Rising home prices imperil Atlanta’s draw

Rising home prices threaten to chill one of metro Atlanta’s most valuable selling points: the affordability of housing.

In four of the five core counties of the region, it takes more than 25 percent of average wages to make monthly payments on a median-cost home, according to a parsing of the data by Attom Data Solutions.

Among core counties, the mismatch of income and price is worst in Gwinnett County, where 31 percent of wages are needed.

The two big variables in the equation – consumer income and house prices – have simply not been moving in tandem, said Daren Blomquist, senior vice president at Attom.

“While home price appreciation in the second quarter accelerated to the fastest pace in more than three years, wage growth turned negative,” he said. “That combination of accelerating home price growth and slowing wage growth, along with (higher) mortgage interest rates, eroded home affordability nationwide.”

In some places, average wages have actually gone down.

So even if Atlanta looks better than many cities, the shift here hurts because it feels like a bigger change, Blomquist said.

“Buying a home now takes a bigger bite out of income than what they would expect based on historical market trends,” he said.

Atlanta is not unique. According to Blomquist, 87 percent of all markets show median home prices rising faster than wages. Since 2011, home prices nationally are up 69 percent while average weekly wages have increased 9 percent, he said.

But metro Atlanta’s population growth – several hundred percent over the past two decades – is largely the result of transplants from all over the country joining in and adding to a vibrant economy. One draw has been relatively cheap housing, and lots of it.

That makes the latest figures troubling, said Mekael Teshome, vice president and economist for the PNC Financial Services Group. “If affordability erodes, that weakens one of the competitive advantages that Atlanta has.”

Many a corporate transfer has delighted in the home they could buy in Atlanta with profits from the sale of a much older, smaller house back in a place like Chicago, New York or Los Angeles. Not that Atlanta is yet challenging those denser, older, more expensive areas for priciness.

For instance, it takes 50 percent of a median income earner’s pay to buy a median-priced new home in Los Angeles, according to Zillow.

Teshome doesn’t expect Atlanta area prices to plateau, so the fix has to come from the other variable.

“Looking six months or more ahead, I do believe that wages will pick up,” he said. “If they don’t, that would be a problem.”

But the lure could be less lustrous – especially for people who are already here, renting apartments and relying on their Atlanta-level incomes to make a purchase.

It is the lowest level of affordability in nearly nine years, according to Attom calculations.

Not surprisingly, the areas hit hardest by the housing crash and recession have recovered the least and, largely because of still-depressed prices, remain the most affordable homes.

For example, Clayton County, where foreclosures and plunging home values were epidemic, is more affordable now than it has historically been, according to the Attom calculations.

The median sales price of a home in Clayton was $81,000 in the second quarter of this year – less than one-third the median in Fulton. Yet even in Clayton, the rebound from the bottom has meant prices have been rising faster than wages.


AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:

Never miss a minute of what's happening in local business news. Subscribe to myAJC.com.

Reader Comments ...

Next Up in Business

Coke: A new version of Coca-Cola Zero hits U.S. shelves next month
Coke: A new version of Coca-Cola Zero hits U.S. shelves next month

Coca-Cola said it is rolling out a new recipe, name and look in North America to replace one of its most successful products — Coca-Cola Zero. The Atlanta beverage giant announced the new version during its second-quarter earnings report. It will be called Coca-Cola Zero Sugar. The new cans and bottles, to roll out in August, will also mostly...
Amazon to offer Sprouts groceries through Prime Now same-day service
Amazon to offer Sprouts groceries through Prime Now same-day service

Fresh off its announced acquisition of Whole Foods Market, Amazon said Wednesday it has now partnered with Sprouts Farmers Market to offer one- and two-hour delivery of products from the high-end grocer to its Prime members in the Atlanta area. The new offerings from Sprouts under Amazon’s Prime Now service comes as the e-commerce giant...
Comcast rolls out mobile phone service in Atlanta stores
Comcast rolls out mobile phone service in Atlanta stores

Comcast said Wednesday it is rolling out its mobile phone service at its Atlanta retail stores this week as the company dives into the national cellular business. Xfinity Mobile will be sold at six Atlanta area Comcast retail outlets, and Atlanta is among the first markets in the Southeast where the communications giant is unveiling the service in...
Smoking at the MARTA station.

This is the first in an occasional series of short videos documenting common challenges riders on MARTA may experience. Smokers often ignore the “no smoking” signs at stations. Even MARTA employees have been spotted smoking near this sign at MARTA’s Kensington station. This video was shot earlier this month at that station.
Ukrainian conspirator in $9 million WorldPay hack sentenced
Ukrainian conspirator in $9 million WorldPay hack sentenced

A Ukrainian involved in a scheme that netted millions after hacking into an Atlanta payment processor was sentenced to 46 months in federal prison. Evgeny Tarasovich Levitskyy, 31, acted as one of the “cashers” who withdrew more than $9 million from 2,100 ATMs around the globe in less than 12 hours, according to the FBI. He is also known...
More Stories