Property Cycle - Atlanta GA

8 Replies

Where is Atlanta in the property cycle at the moment. 

Would be interested in investor views. Its had an amazing run, boom times since 2011.

Will we see more growth, now that interest rates have dropped back?

Anyone seeing softening ??

@Marisa R.

Was a amazing time in 2011 . That was the year I moved here & bought a home after 3 months of living here , I just wish I knew better to take advantage at that time lol 😂

I haven’t seen it soften yet , it seems like everything is still so overpriced but I may not be looking in the right places, be it seem to be that way everyone, one every side of the city .

Great Topic. I’m here to follow

GA has about 5 million more people moving here over the next few decades. Born and raised here 44 years so far. GA is one of the top states in the country with lots of positive metrics going for it.

I do not see 2010,2011 happening again for a long time on the residential side. We are about 11 years into a cycle that typically goes 10 years on average. There might be some juice left to squeeze but not too much on the residential side. Values keep going up and up. Home buyers purchase on monthly payment and with low interest rates to lock in for 30 years it helps ease buyers concern about prices being paid. When interest rates go really high then that is when more problems hit as buyers question what they can afford per month on a purchase.

I see a lot of houses being sold for 400k to 600k to downsizing senior ranch houses and also bigger houses for CA buyers moving here. Brand new homes are being sold minimum in the 200's now and rarely see anything in the 100's unless the developer gets the land for next to nothing with minimal grading and high density allowed then maybe high 100's.  

Thanks for feedback

Town homes generally lag behind sfh but also seeing this market will rising?

@Marisa R.

My opinion is everything is over priced and here’s why. While there are so many people moving to Atlanta, a lot of that was because of the city’s affordability and economic opportunities. However, the only construction going on in the city in luxury, high rise, etc. The percentage of people that can afford these price point isn’t very large. Atlanta is becoming less affordable which is why many people choose to come here in the first place. Secondly, on the commercial side, I’ve toured mid size apartments listed at a 5-6% cap that were half vacant and needed a total gut. So, this let’s me know there is a lot of speculation in the market.

Also, “The Beltline” isn’t bringing the price appreciation that was expected. The initial endeavor made an impact of the appreciation along future development paths hasn’t lived up to expectations. Thirdly, I recently read an article here on BP that was about the foreclosure rates in GA. Most of the major counties in GA, Fulton being in the top, have seen a spike in the year over year foreclosure rates. These weren’t small spikes either. Im talking large percentages here.

There are also other things at play. Student loan debt is becoming a problem. We could start seeing auto loans becoming a problem as well.

It honestly feels like we’re in 2005-2006. There a small signs of trouble but the party is too good currently to show concern. So, the market will probably continue on maybe another good year and a half before we start to see major signs. BUT things are still over priced in Atlanta.

Now, if a great deal comes my way, I won't pass it up, but I like to invest in Real Estate how Warren Buffet invest in businesses. And he doesn't follow the trend. Atlanta is trendy to invest at the moment. Why? Because during the last recession the city was one of the worst impacted and things were cheap for so long. This next recession, whenever it comes....we will see a lot of MFR owners in trouble either because they over paid, over rehabbed, and over speculated, and there will not be enough cushion to offset the declining rents.

Again just my opinion from what I’m seeing here in Atlanta on a daily basis.

Happy Investing!

Canesha

In GA I do not like boom/bust markets. I would rather investors focus on mature established markets where you know ( a deal is a deal) and not if this and this and this happens.

Lot of older dumpy housing stock in inner core Atlanta. I do not buy residential but wouldn't touch that stuff.

Frankly if someone buys into a new high quality subdivision by a high quality builder with a track record the odds of doing well are high. Most will only allow so many investor owned houses which then attracts renters who want to live in that type of community. You buy at Stage 0 and by the time the project is finished out an investor owner can be sitting on 50k to 100k more of equity possible. In addition initial cash flow might be lower but potential for rent growth can be higher over time. So the mix of equity and income appreciation can be good.

With town houses the high end ones have elevators in them. When you have an elevator you enlarge the buyer pool to a degree. Low income type housing sure there is demand but the economics of new development do not work. Land, legal, labor, material costs are all up. That dictates senior living type communities and regular class A multifamily. A lot of property owners are against regular multifamily as they believe it brings in a lower class of tenants to the area. Senior living where mom and dad can be right around the corner for their kids to see them can be an easier sell for zoning.  

Originally posted by @Canesha Edwards :

@Marisa R.

Your reply was dead on. This is exactly what I see happening. I read that article about foreclosures too. I hate that the media always bigs up a city so high that it causes everyone to ignore the facts. Although I love the growth that I’ve seen in Atlanta over the last 10 years it happened so fast. The city is doing something right with new developments and transportation, but inner city prices are inflated and many people won’t be able to afford to live in the city.

My opinion is everything is over priced and here’s why. While there are so many people moving to Atlanta, a lot of that was because of the city’s affordability and economic opportunities. However, the only construction going on in the city in luxury, high rise, etc. The percentage of people that can afford these price point isn’t very large. Atlanta is becoming less affordable which is why many people choose to come here in the first place. Secondly, on the commercial side, I’ve toured mid size apartments listed at a 5-6% cap that were half vacant and needed a total gut. So, this let’s me know there is a lot of speculation in the market.

Also, “The Beltline” isn’t bringing the price appreciation that was expected. The initial endeavor made an impact of the appreciation along future development paths hasn’t lived up to expectations. Thirdly, I recently read an article here on BP that was about the foreclosure rates in GA. Most of the major counties in GA, Fulton being in the top, have seen a spike in the year over year foreclosure rates. These weren’t small spikes either. Im talking large percentages here.

There are also other things at play. Student loan debt is becoming a problem. We could start seeing auto loans becoming a problem as well.

It honestly feels like we’re in 2005-2006. There a small signs of trouble but the party is too good currently to show concern. So, the market will probably continue on maybe another good year and a half before we start to see major signs. BUT things are still over priced in Atlanta.

Now, if a great deal comes my way, I won't pass it up, but I like to invest in Real Estate how Warren Buffet invest in businesses. And he doesn't follow the trend. Atlanta is trendy to invest at the moment. Why? Because during the last recession the city was one of the worst impacted and things were cheap for so long. This next recession, whenever it comes....we will see a lot of MFR owners in trouble either because they over paid, over rehabbed, and over speculated, and there will not be enough cushion to offset the declining rents.

Again just my opinion from what I’m seeing here in Atlanta on a daily basis.

Happy Investing!

Canesha

 

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