Atlanta, Georgia is perfectly positioned for housing growth in 2017 and beyond. Not only is the southeastern city home to the 10th-largest economy in the United States, the busiest passenger airport in the world, and more Fortune 500 company headquarters than any other city in the country behind only New York City, Houston, and Dallas, but it also ranks among the most affordable major metro areas in which to live in the entire country with a cost of living that hovers right around the national average and a relatively low cost of relocation. By comparison, Sperling’s “Best Places” estimates New York City’s cost of living is nearly 25 percent higher and Payscale.com estimates it would cost about 133 percent more to move to New York City than to relocate to Atlanta.
Atlanta’s Housing Market [Q4 2017]
When discussing the Atlanta housing market, it is important to remember that the city’s urban and suburban structure has an extremely broad base. In fact, Atlanta has long been the “poster child for urban sprawl” because the city’s suburbs and urban areas simply keep expanding outward as the city’s population swells. While Atlanta’s metro area is most easily defined as the area inside the city’s interstate highway loop, I-285, dozens of additional counties outside that loop are home to residents who live, work, and play in the Atlanta metro area and are inherently part of the broader area economy.
These suburban areas offer some of the most interesting opportunities for real estate investors. Clayton County, for example, which is located on the south side of the city, has spent multiple years at the top of ATTOM Data (formerly RealtyTrac)’s list of best places for rental returns in the country. With gross rental yields in excess of 23 percent, future predicted job growth in that county of nearly 38 percent over the next decade, and median home prices nearly $100,000 less expensive than the median home price in the Atlanta metro area, Clayton County is a highly attractive location for renters and turnkey rental owners. With the Delta Airlines Tech Ops division and the local public school system employing the majority of residents in that area, it is likely to remain a highly desirable area for renters for the foreseeable future.
Other areas of note in municipal region include Alpharetta, a city just outside the metro area with its own set of high-profile private employers that include LexisNexis, Comcast, E-Trade, Cox Communications, Verizon, and UPS. Alpharetta is home to three college campuses as well. The city is certainly among the more affluent suburbs of Atlanta, but is noteworthy because 94 percent of the workforce commutes into the area, making surrounding counties interesting targets for investors considering investing in turnkey rental properties. Also, the city is currently formulating a series of developer incentives intended to create more “workforce housing” that will bring in households with annual incomes of about $75,000 to live in incentivized rentals renting at about $1,350 a month (defined as “affordable” for this income bracket).
Also of note in the Atlanta area is the city of Roswell, which is part of the metro Atlanta area and Georgia’s seventh-largest city. The city and the surrounding area are home to many commuters and the area boasts 3.6 percent unemployment. This area offers opportunities not only for single-family investors, but also for those interested in mixed-use developments and commercial developments as demand for these types of properties in Roswell is so high that older buildings are often as attractive an investment as new construction. City planners recently commented that residential and commercial rents in existing developments are rising so fast that it is sometimes difficult to sufficiently incentivize new construction, which has led to some very attractive local initiatives intended to do just that.
Employment and Economy [Q4 2017]
Atlanta’s economy is the 10th largest in the United States and the 18th largest in the world. In 2014, the city’s GDP was estimated at more than $324 billion. The city has been classified as an “alpha world city” since 2010 by Loughborough University. Not only is the city home to the headquarters of dozens of major corporations including Arby’s, Chick-fil-A, RaceTrac Petroleum, Suntrust Banks, and Oxford Industries, but it boasts headquarters for six Fortune 100 companies:
- The Coca-Cola Company
- Home Depot
- United Parcel Service (UPS)
- Delta Airlines
- AT&T Mobility
- Newell Rubbermaid
Nearly every Fortune 1000 company has a presence in the Atlanta area (in excess of 75 percent), and municipal and state government bodies have long been strong supporters of new business in the area. This has resulted in many major corporate moves into the area, including Porshe, BMW, NCR, and Tyler Perry Studios, which is headquartered on a former army base just outside the city, one of the largest studios in the country, and has created a booming film and television industry in the area that attracts a large population largely inclined to rent instead of own.
The city is also home to a growing high-tech community thanks in large part to the U.S. Centers for Disease Control and Prevention (CDC) and the Nuclear Regulatory Commission Region II being headquartered in the area.
ATTOM Data’s recently released pre-mover index named a number of counties surrounding the Atlanta area as the “busiest” for households preparing to move. This means that these counties are likely to experience additional growth as the local population swells with new residents. The report credited the high levels of activity to the availability of relatively affordable housing. Although Atlanta area housing inventory has been tight of late (under three months’ worth), the area is still keeping pace with national levels of affordability and costs of living, which is unusual for a metro area of this size.
Conclusion: Real Estate Investing Opportunities in the Atlanta Market
While Atlanta is home to a dynamic and creative population of fix-and-flippers, rehabbers, and wholesalers, the market offers the best opportunity to real estate investors who wish to own rental properties. The area is in a state of constant development and, unlike comparable metro areas, has room to expand outward and is doing so. This provides ample opportunity for investors wishing to build a turnkey rental portfolio to acquire existing homes for single-family rentals, take advantage of suburban affordable housing and development incentives, and acquire multiple properties at once due, once again, to the relative affordability of property, particularly in the suburban areas where commuters live.
ATTOM Data’s chief economist Darren Blomquist recently referred to the area as one in which households are willing to “drive until you qualify,” specifically referring to the need for new Atlanta-area residents to live outside the city in order to qualify for a mortgage to purchase a home. Many of those households will opt to rent closer to the city’s center given the opportunity to do so, creating a tenant population of long-term, reliable, professional families.
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