PERFECT STORM: Why the Atlanta Real Estate Market is Booming
By Steve Saenz, ExploreATL Tour Guide | June 2018
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Atlanta has been a pretty popular place to live since 1837, when a fledgling railroad town called Terminus was formed. However, nothing compares to what is happening in Atlanta today when it comes to real estate. A confluence of events have created a "perfect storm" in the Atlanta real estate market. The result can be described as a huge gap between the supply of homes and the demand for them. This explains why we have seen an unprecedented increase in real estate prices since the economic downturn of 2008 - 2012. Here are some of the drivers (conditions) that have created this rare economic event...
- LOCATION — The old real estate adage about location applies to entire cities as well as individual properties. Atlanta largely exists because of it's location in the foothills of the Appalachian Mountains. Our city sits atop a ridge that runs south of the Chattahoochee River. At 1,050 feet above sea level, Atlanta has one of the highest elevations among major cities east of the Mississippi River. It was this location (in 1837) that made ATL the logical place to establish a connection between the Western & Atlantic Railroad and the rest of the United States (see below). This was done to provide the Port of Savannah with "inland reach." To this day, Atlanta enjoys a strategic advantage because of its location. Our city remains one of America's most important transportation hubs and increasingly serves as a gateway to and from Europe and South America. Speaking of international portals, there is significant interest in Atlanta real estate among institutional investors around the world. Institutional capital is also flowing into some familiar places from neighboring states.
- POPULATION — In 2016, the Office of City Planning in ATL commissioned a study to determine how big Atlanta is likely to get by 2050. The answer, according to Dr. Arthur Nelson, is 1.3 million. In 2018, Atlanta's population (city limits) was slightly less than 500,000. Metropolitan Atlanta is expected to grow from 6.5 million to 9 million during the same period. This structural trend will drive the demand for housing throughout the Atlanta region for decades to come. Dr. Nelson's study helped lay the foundation for the City Design Plan, which was published in September 2017.
- LIFESTYLE — During the second half of the 20th Century suburban living (swim & tennis, cul-de-sacs, malls, golf courses, etc.) defined a lifestyle that many metro Atlantans sought when deciding where to live. Today, Atlanta's in-town neighborhoods are experiencing very strong demand for housing as many people now want to have access to arts & culture, dining and walkability.
- DEMOGRAPHICS — The Atlanta real estate boom is being driven, in large part, by demographics. If you look at the buyers of in-town properties you will see that they include multiple generations including recent college graduates, millennials and baby boomers. Many "empty-nesters" are selling their homes in the suburbs and moving in town. This is especially true for neighborhoods that offer amenities such as walking trails and upscale restaurants. Incidentally, the Millennial generation is larger than the Baby Boomer generation and they are just getting started.
- DIVERSITY — As the cradle of the Civil Rights Movement, Atlanta enjoys a special place in the hearts and minds of people who value diversity and equality. Today, Atlanta is becoming more culturally diverse, which bodes well for our city as it competes for talent in an increasingly globalized economy. These new residents will need a place to live and many will locate inside the city limits because of this cultural diversity and the amenities described above.
- ATLANTA BELTLINE — This massive redevelopment plan has been a catalyst for economic and social development in neighborhoods that have suffered from disinvestment for the past 50+ years. It is also creating a "lifestyle" that people of all ages want to participate in. If you want to know how and why the Beltline project came into existence, please read, Where We Want to Live by Ryan Gravel. See also: My 2015 interview with Ryan
- QUALITY OF LIFE — Let's face it, Atlanta is a pretty nice place to live, which explains why it has been growing rapidly since Stephen Harriman Long drove that stake in the ground back in 1837. Atlanta, which is known as the "City in the Forest," offers its inhabitants a compelling quality of life. Interestingly, the perception that some people have about ATL changes after they move here. I have spoken to any number of individuals who have been transferred to ATL early in their careers from places like Denver and the SF Bay Area. Most have said that they were pleasantly surprised at "how cool" ATL was after they moved and spent some time here. See also: ChooseATL
- TRANSPORTATION — Since its inception, one of Atlanta's strategic advantages has been its transportation system. In addition to its extensive transportation infrastructure, Atlanta is a leader in logistics and supply chain management. See also: MARTA Transit-Oriented Development.
- HIGHER EDUCATION — The Atlanta region is home to some 57 colleges and universities. The collective student enrollment at these institutions is 250,000, which ranks Atlanta at #7 in the USA. Atlanta's Spelman and Moorehouse Colleges ranked #1 and #4 among Historically Black Colleges and Universities in the 2018 Best Colleges & Universities Rankings. The direct and indirect economic impact of Atlanta's higher education system is profound. Many students stay in Atlanta after they graduate. Many parents buy houses or condos for their children while they are going to school here. This creates more demand for housing.
- JOBS — All of this makes Atlanta a powerful engine for job creation. It makes our city an attractive choice for companies that are expanding their operations and/or relocating their headquarters. This also makes Atlanta more competitive when it comes to attracting talent. When companies like Amazon, Google, NCR and State Farm relocate to Atlanta or open regional offices here, they create lots of high paying jobs. This is an important point and one that will put more upward pressure on real estate prices.
In summary, the ten drivers described above have created a unique and powerful economic event. These are structural trends; not cyclical ones. The supply and demand imbalance for housing will last for decades. Will there be corrections along the way? No question about it; but the long-term trend is decidedly UP! Those who are in a position to purchase or invest in Atlanta real estate have a once-in-a-lifetime opportunity to create wealth.