How long will the ATL housing boom continue?
This paper explores the secular trends that are driving demand for ATL homes...
Executive Summary
This paper explores ten structural trends that are driving ATL home prices higher. While the focus of this discussion is the residential housing market in the City of Atlanta, most of the trends discussed also apply to communities and cities throughout the metro Atlanta region.
As with most things, the price of real estate is determined by supply and demand. The premise of this paper is that the demand for homes in ATL will far outpace the supply for the next several decades. During this time, home prices should continue to rise at an above-average rate resulting in significant (generational) wealth creation for those who are in a position to purchase and/or invest in ATL real estate.
Single-Family Homes Should Benefit Most
In terms of long-term price appreciation, it is important to note that the supply-demand imbalance should postively impact single-family homes more than multi-family dwellings such as condominiums and townhomes. This is due to the supply side of the equation. The number of single-family homes in the city is relatively static, while the number of multi-family units has much more room to grow. Think vertical.
The ten structural trends discussed in this paper are Location, Population, Lifestyle, Demographics, Diversity, Quality of Life, Jobs, Higher Education, Transportation & Logistics, and the Atlanta Beltline. At the bottom of the page, you will find a list of Articles, Maps and Resources that support and expand on the points made below.
Strategic Location
The old real estate adage about location applies to entire cities as well as individual properties. Atlanta exists because of its location in the foothills of the Appalachian Mountains. The 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. This was done to provide the Port of Savannah with access to markets in the Midwestern USA.
To this day, Atlanta enjoys a strategic advantage because of its location. The city remains one of America's most important transportation hubs and increasingly serves as a gateway to and from Europe and South America. Atlanta’s location in the Georgia Piedmont provides residents and visitors with moderate weather and its legendary tree canopy, which is one of the things people like most about ATL.
Population Surge
In 2016, the Office of City Planning for ATL hired Dr. Arthur Nelson, a demographer and urban planner, to determine how many people would be living in ATL by 2050. In his presentation, which appears below, Dr. Nelson explains how he arrived at his forecast of 1.3 million. For context, the current population of ATL (as of Dec 2020) was approximately 500,000. He is saying that another 800,000 people will be moving here over the next 30 years! If it materializes, this population surge* will turbocharge demand for all types of housing for several decades.
* According to the Atlanta Regional Commission, the ATL region’s population growth slowed in late 2019. This is discussed further in the JOBS section below.
Urban Life 2.0
Like many US cities, Atlanta’s intown neighborhoods experienced a significant decline in population during the second half of the 20th century. For context, the population of ATL right now (~500K) is about the same as it was in 1970! Some would say that the ATL region, which includes some of the nation’s fastest-growing counties, was a ‘poster child’ for suburban sprawl for much of the 1970s, 80s, and 90s.
In the mid to late 1990s, a renewed interest in intown living began to emerge. This re-urbanization trend, which really took hold in the 2000s, shows no signs of letting up. In fact, the appetite for what we might call “Urban Life 2.0” is stronger than ever as we enter 2021. The lifestyle that intown dwellers seek is defined by tangible and intangible attributes such as diversity, parks, and walkable neighborhoods. Those who choose to live intown appreciate the arts, culture, and the burgeoning food and beverage scene. You often hear the word vibe used to describe ATL’s intown neighborhoods. As you get to know them better you realize that each has its own distinct look and feel. That’s one of the intangibles that people like most about ATL.
Demographics
Another key driver of demand for intown real estate is demographics. Interestingly, if you look at the buyers of intown properties, you will see that they include all generations including recent college graduates, Millenials, and Baby Boomers. Another interesting trend is the many “empty-nesters” who are selling their homes in the suburbs and moving in town — again, motivated by that Urban Life 2.0 discussed above. This should continue well into the future as more Baby Boomers retire and Millenials move into their peak earning years.
Cultural & Ethnic Diversity
As the cradle of the Civil Rights Movement, Atlanta enjoys a special place in the hearts and minds of people who value diversity. 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
The Atlanta Beltline is a multi-decade, multi-billion redevelopment plan that began in 2005. This long-term infrastructure project is transforming many parts of ATL and has been a major catalyst for economic and social development in neighborhoods that have suffered from disinvestment for over 50 years. If you are interested in the Beltline backstory (which is very interesting) pick up a copy of Where We Want to Live by Ryan Gravel.
Quality of Life
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 many individuals who have been transferred to ATL early in their careers from places like Denver and the SF Bay Area. For many of the reasons discussed above, most have said that they were pleasantly surprised at "how cool" ATL was after they moved and spent some time here.
Transportation & Logistics
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 video below). Georgia is No. 1 for U.S. distribution and supply chain hubs and No. 2 for infrastructure and access to global markets. Georgia also offers a robust rail and highway infrastructure. ATL is home to the busiest airport in the world. Georgia also enjoys one of the busiest ports in the US (Port of Savannah) as well as the intersection of two of the nation’s largest fiber-optic trunk routes.
Video by: Georgia Department of Economic Development, GeorgiaUSA.com
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 US. 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.
Regional Job Engine
All of this makes Atlanta a powerful engine for job creation. It also makes the city an attractive choice for companies that are expanding their operations and/or relocating their headquarters. Very importantly, it 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 thousands of high paying jobs. This is a key driver of demand and one that will put sustained upward pressure on real estate prices.
The ATL region experienced a deceleration in job growth before the pandemic hit. The lingering effects of the pandemic (job growth, remote work, etc.) could cause home prices to moderate in the near term. Keep an eye on these trends.
This regional snapshot presents ARC’s major jurisdiction population estimates for 2020. The 10-county Atlanta region added 63,600 new residents between April 2019 and April 2020, according to those estimates. Overall, the Atlanta region’s population increased by 1.3 percent and now stands at 4,692,000 — more than that of 24 states. A significant drop in job growth this past year has contributed to the slowing of the region’s annual population growth, to a lower level than that seen in any of the last four years. The lower amount of growth reflects a slowdown in job growth over the past year. (NOTE: These estimates for April 1 do not reflect impacts of any pandemic-related job loss). Source: Atlanta Regional Commission
In summary, the ten drivers described above have created a unique and powerful economic event. Remember that these are structural trends; not cyclical ones. The supply and demand imbalance for housing should 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 will have an opportunity to create generational wealth.
Articles, Maps & Resources
Articles
Atlanta housing price increases could be among the largest in the nation in 2021 (Atlanta Business Chronicle)
Atlanta’s Thriving Economy (ChooseATL)
Atlanta’s Zero Mile Post: Where & Why the City Began (U.S. National Park Service)
Becoming the City in a Forest (American Forest)
Game-Changers: 10 Projects that are Transforming Atlanta Right Now (ATLsherpa)
Georgia’s World-Class Infrastructure (Georgia Department of Economic Development)
Regional Snapshot: 2020 Population Estimates-Lowdown on a Slowdown (Atlanta Regional Commission)
Transportation Has Long Fueled Atlanta (Federal Reserve Bank of Atlanta)
Maps
City of Atlanta (Google Maps)
Atlanta Region Data Dashboard (Atlanta Regional Commission)
Diversity in Metro Atlanta Region (Atlanta Regional Commission)
Housing Subarea Analysis (Atlanta Regional Commission)
Atlanta Beltline Map (Atlanta BeltLine)
Resources
Atlanta City Design (Department of City Planning, City of Atlanta)
Atlanta Population & Employment Forecasts (Atlanta Regional Commission)
Atlanta Beltline Redevelopment Plan (Original document, 2005)
Atlanta’s Colleges & Universities (Atlanta Convention & Visitors Bureau)
Metro Atlanta Housing Strategy (Atlanta Regional Commission)
S&P/Case-Shiller GA-Atlanta Home Price Index (Federal Reserve Bank of St. Louis)
Where We Want to Live: Reclaiming Infrastructure for a New Generation of Cities (book by Ryan Gravel)
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