Atlanta, Georgia has always been one of the stellar housing markets in the United States for a variety of reasons. First, and foremost, is Atlanta's southeastern location. It is warm and sunny here much of the year. Winters can be very cold for a few days, but overall winters here are pretty mild.
The climate here is also rather docile compared with weather in other parts of the U.S. There are tornadoes but they are usually tame compared to the mile-wide monsters found up in the midwest. Thunderstorms are common but usually moderate as they cross the Lookout Mountain ridge, located between North Georgia and Northern Alabama.
Most importantly, Atlanta has virtually no geographic boundaries to growth. As such, Atlanta has expanded over the past 40 years to become the largest metropolitian area in terms of square miles, in all of the United States. "Metro Atlanta" is approximately 70 miles across, from east to west, and another 70 miles across from north to south.
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With so much buildable land and a thriving tech sector in the mid 1990's, Atlanta grew into a home building machine. By the late 1990's home construction in metro Atlanta was a prime economic driver for the state of Georgia. Land outside the city was cheap and with the advent of the internet boom, Atlanta soon developed a fast growing tech sector that created tens of thousands of jobs, and a constant demand for new homes. Hundreds, perhaps thousands of new subdivisions were springing up all over the outer metro counties.
This trend would continue unabated until 2008, when the housing market, along with most of the economy, took a massive tumble that saw foreclosures skyrocket. This in turn brought the local housing market to a screeching halt. Hundreds of subdivisions were abandoned by builders who could no longer afford to build new homes because the ones already built were barely selling. Existing neighborhoods, especially in the metro counties outside the city of Atlanta, were riddled with tens of thousands of foreclosures. This in turn sent home values cascading downward. The farther away from downtown Atlanta, the lower the values went.
By 2009 home building had all but stopped. Georgia saw it's unemployment rate shoot up to more than 12% during this time as builders and contractors began to default on loans and go out of business. By 2012 the state had shed several million construction jobs, which itself increased local foreclosure rates and aggravated things further. This would prove to be a major turning point in the Georgia economy.
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Also during this time came the rise of the Wall Street funded investment companies who had once funded mortgages, and now were coming to town to buy up several billion dollars of foreclosures, and turn them into rental homes. In 2011 and 2012 they were buying foreclosures at the rate of more than $100 million dollars per month. This would prove to be another major turning point for the local economy.
Metro Atlanta has shifted from a high percentage of home owners, to a high percentage of renters. The resulting shift has produced more apartment construction, along with a dearth of foreclosed homes that are now available for rent. This has reduced demand for other products that are ancillary to housing. Appliance stores, furniture stores, flooring and construction products have continued to struggle to build sales momentum. Many of the smaller name real estate brokerage franchises have disappeared. Even the big names have seen reductions in sales staff and the number of office locations. I know a few long-time real estate brokers who have left the business for other careers.
The local landscape, even today, 7 years on from the 2008 crash, is still riddled with vacant foreclosures in older, less desirable neighborhoods. There are still hundreds of partially built subdivisions strewn all over the wider metro area. While builders have made some attempts at a comeback in 2015, many subdivisions have seen only a few homes built and sold this year. Nothing even close to the high-growth days of the late 1990's and early 2000's. The only areas of "sustained" building that I've seen this year have been confined to more affluent, close-in neighborhoods, which have seen more demand from higher income buyers. But even in those areas, home sales have been more of a challenge.
On the commercial side, the most noticeable change has been the increase in medical facility construction. I guess the new health care law has health-care-real-estate-developers expecting the kind of growth in medical facilities that was once enjoyed by private companies like Home Depot and Walmart. Another growth industry is in senior housing. Even with a dozen fairly new facilities in Cobb County alone, the ones that I have checked with have waiting lists of up to a year.
Atlanta has been and always will be a vibrant city, but it's had to roll with the punches. Adapting to the new millennium has been tough for the entire state, in terms of replacing those old 20th century jobs with modern tech jobs. The housing market in Georgia once employed millions of people. But today's technology has reduced the demand for human labor. Outsourcing took away many of those tech jobs that were located in Atlanta during the early days of the internet boom.
Though the media reports that home prices are "rising" Atlanta is still "cheap" compared to many other metro markets. Property taxes are relatively low, as most counties had to roll them back during the foreclosure crisis. All in all Atlanta still compares favorably to other cities in terms of home prices, but job growth is somewhat weak and median incomes are lower than they were 8 years ago. This will continue to keep a lid on housing prices and the housing industry will continue to struggle until job growth picks up significantly. *
About the author: Donna S. Robinson is an Atlanta native, 18 year veteran of the real estate industry and residential real estate market expert. She is the author of "Real Estate Investing Fundamentals & Strategies". Follow her on twitter @donnaconsults Watch her videos here.