Atlanta Home Prices

AJC 6/21/18 article, page B1 Metro, “Housing prices hit unaffordable levels” reports that home prices in Atlanta’s 5 core counties increased 21% over the past 3 years, but salaries are only up 9%. This excellent article by Bill Torpy reports that the median income is $63,000 a year and home loans are limited to 2.5 times income and that limits mortgages to $157,500.

Torpy then sites the large number of home developments advertising homes for $500,000 and more and he rightly questions the number of people who have household incomes of $200,000 a year who would buy a home where these developments are being advertised.

Atlanta has had mixed results with new, pricy residential single family homes replacing older properties. These “in-fill” developments are built with the hope that property renewal continues, but it often doesn’t.

The model that worked is when an older area becomes popular with young home buyers, they buy an older home in the trendy neighborhood for an affordable price and fix it up.  Virginia Highlands was one of the first neighborhoods to pull this off, followed by Inman Park and Grant Park.

The model that is risky is when a developer buys an older home for $300,000, tears it down and builds a $400,000 home and tries to sell it for $800,000. These homes sit for a while, but eventually they sell and that’s amazing.

If these $500,000 developments want millennials, they will need buyers with incomes of $200,000 a year and there aren’t many of those. The best prospects for these homes in Atlanta are lawyers who want to live close to their downtown offices and the court houses.

One concern of homeowners whose home prices have surged beyond their expectations is that if that continues they won’t be able to sell their homes, because their high price will reduce demand.

Another concern for homeowners of modest means is that they will need money to keep the home repaired and upgraded. They are also concern that their higher property value will result in higher property taxes. These folks may need to move to cheaper digs further out or in the exurbs.

The final concern is that Atlanta has a house price bubble on homes that cost over $400,000 that will burst during the next real estate downturn.

Torpy reports that developers like condos, but condo buyers should be wary of condo rules, condo boards, assessments, and limits on renting you condo if you can’t sell it. There are lots of condos for sale by owners and their prices have not increased.  Developers also like to build new apartments, but they are too pricy at $1,500 a month to be a good deal.

Finally, shelter seekers need to be reasonably close to where they work or at least have a commute that isn’t torture.

Norb Leahy, Dunwoody GA Tea Party Leader