Metro Atlanta housing top-heavy, not enough priced for first-timers


Demographics and economics are driving the housing market in metro Atlanta toward a surplus of high-priced homes and a vast pool of young renters, according to a high-profile expert.

Since the recession, dramatic changes have puzzled many observers, but the forces driving the market are too powerful to fade quickly, said John Hunt, principal in Atlanta-based MarketNsight during a Thursday conference at SunTrust Park.

“This is a reset,” Hunt said. “This is a demographic and psychographic reset.”

Home prices have been solidly rising while the number of sales in many areas is weak. It is not a lack of demand, but there is a mismatch of demand and supply. There are potential buyers, but not enough inventory – homes that are listed for sale.

But it’s not across the board, Hunt said. “There’s a shortage of homes for sale, but the shortage is at certain price points.”

New construction used to churn out many “starter” homes. Now, new construction is disproportionately higher-priced.

That is because the starting point for home prices are the costs of land and development – the higher those rise, the more a builder is driven to charge for his product.

The median price of a home in metro Atlanta is a little more than $200,000. The median household income is about $62,000. But the market is saturated with homes priced far beyond their means.

That is because once builders have spent upwards of $100,000 on the purchase and preparation of land, then more on labor and materials, they are simply not going to build an entry-level home, Hunt said.

“We are running out of cheap lots,” he said. “We [builders] are all being funneled into the market for buyers who are capable of paying more than $500,000 and we are not all going to fit.”

The number of homes sold is falling in some areas because the available homes are out of reach of most potential buyers, he said. And the price inflation is going to worsen, Hunt said: the land being readied for homes is much more expensive than the land used for homes that are currently for sale.

The biggest impact comes from the two biggest population segments, he said: baby boomers and the older millennials who have embarked on careers and settled into couples.

“These people have a lot in common – dual income, no kids. And they like to party.”

For the older boomers, that can mean purchase of a high-end townhome, but many boomers hesitate to sell their own homes since there are so many higher-priced houses on the market, so they “age in place.”

In many of the suburbs, sales are strong – and many of the buyers are young. But they are people who have started families, Hunt said.

Some millennials are still struggling financially. But many others — especially those without children — are choosing to rent in much greater numbers than their predecessors. And they live in apartments even though the rents they pay often equal to what would be a mortgage payment for a new house. But they simply do not want to live where those homes are being built, Hunt said.

They’ve got the money, but we are not building what they want where they want it,” he said.

Also speaking at the SunTrust conference, Rajeev Dhawan, director of the Economic Forecasting Center, said millennials who think about buying often don’t feel any urgency.

“The current crop of first-time homebuyers are conditioned to expect interest rates to rise, but then drop again.”



Reader Comments ...


Next Up in Business

Record number of Thanksgiving travelers expected at Hartsfield-Jackson
Record number of Thanksgiving travelers expected at Hartsfield-Jackson

A record number of travelers are expected at Hartsfield-Jackson International Airport security checkpoints on the Sunday after Thanksgiving. The most recent one-day record was set over the Memorial Day travel period this year when more than 93,000 passengers were screened in a single day at Hartsfield-Jackson. Over the Thanksgiving travel period from...
Guns caught at Hartsfield-Jackson checkpoints this year have already set a record
Guns caught at Hartsfield-Jackson checkpoints this year have already set a record

Nearly 300 guns have been caught at Hartsfield-Jackson International Airport so far this year, with a record number of firearms caught at security checkpoints, according to officials. The total of more than 290 includes firearms found in carry-on bags and improperly packed or undeclared guns in checked luggage. Last year, a record 245...
It’s official: Amazon picks NY, Va. and even Nashville
It’s official: Amazon picks NY, Va. and even Nashville

Georgia didn’t convince Amazon that Atlanta is the best place for the company’s second headquarters, missing out on tens of thousands of jobs, the nation’s biggest ever economic development prize and the growth headaches expected to have come with it. The Seattle-based e-commerce and tech giant made it official Tuesday, announcing...
Cactuses, street graffiti and thousands of sandwiches: The tactics cities used to try to lure Amazon
Cactuses, street graffiti and thousands of sandwiches: The tactics cities used to try to lure Amazon

The guessing game is over: Amazon.com reportedly plans to open new corporate outposts in Northern Virginia and New York, two already crowded metropolitan areas that are likely to become even less affordable with a new influx of tech workers. In some ways, the decision isn't surprising, as Amazon had made it clear that the company wanted to base its...
Report: Amazon chooses N.Y. and Va. for new headquarters
Report: Amazon chooses N.Y. and Va. for new headquarters

The New York City and Washington D.C. metro areas are splitting Amazon’s planned second headquarters project, according to a Wall Street Journal report Monday night. The official announcement could be made as soon as Tuesday, the media outlet said, citing unnamed “people familiar with the matter.”  Losing dibs on the tech giant&rsquo...
More Stories