3 Hot Tips on Investing in Atlanta in 2020

Atlanta, the capital of Georgia, is the economic and cultural epicenter of the greater metropolitan area. Boasting the world’s busiest airport since 1998, the Hartsfield-Jackson International Airport is the headquarters for Delta Airlines and has direct flights to over 200 destinations and 50 different countries.

Atlanta is home to six professional sports teams, a thriving music scene, and the largest outdoor aquarium in the Western Hemisphere. Known as the “Hollywood of the South,” Atlanta has become a popular place to film movies and TV shows. It has thousands of public parks and trail systems with the local government committed to creating a “greener” city. The city offers urban walkability, relatively low cost of living, and plenty of job opportunities in varying industries.

It’s no wonder Atlanta is the fourth fastest-growing metro area in the United States. Locals rarely leave and 100,000 new residents move to Atlanta every year.

Atlanta & COVID-19

Atlanta’s economy is the 10th largest in the U.S. and the 20th largest in the world.

Between 2018 and 2019, Atlanta saw a huge jump in jobs, 3.5%, compared to 2.6% nationwide. When we rounded the corner into 2020, it seemed like the upward trend in job growth would continue. And then, well… you know what happened next.

Just like the rest of the United States, Georgia’s unemployment rate skyrocketed when the coronavirus hit. In April, their unemployment rate reached a peak of 12.6%. From February to July, the state of Georgia suffered just over 219,000 job losses.

The good news is Georgia saw the worst unemployment rates back in April and have recovered every month since. A recent report by the Georgia Department of Labor (GDOL) stated that Georgia’s unemployment rate is the seventh lowest in the nation. In fact, during the month of August, unemployment numbers decreased across all counties in Georgia.

These are all good signs that Georgia’s overall economy is on the road to recovery since COVID-19.

What Drives a Strong Real Estate Market?

Understanding what a healthy real estate market looks like is key to a successful investment. A strong housing market will have a combination of population growth, job growth, and affordability.

Growing Population

Population growth is tied to jobs. When jobs are readily available, people are willing to relocate, if necessary. Investing in metros with several large employers nearby is a great indicator of a solid real estate market.

Job Growth

COVID-19 has changed the way many of us do business. Wearing masks and social distancing is the new norm. Businesses have had to close down or shift operations, and employees who are able to work remotely are encouraged to do so. No longer having to live in close proximity to one’s employer opens up a world of possibilities. Migration patterns may shift as more people live where they hoped to one day retire.

Affordability

To find out if an area is affordable or not, simply compare median household income and median home price to national averages. This will quickly tell you if that market is an affordable place to buy real estate.

3 Tips for Investing in Atlanta Today

Atlanta has become a hotspot for all types of real estate investing. It is one of the top 10 rental markets in the U.S. today. Here are five tips for successfully investing in Atlanta right now.

Tip #1: Look for Areas with a Growing Population

Since 2010, more than 735,000 people have moved to the Atlanta metro area. There are approximately 100,000 people moving to the area every year. The current population of the greater Atlanta metro is 5.6 million and is expected to grow to 8 million by 2040.

The largest demographic moving to the Atlanta area seems to be young and educated. The majority of this population are renters and not yet ready to buy. Around 25% of Atlanta’s residents are between the ages of 28 and 38. This younger age group moving to Atlanta should continue to feed a strong rental market with high demand.

The places with the largest expected population increases by the year 2050 include:

Parts of intown Atlanta
Northern suburbs (along I-17, I-85, and GA 400 corridors)
Southern side of the airport
Gwinnett County, northeast of Atlanta, is expected to become the most populous county in Georgia, behind Fulton County.
Forsyth County, located North of Gwinnett County, is expected to double in size over the next 30 years.

Steady and above-average population growth is boosting demand for affordable housing. Housing inventories, not just in Atlanta but all across the country, are having difficulty keeping up with demand. This lack of inventory paired with high demand is pushing home prices up. Young people are forced to rent simply because they can’t afford to buy a home with price tags continuing to go up.

Tip #2: Find Up-and-Coming Neighborhoods That Are More Affordable

Atlanta has a very low cost of living compared to other major metros like New York and San Francisco. Having said that, not all areas of Atlanta are great places to buy real estate. Up-and-coming neighborhoods near jobs are often the best neighborhoods for both cash flow and appreciation.

In April, Atlanta’s number of home sales dipped more than 25% compared to 2019. This downward trend continued throughout May but has slowly recovered since. Since last year, there’s been a 4% increase in home sales. Even with the coronavirus pandemic, home sales around Atlanta are expected to increase 4.7% over the next year.

Notably, a recent report by Re/Max showed the average selling price in the Atlanta metro in August was $290,000—an 11.5% jump compared to August 2019.

This tells us that even with more homes hitting the market, there are still more buyers than sellers—thus, driving prices up. There are a number of growth markets in and around Atlanta where it’s still possible to buy an affordable home that can be rented out for more than the expenses.

Tip #3: Buy Where the Jobs Are

Trees aren’t the only things growing in Atlanta. As of 2019, there are 30 Fortune 500/1,000 companies whose headquarters are located in the Atlanta metropolitan area. Combined, these companies make $438 billion in revenue.

For the sixth year in a row, Georgia was ranked as the No. 1 best state for doing business in by Site Selection. There are a number of jobs in different industries including:

Wireless technology
Bioscience (global headquarters of the CDC & 45 hospital locations)
Technology
Supply chain & manufacturing

Some of the largest employers with headquarters in Georgia include Delta Airlines, Emory University & Emory Healthcare, The Home Depot, and Coca Cola. There are also several healthcare systems and universities around the Atlanta area.

The Atlanta Regional Commission is projecting the 21-county region to add upwards of 1.2 million jobs by 2050. The employment sectors that will see the biggest growth are health care, professional, science, technology, and construction.

Jobs will always bring people and people will always need a place to live. Buy investment property near jobs.

Best Areas in Atlanta for Flipping Houses

Adair Park
Reynoldstown
Cabbagetown
Decatur

Best Areas in Atlanta for Cash Flow & Appreciation

Grant Park
Chamblee
Gwinnett County
Old Fourth Ward
Hanover West
Midtown & Downtown
Buckhead

Conclusion

Pandemic or not, Atlanta’s future looks bright. The Atlanta metro area has experienced impressive job growth, population growth, and offers more affordability than most other major cities.

Before investing in any market, make sure you are staying current on Atlanta’s housing market. If you want a great way to keep up on specific market trends, BPInsights makes it easy to look at vacancy rates, average rents, and more.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.