Home building continues, but Atlanta’s growth slowing, expert says


The steady pace of job creation used to mean a parallel surge in home construction, but the housing market has new rules, said one of the area’s highest-profile analysts.

The coming year will see an unspectacular increase in the number of permits for new homes in metro Atlanta, said John Hunt, the principal of MarketNsight and president of data firm ViaSearch. Hunt was speaking Monday at his company’s conference with several hundred real estate professionals.

“Growth rates are moderating,” he said.

Optimists have been talking about a surge of millennials transitioning from renter to homebuyer since housing prices hit bottom in about 2012. That hope has been misplaced, Hunt said.

“Will 2018 finally be the year of the first-time homebuyer?” he asked. “It was supposed to be 2015. It was supposed to 2016.”

He shook his head no. “The metrics we used to count on – so many of them are obsolete.”

When interest rates were low and lending standards lax, it took very little to spur building in the metro area. When the region, like the nation, hit a recession in early 2001, unemployment rose and job growth sputtered. But the housing market barely blinked.

Since then, job growth was assumed to guarantee that home construction would rise in synch. Not any more, he said.

Rates are low, and lending standards have eased somewhat from a few years ago. But the surge some experts predicted has not materialized.

One big difference is demographic: the millennials. They tend to have modest incomes – even in Atlanta, where job growth has been steady and strong.

There’s also a cultural dimension: Millennials also tend to prefer urban living. That means they are less likely than previous generations to – in the real estate cliché – “drive until they qualify” for a mortgage.

There is still a wave of building far from the city of Atlanta, Hunt said.

Hall, Jackson, Barrow and Paulding counties have all seen a rapid pick-up in construction.

“But those are not millennials,” he said. “It’s families, looking for housing they can afford and schools that aren’t terrible.”

In many places, builders face a rapidly rising cost of land. To make their money, they build houses that must sell for $400,000 or more – and that’s not where most of the demand is, Hunt said. “All of us are being funneled into a price point where there are no buyers. And we are not all going to fit.”

That all adds to up to homebuilders being unable to offer what millennials want, he told the group. “You can’t give them what they want, where they want it and at a price they can afford. Yet.”

The millennial reluctance to buy outside of urban areas makes a huge difference in the market. During the housing boom, 60 percent of home purchases were either first-time buyers or someone moving up from their first home, Hunt said.

People bought early and often. A generation ago, the average age of the first-time homebuyer was 25. That buyer stayed in a home an average of seven years, becoming a move-up buyer at 32.

Now, the average age of a first-time buyer is 33.

That means a huge group of what used to buyers is simply not in the market, Hunt said.

“Welcome to our new normal.”

MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.

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

Survey says... Americans sure do work a lot -- when they aren’t sleeping
Survey says... Americans sure do work a lot -- when they aren’t sleeping

Stop worrying about trying to keep up with the Joneses, Mr. or Mrs. (or Ms.) Average American. Turns out they’re doing the same stuff as the Smiths. And the Johnsons. And the ... well, you get the idea. Thanks to the U.S. Bureau of Labor Statistics, we know that the Joneses, et. al., spend their days working. And working. And working some more...
UPS offering retirement buyouts to management
UPS offering retirement buyouts to management

Sandy Springs-based UPS said it is offering buyouts to some of its management employees who are eligible for retirement. The company said a “select group of non-operations, retirement-eligible U.S. management employees” have been told they are eligible for a voluntary retirement plan, with a financial buyout to retire. To be eligible, management...
Delta brings beehives to headquarters near Hartsfield-Jackson
Delta brings beehives to headquarters near Hartsfield-Jackson

As part of its effort to be a more environmentally responsible company, Delta Air Lines will add a new group of worker bees to its Atlanta-based headquarters. Queen bees and male drones are coming, too. Delta is the first of a group of metro Atlanta companies to install beehives through a partnership with Bee Downtown as the airline seeks to &ldquo...
Metro Atlanta jobless rate dips to 11-year low
Metro Atlanta jobless rate dips to 11-year low

Metro Atlanta had only modest job growth last month, but the unemployment rate fell to 4 percent – its lowest level in March since 2007. The region added 7,300 jobs during the month, less than half the average expansion for March during the previous five years, according to a report Thursday from the Georgia Department of Labor. The region...
Kempner: When the gas station comes to you, why have a gas station?
Kempner: When the gas station comes to you, why have a gas station?

Well, this is bad timing. Now, that we have gas stations and convenience stores all over the place, are we on the verge of no longer needing so many?  Forget hopes for electric cars for a moment. We’re talking about drivers of gasoline-powered vehicles no longer having to hustle to the gas station. Because the station soon may be coming...
More Stories