you, please make sure you subscribe to my channel and you’ll get notified when we post a new video like this one here.
Let’s dive right in…all real estate markets come down to supply and demand. As a general rule of thumb, we say that a 6 month supply of homes is a “balanced” market. More than 6 months, is a buyer’s market and less than 6 months is a seller’s market. This is true locally for homes in Roswell up to about $750,000 or so and then “a balanced market” goes up a little. So for say a home that is $1,000,000, we might consider a balanced market of 9 months of inventory. This can change even within different areas of the Metro Atlanta market and it’s closely tied to median sales prices for the hyperlocal area.
A quick note on months of inventory. This is sometimes discussed as absorption rate, the months supply of homes, or months of inventory. Let me give a quick example. Let’s say in your market there are 100 homes for sale. In the last 3 months, 30 homes sold so we are currently averaging 10 home sales per month. At the rate of 10 sales per month, it will take 10 months to sell 100 homes. We have 10 months of inventory. The absorption rate is 10 months. There is a 10 month supply of homes. We then compare our 10 month supply of homes to our previous rule of a balanced market being 6 months of inventory and see that in this example, we are in a buyers market. Hopefully, that makes sense!
As a side note here, it’s been a long time since we have seen 10 months of inventory in Roswell. In fact, the last time we even had over 6 months of inventory was February 2015! 6 years ago. Wow. Sorry, I digress. Ok, we can’t know where we’re going until we know where we are right now so let’s dive in and see what’s actually going on in the local Roswell market.
Today, at the beginning of February 2021, there are 79 homes for sale and 140 more homes under contract. That’s an activity index of 1.77 where anything over 1 indicates more homes are selling than are available. It’s a leading indicator that tells us inventory is still shrinking - and by quite a bit! Looking at the last 3 months of sales (and knowing they are some of the slowest months of sales in the whole year), we see that we had 283 sales and are averaging 94 sales per month. With 79 homes for sale and 94 sales per month, we see we have a .84 of one month supply of homes. Less than a month! That’s using previous sales volume and we know that sales heat up over the next few months. This means the true inventory of single-family homes in Roswell right now is probably closer to one-half of one month's supply of homes. This is incredibly low. Crazy low.
It explains why prices are increasing, it explains why we have so many multiple offer scenarios and it is something we as real estate professionals must be able to explain to our clients so we can properly educate them on the current state of the market. This goes for buyers and for sellers alike. What this means is appraisals can’t keep up with sales prices. It means buyers with homes to sell get beat out by buyers with no contingencies. It means more than one person wants to buy every good house on the market.
You know what it doesn’t mean? It doesn’t mean that all homes sell. In fact, in Roswell, in the last 30 days, 20 homes came on the market and then came off without selling. That’s 25% of homes in this crazy market still didn’t sell for one reason or another. Seems impossible, but it’s true! These levels are unhealthy and create a volatile real estate market as prices outpace other economic metrics for extended periods of time.
Two things can happen to change the balance of the market; more inventory can come on the market or fewer home sales can happen or both. If sales volume stayed the same, we would need 564 homes for sale instead of 79 to reach a balanced market. That’s more than 7 times the current inventory levels. Alternatively, we could cut sales from 94 per month to 13. That would also give us a balanced market. However, that’s absurd to think we could only have 13 sales.
It’s these reasons that I give to you here that means in my opinion, there is no way we see a crash in the real estate market. Supply and demand are so far out of balance it would take something extraordinary and completely unpredicted to crash the market. It also means that in no way, shape or form can forbearance that leads to foreclosure destroy the market. The math simply doesn’t exist to allow for it. It means that interest rates would need to run to levels higher than would be possible to slow sales enough to crash the market and the Fed has said they are keeping them low into 2022.
It also means that if rates rise and foreclosures do come into the market, we still won’t be back to a buyers market. We are that far out of balance the other way right now. As a side note, there will be no foreclosure crisis in 2021. The moratorium extensions and the time it takes to foreclose and get them into the market takes longer than there are months left in 2021. When they come, they will be predicted and absorbed before the market can shift that far. It is true that some of the low inventory levels can be directly attributed to COVID. Because this is the case, we can safely say that at some point in 2021, probably by the start of the 3rd quarter, we should see more people willing to list their homes for sale. This will ease some of the pressure but it will be too late in the year to create a slowdown.
The economy is poised to operate fully once the vaccine is distributed, jobs will return, banks will recast and modify loans and set up repayment plans for people in forbearance and we will move on. That’s how it works. What I do think will happen is that we will go back to a more normal real estate market in 2022 when we see 4-6 months of inventory and prices level off for a while. This will be welcome news for many.
This is just my opinion and I no more have a crystal ball to see into the future than anyone else so take it for what it is. If you’re sitting on the sideline as one says you’re going to wait for the crash, by all means, wait. For the rest of you, in my opinion, now is probably the best time to buy and sell real state in your lifetime. Rarely is it both great to buy and sell at the same time. Get out there and seize the opportunity! Once again thanks for watching and if you enjoyed this video, make sure you subscribe to my channel so you’ll get notified of other videos like this one. Until next time, thanks for watching!