Home buyers pinched between climbing rates and high prices

Nov. 5—Though the frenzy of the pandemic-era housing market has slowed to merely a brisk pace, first-time home buyers are finding themselves in a new type of squeeze.

Gone are the days when a house would have multiple offers within hours of being listed, some of them well over asking price.

But caught between persistently low inventory and high prices, and now, rising mortgage rates, a lack of affordability remains the elephant in the room in Cobb's housing market.

"That price point (for first-time buyers) used to be in the 200s," said Hicks Malonson, a broker with Harry Norman Realtors in Marietta. "Not anymore. And my rate-sensitive buyers have said, 'Yep, I get it. I am not paying that price at that rate.'"

Thirty-year mortgage rates are now hovering around 7%, the highest rate since 2002, Freddie Mac reported this week. Rates were around 3.2% at the top of the year, making this year's jump also the fastest rise in over 40 years, according to Holden Lewis of Nerd Wallet.

Though Freddie Mac reported a slight dip in rates this week, "the dynamics of a once-hot housing market have faded considerably," the company said. "(Wednesday's) interest rate hike by the Federal Reserve will certainly inject additional lead into the heels of the housing market."

But data from the National Association of Realtors and the Georgia Multiple Listing Service indicates prices have so far refused to come down significantly.

The average listing price for a home in Cobb is close to $40,000 higher than it was a year ago, per the Georgia Multiple Listing Service, which real estate agents have attributed to a continuing lack of quality inventory (the First Multiple Listing Service, a different organization, reports a slight decrease in prices in recent months).

"That remains a challenge, especially inventory we can say is quality. Because there was a time where it didn't really matter what you did to it, whether it was — we call it in our world 'parade ready' — whether it was ready to be put on display," said Malonson.

Johnny Sinclair, a Realtor with Ansley Real Estate, said during his 18 years in the business, Marietta's typically had around 150 available single-family homes within the city limits.

"During the red-hot thing, it got down to as low as 23, which was unheard of. You've never had that," Sinclair said. "It has risen back up, but it's staying steady around 70 ... a lot of those houses are houses that have been on the market for a while. They're kind of the leftovers."

One change over last year is that the average sale price ($483,000) has dropped below the average list price ($489,000), suggesting the bidding wars of the pandemic market are past.

"If it's a really cool house, or a great location ... and you price it correctly, you still might even get an offer at full price or even a little bit above. But the days of getting, like, 10 offers are probably gone," Sinclair added.

In public discussions of Cobb's affordability crisis, elected officials often invoke the police, firefighters, teachers and other public servants who can't afford the ever-climbing prices.

Jeff Hubbard, head of the Cobb County Association of Educators, said most young teachers have to start out their careers living in either apartments with roommates, or houses in another, cheaper county.

"The bedroom community thing, I think, is still very real ... if we have 50% of our younger members that live in Cobb, I would be surprised," he said.

"Hopefully we'll be able to see more people moving into the area and deciding to make Cobb their permanent home ... I think the bigger issue here is that because of the lack of affordable housing, when people look at education as a career ... it's a matter of keeping them in the field, so they don't get discouraged," Hubbard added. "Hopefully ... once this housing market slows down, once the inflation slows down, not only will they stay in education — rather than go looking for other careers where they can make more money — but that they'll want to put roots down here as well."