The Atlanta residential real estate market has gone from leading the nation in foreclosures in 2012 to the land of bidding wars and low inventory in early 2014.

We’ve had more gut-wrenching loops, spins and turns than the Georgia Scorcher at Six Flags. Yet earlier this month, realtor.com predicted Atlanta would be one of the 10 hottest housing markets in 2015.

Here are a few trends to watch that just might make that prediction come true.

First-Time Buyers Returning–

While prices on entry-level homes may be a bit daunting in other markets, Atlanta is ideal for first-time homebuyers. The average sales price in Atlanta, which was $259,557 in November, buys anything from an Intown condo to even new construction in the suburbs.

This is a tremendous value compared to other hot markets such as Chicago, where a similar home could cost anywhere between $600,000 to $1 million. Atlanta is a young city and a great place for young professionals, who are attracted by the low cost of living and number of colleges in the area. Watch for a strengthening of the first-time homebuyer market, especially as rental property prices continue to escalate and jumping into homeownership just starts to make more sense.

Inventory – The lack of inventory, fueled largely by investors snatching up distressed inventory, eased in 2014 as consumer confidence rose and more homeowners put their properties on the market. The number of homes for sale in Atlanta rose 12.6 percent between November 2013 and last month, which appears to be slowing the buying and selling process. It’s good news for buyers, who don’t feel the pressure to act as quickly as they did last year, resulting in fewer bidding wars and multiple offers. Which brings me to my next point…

Price Appreciation is Slowing–

Inventory has a direct impact on prices. It’s a simple matter of supply and demand: when demand is high but supply is low, prices rise, as we saw in 2013 and early 2014. But when the supply starts rising and demand is steady, things generally even out. While prices have risen significantly over the past two years in Atlanta, from an average sales price of $197,000 in November 2012 to $259,000 last month, don’t assume this trend will continue.

Prices fell 4.8 percent in Atlanta from July through November, which was a higher seasonal drop than we saw with last year’s 1 percent decline.

Pricing Appropriately–

While we’ve moved to a more balanced buyer/seller market, many homeowners still think we’re in a seller’s market and are being a bit overzealous on their prices. Like little kids on Christmas Eve, visions of bidding wars are dancing in their heads. But homes that are not priced appropriately are not selling, despite the buyer demand. There’s too much competition and too many “comps” (comparable properties nearby that have sold) to show what buyers are willing to pay. We’re also seeing appraisal issues when properties are priced too high.

*All stats provided are according to First Multiple Listing Service.

Source: Atlanta Business Chronicle