If you were shopping for homes in metro Atlanta a year ago, you might have had your pick of houses in any number of neighborhoods.
There are barely enough homes for sale in metro Atlanta to meet the demand of the people who want to buy them.
“It came on so quickly,” said Nancy See, president of the Atlanta Board of Realtors. “A year ago, it was not this way.”
Housing inventory is measured in months, with the number of homes on the market in a given area compared to how many sold there in the preceding 12 months. If sales continue at the same pace, the thinking goes, the measure shows how many months will pass before all the homes on the market would be sold.
In a normal market, there is usually a six-month supply of homes for sale. But at the end of March, metro Atlanta’s supply was down to 2.9 months worth of houses, according to data from Smart Numbers. In several metro Atlanta counties, there were fewer than two months worth of houses for sale.
In the middle of 2008, there was a 13.8 month supply of houses in metro Atlanta, said Eugene James, Atlanta regional director of Metrostudy, a housing analytics firm. The measure includes both new construction and resale homes.
Lower inventory is good for sellers, as it drives prices up and means some can get more than their asking price. As prices rise, values increase and homeowners who owed more than their home was worth start to come above water on their loans.
But low inventory can be a problem for buyers. With fewer houses for sale, there is more competition for existing homes. Buyers cannot always find something that suits their needs, and when they do, they have to compete against others — and quickly.
James Barrett, who last month closed on a house in Alpharetta, said he and his wife three times wanted to look at houses that had been taken off the market by the time they tried to see them.
Barrett looked at more than 100 houses online, visiting 10 before he found the home with the large, fenced-in yard that was perfect for his family’s three dogs.
“I had intended to go see a few more,” he said. “Twenty percent of all houses we wanted to see, we couldn’t see.”
Fewer homes on the market means See’s Realtors often have a hard time making a match for their clients.
“There are buyers out there we cannot even find houses for,” See said. “It’s something we have not seen for many years.”
Since Realtors make money on listings, the low inventory puts them in a difficult place, said John Hunt, a senior analyst with Smart Numbers.
Some homeowners who might be inclined to sell are locked into rental agreements with tenants they brought on to help them through the recession, See said.
Others who could sell might be waiting for the market to continue to climb. Homes in metro Atlanta have returned to their historic 1999 values after falling to 1996 levels early last year, according to the latest data from the S&P/Case-Shiller home price index.
Metro Atlanta’s home prices have been rising faster than those of many other cities, and Hunt said that’s in large part because investors have bought up many of the least-expensive homes, and a low supply has led to bidding wars on other properties that might not inspire such exuberance if there were more homes available.
“The lack of inventory covers a multitude of sins,” he said. “It just makes the data look better.”
In fact, sales of single-family homes were down nearly 12 percent in March compared to March 2012, according to figures from the Atlanta Board of Realtors. At the same time, the median sales price rose 47 percent, to $180,000.
It’s the lack of home inventory that’s driving the resale closings down, Hunt said. More people are putting homes on the market as they watch neighbors’ quick sales — that’s reflected in the latest numbers, which show home sales rose almost 27 percent from February to March — but as more buyers come out, too, the total inventory levels aren’t increasing.
Prices rose 12.5 percent from February to March, the Atlanta Board of Realtors said.
“There’s a huge spiral-up effect going on right now,” James said. “Home equity is returning for everybody. …That’s money you can spend on other things.”
Low inventory levels are fueling a rise in new-home construction, James said, as people build the houses they want but cannot find.
That is not consistent across the region, though, because inventory levels are not even across the metro area. In Dawson County, the 10-month supply of homes indicates there are still plenty of houses for buyers on the northern edge of the region. But in Clayton County, south of Atlanta, there was just a 1.2 month supply at the end of March, the lowest level in the metro area.
“People are not listing their homes at what we would consider a normal rate,” Hunt said.
James expects housing inventory to remain below the norm for the next several months.
“It’s just amazing what’s going on out there,” he said. “There’s just not enough supply to meet demand.”