(Originally aired Oct. 16, 2022)
With a possible economic recession on the horizon, there could be big trouble in America's housing market. Buyers and sellers are suffering from whiplash after recent wild swings in home prices and mortgage rates. Lisa Fletcher takes us to one city for the roller coaster ride.
The following is a transcript of a report from "Full Measure with Sharyl Attkisson." Watch the video by clicking the link at the end of the page.
We begin our look at the volatile world of home sales in Atlanta at the beginning of the summer.
Kena Stewart: And it’s quiet.
Our guide on this housing roller coaster ride is real estate agent Kena Stewart.
Kena Stewart: This is a two bedroom, two bath. What I like about this one — look at this space here!
Joey Laderman: It's a little sunroom. That's really nice.
Kena Stewart: This is gorgeous.
On this day in June, the market is red hot. Stewart is showing prospective home-buyer Joey Laderman a condo priced at $225,000, and almost certain to sell for much more.
Kena Stewart: We can literally lock the door and walk out, and I might get a notification that it's off the market. So they move that fast.
Earlier this year, in Atlanta and across the nation, mortgage rates were at an historic low of 3%. Average home prices there soared almost 25% between 2020 and 2021, and there were more buyers than houses.
All that added up to a seller’s market, meaning people selling homes, like this condo, could call the shots and often have multiple buyers bidding up the price.
Joey Laderman: It's just a waiting game, I guess. Eventually you'll find something.
Kena Stewart: The home-buying experience here in Atlanta is crazy. We have cash buyers competing against cash buyers. People are putting in bids 10% to 30% over list price.
Then, a big turnaround. Interest rates topped 5% in July, meaning the cost of a home loan nearly doubled compared to a year before, making payments on the very same $250,000 home easily $350 a month more.
At the same time, inflation has soared, and the housing supply has begun to catch up with demand. In July, about 63,000 buyers across the U-S backed out of sales contracts on houses they could no longer afford. And housing prices started to tumble that same month. Notably, in Boise, Idaho, where nearly 70% of sellers dropped their price. Denver, Salt Lake City, and Tacoma among the top metro areas to see discounts.
We went back to Atlanta after this seismic shift to find real estate agent Kena Stewart adjusting to the new reality.
Kena Stewart: The market has shifted to a buyer's market, like literally overnight.
Lisa Fletcher: A lot has changed.
Kena Stewart: Oh my God. Last time I seen you, it was a seller's market.
On this day, Stewart is showing condos in the trendy Atlantic Station neighborhood.
Kena Stewart: So in these particular buildings at one particular time there was about 16 to 20 condos for sale, and they've all dropped their pricing.
Stewart’s client, Pamela Hill, is looking to downsize. As a buyer, she likes the lower prices, but as a seller, knows she won’t be able to get as much money for her current home.
Pamela Hill: If I sell my property today, my challenge is, that my husband and I are facing, is trying to buy something for that same value.
It’s a predicament facing homeowners across the country, including Joey Laderman, the Atlanta client who was looking at the $250,000 condo back in June. That condo sold the next day for almost $35,000 over asking price, and Laderman found himself forced to retreat to the sidelines, dropping the selling price of his own home, and putting his buying plans on hold.
For Full Measure, I’m Lisa Fletcher.
Watch story here.
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