Atlanta’s spring home selling season started off strong with a big jump in home values from last year. In March 2016, the average price for a home in the U.S. was $186,000. According to a report from Re/Max of Georgia, Atlanta alone saw a median home price of $220,000, up 10.6% from last year.
“There continues to be a growing increase in demand in the area, as greater Atlanta is now below the national average for months supply,” said John Rainey, Vice President of Re/Max Georgia.
The market might look hot right now, but the double-digit price increases may hint at a “bubble” forming in the Atlanta housing market. And the aftermath of a housing bubble popping can be disastrous, as most Americans remember well. Though a small bubble may not have as much of an impact as the housing market crash of the Great Recession, it could still hold big consequences for the area.
Re/Max reports that a six-month supply of homes is representative of a balanced market, but the numbers reported for March only represented about a two-month supply. So while prices are great for sellers, buyers are having a much more difficult time.
Fewer homes for sale means prices are being driven higher and higher. This means buyers either have to strain themselves to cover expenses or compromise on home size, quality, and location for a more modest price. Unfortunately, it also means the increase in housing prices may not be sustainable.
But many homeowners have given up on the house hunting business altogether, instead opting to remodel their existing homes. As of 2015, the most common remodeling jobs were in the bathroom and kitchen, coming in at 81% and 79% of all home improvement projects, respectively. That means renovating homeowners are improving multiple areas within and around their home. And home improvement companies like Home Depot are reaping the benefits.
“You want a drill, you want a lawnmower, you want a can of paint — you are going to find the best product,” Ted Decker, Home Depot executive vice president, told the Atlanta Journal-Constitution (AJC).
Home Depot is a business that is in the right place at the right time. Even imbalances in the housing market — much like the one in Atlanta right now — work to the company’s advantage. A low number of homes for sale means millions of homeowners are staying put and investing in the property they already have.
Even a simple landscaping job can increase a home’s resale value by 14%. Current homeowners are putting money into these projects, and into Home Depot’s success. Marshal Cohen, chief industry analyst at the New York-based NPD Group, explained that owners are investing time into their homes as well as money.
“We are more nest-centric,” Cohen said. “We are all doing more things at home. Yes, we travel a lot, but when we are not traveling, we are spending more money at home.”
But for those people looking for a new home in Atlanta, the tide has yet to turn in their favor. But summer is just around the corner, and it may provide a better outlook for buyers rather than sellers.