By some metrics, Georgia’s economy is firing on all cylinders with high tax revenues, low unemployment and high rates of industrial construction.
But as the Norton Agency looks ahead to what 2022 may bring, it predicts the housing market will see continued problems with high costs, low inventory levels and soaring prices that will block out many first-time home buyers.
Here are some key takeaways from Norton’s annual economic forecast from CEO Frank Norton Jr., who presented his report Tuesday, Jan. 25, at Lanier Technical College.
Where are average homes, homebuyers?
“We are not sure who qualifies as ‘average’ nowadays, but what we do know is that the average house is history as is the average house price,” Norton said.
In the last year, the idea of the average home buyer evaporated, Norton said, because inventory decreased so dramatically and prices increased just as dramatically. The average home sale price in Hall County increased by nearly 20% in the last year, according to First Multiple Listing Service data, and inventory has decreased by 54% in the same span.
“2021 saw the inventory for average homes evaporate, saw builders pushing for greater profit margins flee from previous bread-and-butter construction and governments impose material density and square footage requirements all but forcing entry level starter homes or first-time buyer products to extinction,” Norton said.
In 2022, Norton Native Intelligence, an annual report compiled by Norton, predicts current trends to continue with less inventory, higher costs and less new home construction.
Labor, lumber and steel prices remain high, making it difficult to find any homes in Hall County for under $250,000.
Interest still low but likely to increase some
Don’t expect interest rates to stay quite this low forever, but 2022 should still be a good time to take out a loan.
The U.S. Federal Reserve System has kept interest rates low during the pandemic, but Norton expects rates to increase this year.
Mortgage rates averaged 3.18% in the last quarter of 2021, and Norton’s projections show they could rise up to 3.55% by the third quarter of 2022. Though rates will likely go up slightly, they should remain relatively low when compared to rates before the 2008 housing crisis. Mortgage rates were as high as 6.7% in 2007, according to Freddie Mac data.
Housing and commercial inventory low
One of the key issues causing homes to soar in value is there simply aren’t enough of them in North Georgia, or around the country, especially for those looking to rent.
The vacancy rate for multi-family units in Hall County is at just 2.3% as of Jan. 1, 2022, according to Norton Native Intelligence data.
Inventory is low in the commercial world, too. The Norton Native Intelligence forecast states that office inventory is low in North Georgia, even though the region has been less affected by the pandemic than offices in larger metropolitan areas.
Norton’s market temperature metrics show that the market for commercial real estate has heated up since the start of the pandemic, but retail and offices have not come back up to pre-pandemic levels. Industrial developers will likely have to move farther out along Interstate 85 and east toward Augusta for space in a market where land is more costly.