How do current mortgage rates affect home buying in Atlanta?

Current mortgage rates are significantly impacting home buying in Atlanta in several ways:

1. Affordability challenges: Higher mortgage rates have reduced affordability for many potential buyers in Atlanta. As of July 2024, mortgage rates in Georgia are around 6-7% for a 30-year fixed mortgage. These elevated rates increase monthly payments and make it more difficult for some buyers to qualify for loans.
2. Decreased buying power: The higher interest rates mean buyers can afford less house for the same monthly payment compared to when rates were lower. This has forced some buyers to adjust their expectations or look at less expensive properties.
3. Slowing sales volume: The number of homes sold in Atlanta has decreased compared to last year. In May 2024, 773 homes were sold, down from 802 the previous year. This decline is partly attributed to the higher mortgage rates making purchases less affordable.
4. Longer time on market: Homes in Atlanta are now taking an average of 35 days to sell, up from 28 days last year. This increase is likely due to buyers being more cautious and taking longer to make decisions in light of the higher borrowing costs.
5. Impact on pricing: While home prices in Atlanta have still increased year-over-year, the rate of growth has slowed. The median home price is up 4.7% from last year, but this is a more modest increase compared to previous years.
6. Increased competition for lower-priced homes: With affordability concerns, there's more competition for homes at the lower end of the market as buyers try to stay within their budgets given the higher mortgage rates.
7. Shift in buyer demographics: Higher rates may be pricing out some first-time homebuyers, potentially shifting the market towards more established buyers or investors who are less sensitive to interest rate fluctuations.
8. Refinancing slowdown: The higher rates have significantly reduced refinancing activity, which can impact overall market liquidity and the ability of current homeowners to access their home equity.
9. Increased importance of credit scores: With higher base rates, having a good credit score becomes even more crucial for securing the best possible mortgage rate, potentially excluding some buyers with lower credit scores from the market.
10. Adjustable-rate mortgage popularity: There may be increased interest in adjustable-rate mortgages (ARMs) as buyers look for ways to lower their initial monthly payments, though this comes with its own risks.

Overall, while the Atlanta housing market remains competitive, the higher mortgage rates have created a more challenging environment for many potential buyers, slowing down sales and moderating price growth compared to previous years.