To quote the old Bob Dylan song, “The times they are a-changin’.” In the past few years, the U.S. and Lake Lanier have seen one of the most frenzied seller’s markets in history. A lot of factors contributed including historically low interest rates, a healthy economy and pandemic fears that drove many people out of the crowded cities to take advantage of working from home so commute time was no longer a factor. In 2021, a record-breaking 6.9 million homes sold in this country, a monumental increase over the 2020 figure of 5.6 million. The number of buyers far exceeded the number of sellers creating a chaotic and frenzied seller’s market.
On the lake, we saw record sales with new waves of buyers from other states as well as increases from metro Atlanta. Whether they wanted a second home or a new residence, Lake Lanier real estate was an attractive alternative to crowded cities. It was not uncommon to receive 20-30 bids on a single lake home. To get the deal, buyers were forced to agree to contract terms that grossly favored the seller including all cash, offers much higher than the list price, little or no due diligence and no contingencies. As a result, prices in the first half of 2021 were 34 percent higher than the same period in 2020. That rapid rise slowed considerably in the first quarter of 2022 and by June, you could almost hear the brakes screeching. The 14 percent increase from that period last year happened early in the year and appears to have leveled off.
With the most rapid rise in mortgage rates since 1980 and the highest inflation rate since ’81, buyers have become more wary. It is still a seller’s market, but the frenzy is over. For sellers who priced their homes above the realistic value in the hopes that the market will catch up to their optimistic price, that ship has sailed. We are experiencing more price reductions than we’ve seen since the Great Recession. Reasonably-priced homes are still selling quickly, but the overpriced ones are starting to linger on the market. As a result, the inventory of homes for sale is on the rise. In some ways, that is good news for buyers and sellers. Many homeowners who previously thought about moving put it off because they were afraid they wouldn’t be able to find a new place. Now, there are more options, so potential sellers might be more likely to take the plunge.
Should we worry about a real estate recession like we suffered through in 2008? Most experts don’t think so. In 2008, the mortgage industry was in trouble. Near the end of that recession, 26 percent of homeowners’ mortgages were under water; that is, the amount they owed was higher than the value of their homes. Today, that number is just 2 percent. Though mortgage rates have risen into the 5s, the historic average rate is 7.81 percent, so it is still at a manageable level. Unemployment is low, especially in our area, and Lake Lanier continues to be a magnet for buyers. You may recall that for Lanier homeowners, the Great Recession was coupled with the 100-year drought which added to the dismal and challenging lake market.
For many years now, the lake has stayed full and beautiful, so that is not a factor, at least for now. Though prices may drop a small percentage during this market shift, Lanier homes should hold their value better than most real estate. After all, who doesn’t want to live on the lake?