2022 Real Estate Forecast: Inventory, Inventory, Inventory

Atlanta’s real estate community is thriving, and the consensus is that 2022 is off to a great start. The old industry adage — “location, location, location” — now sounds more like “inventory, inventory, inventory.” Over the past two years, many of the real estate professionals we spoke to said they have set new sales records.

Now, mortgage rates are increasing and more inventory is needed.

Jewish leaders in the Atlanta community have also been busy. J-CREN, a network of Jewish commercial real estate professionals and individuals from related industries, was recently organized by the Jewish Federation of Greater Atlanta. The group, which so far has 400 members, offers networking and learning opportunities for new and seasoned professionals and is free to join.

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Federation Board President and J-CREN advisor Matt Bronfman. // Credit: Patti Covert

Matt Bronfman, CEO of Jamestown and board chair at the Federation, said, “The number of Jewish commercial real estate professionals in Atlanta is large and growing. Giving them opportunities to network with each other and engage more with the work of Federation will strengthen Jewish Atlanta.”

Mark Silberman, one of the group’s founders, said J-CREN “brings together multiple generations and an abundance of young people working in the industry to better connect them to the mission of the Federation and our growing Atlanta Jewish community.”

Robin Blass and her daughter, Lauren Blass Solomon, offer advice for buyers and sellers.

Industry leaders like Eliot Arnovitz of the M&P Shopping Centers (and a J-CREN co-chair), said, “The Real Estate Division (J-CREN) allows real estate professionals a chance to meet, share ideas and create friendships and mentorships. It is a chance to do well by doing good.”

Veteran realtor Larry Brown says it’s a great time to be a seller.

Fellow J-CREN Co-chair Carolyn Oppenheimer, of Halpern Enterprises, agreed. “Atlanta real estate has always had a strong Jewish representation,” she said, “but over the past decade the number of young, smart, energetic deal makers has grown. J-CREN is an opportunity to bring the seasoned and the young together for networking, deal making and getting to know and understand the history and importance of the Jewish community.”

“The real estate industry has historically been an outperforming sector of the economy,” added Tim Schrager, CEO of Perennial Properties, Inc., “and it’s filled with generous people who are often looking for ways to give back. J-CREN provides an aligning of the stars for industry professionals.”

Steve Selig, president and chairman of the board of Selig Enterprises, Inc., said, “We are bullish on real estate.”

Industry veteran Steve Selig, president and chairman of the board of Selig Enterprises, Inc., said, “We are bullish on real estate, both commercial and residential, more so now than ever. The demand from corporations to relocate to or expand their offices in Atlanta is outweighing the supply of office product, especially in the red-hot Midtown submarket. Just the two announcements by Google, who will be moving into our 1105 West Peachtree project this year, and Microsoft will bring 4,000 new high-paying jobs to Midtown, collectively. These tech giants’ announcements were later joined by Cisco, Visa, Micron and several others announcing major office expansions in Midtown, bringing even more jobs to the area. The people filling these jobs will need places to live and shop, and the younger generation especially values convenience, so the in-town residential market, both multi-family as well as single family, will continue to benefit. Based on this demand, we have recently broken ground on a multi-family project at The Works on the Westside, and should have another mixed-use project to announce shortly in Midtown.”

Richard Lenner, Carolyn Oppenheimer (J-CREN Co-Chair) and Benjamin Halpern. // Credit: Patti Covert

When it comes to commercial real estate, the pros say that sellers continue to have an edge in this market. According to Lawrence G. Brown, a 50-year veteran of the commercial real estate business and a broker for Brown Realty Group, LLC, it’s all about diversifying. “It’s a great time to be a seller,” Brown says. “Sellers are getting multiple offers for their properties due to several factors: lack of supply, low interest rates and the desire to own real estate as an investment to diversify a portfolio. If interest rates go up as predicted, the market will change; however, there is so much cash chasing deals that a seasoned investor could make some really good buys.”

Robyn Zimmerman shares tips on preparing your house to sell.

According to Jason Chaliff, managing director of Rise Property Group, which specializes in helping landlords purchase, sell and lease properties throughout the Southeast, the view from the seller’s perspective is good, as prices are still increasing. “We have seen significant price increases across the market as we struggle to add supply,” Chaliff said. “The growth of the Sunbelt region has had a tremendous impact on property prices in all asset classes. The MSA (Atlanta Metropolitan Statistical Area) is in high demand, investors and operators continue to be attracted to our growing population, robust economy, transportation access and educated workforce.”

Another trend is the growth of demand for space in the suburbs. “Multifamily rents continue to rise across the market,” Chaliff said. “Rents are up over 20 percent year over year, with rents in affluent suburbs such as Alpharetta increasing 25 percent in a 12-month period. Developers continue to pay record prices for developable land.” His firm is focused on creating workspace in the suburbs, with recent projects in Cumming, Lawrenceville and Smyrna that “have taken advantage of increasing market demand for industrial and flex suites, securing market rents well above pre-COVID rates.” His team continues to look for “available properties in affluent suburbs where both investors and owner-users are eager purchasers.”

Kenny Holzer, president of Skyline Seven Real State.

Looking back on the real estate market over the course of the pandemic, Kenny Holzer, president of Skyline Seven Real State, said that “in the spring of 2020, the real estate market came to an immediate halt. Properties expected to sell didn’t close and leases ready to be signed didn’t get signed. For the remainder of 2020, many people took a ‘wait and see’ attitude while the pandemic ran its course. Even worse, some businesses were forced to close their doors permanently. And then, in 2021, we learned about the resilience of Atlanta and our business community; the retail real estate market bounced back at an incredible clip, with more leases being signed and properties being sold than I recall in any year during the last 25 years. And while some property types (hotel and office) may face challenges (emergence of Zoom versus business travel and remote working), the retail sector has entered 2022 with the same momentum we enjoyed last year.”

Beyond the lack of inventory, one detail stood out: mortgage rates are climbing. According to Marc Garfinkel, mortgage consultant at Prosperity Home Mortgage, “2022 is the beginning of the inevitable mortgage interest rate climb. As a result of the COVID-19 pandemic, interest rates in 2020-2021 hit rock bottom. Well, that is over. Rates are on the rise and projected to continue to increase throughout the year. We are resetting expectations to ensure that clients get the best mortgage rate, but also understand [that] rates are going up. If you want to hold out, expecting that rates will get better, it’s advisable to lock in a rate as soon as possible. Do not count on the past predicting the future.”

Garfinkel added that he expects this “more normal interest will reduce the buyer demand slightly and allow for a more normal and healthy housing market in 2022.”

Marc Garfinkel, mortgage consultant at Prosperity Home Mortgage.

The real estate agents we spoke to confirmed that Atlanta is seeing a seller’s market. Seasoned agent Lauren Blass of the Blass Group predicts that “2022 will continue to be a seller’s market.” But, she says, we won’t be seeing “the 24-26 percent increase of the prior year’s prices.” Rather, we should see a “normal stable 4-6 percent increase.”

Buyers, Blass said, know that they must be prepared to make an offer above the list price. “We have less than a one-month supply,” she said. “In a stable market we would have a two to four-month supply.”

Agent Robyn Zimmerman counsels sellers to show potential buyers that “they don’t need to leave their new home and can enjoy their favorite activities in their very own backyard. Although it will continue to be a seller’s market, giving your home things that 2022 homebuyers are looking for will translate into more money on the sale of your home.”

Jason Chaliff, managing director of Rise Property Group.

Leigh Schiff, of the Schiff Real Estate team, is busier than ever. “Historically, there has never been a better time to be a seller in today’s real estate market,” she said.

“Homes are selling for record prices because of unprecedented, low inventory levels and extremely high demand. On the other side of the coin, buyers are competing against other buyers on almost every new listing, often regardless of price or condition. In most cases there is no due diligence period, financing or appraisal contingencies if buyers want to win in a multiple-offer situation. Many buyers are simply not in a position to waive all of these contingencies. Skilled realtors looking for properties for their buyers are exhausting any and all creative efforts to build inventory. It has never been more important to work with a savvy, strategic realtor. We are seeing record numbers of homes selling off the market at ‘make me move’ prices.”

Leigh Schiff says the best times to sell a house is now.

Agent Robin Blass said, “Today’s buyers are exhausted from home searches and the continued rejections of offer after offer. Home purchasing needs will continue to fuel the market as many new buyers enter the market [alongside] relocation buyers from all the companies selecting Atlanta as their new home. All of this is exciting, but we need more homes. Interest rates are still great — for now — and even with the higher home prices, buyers can secure a great rate and a monthly payment that is doable. Now is a great time to buy. Lending options have evolved, with many products for the consumer to choose from. Recently, the conforming loan amount was increased, allowing a buyer to purchase up to $647,200 with a conventional loan. That is huge. Our best advice is to pack your patience and always be ready. This market is crazy.”

For more information about joining J-CREN visit www.jewishatlanta.org and contact Joel Ashner.