Atlanta, GA Real Estate Market Outlook

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Atlanta, GA Real Estate Market Outlook

Kavian Anderson-Spells
Member since 2019 · 4 posts · 4 votes

My first post! 

I'm a newbie looking for my first deal. I just started reading The Ultimate Beginners' Guide to Real Estate Investing and I ran across the explanation of the Real Estate Market Cycle. My question is, where do you think the market cycle is for the Atlanta, GA area? I understand that every county/zip code can be different so if you want to go into a specific area, please do! 

Refresher:

The Peak: Prices are at an all-time high, inventory is down. Multiple offers are common, even above asking price

The Tipping Point: Prices begin to fall. Foreclosures begin rising

The Decline: Proces continue to fall, foreclosures flood the market. There is a fear of buying

The Bottom: Prices bottom out, there is excess inventory. Deals are plentiful and cash-flow is at an all-time high

The Climb: confidence improves leading to more sales. Declining inventory and rising prices.

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Canesha Edwards
Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
7y

@Kavian Anderson-Spells

Welcome to BP. Honestly, I believe the Atlanta market is over priced, especially closer to the city. I do agree that the south side of Atlanta has lower price points but it really depends on what type of investor you’re looking to be and what type of tenant you want.

I say this because while everybody is looking to the Southside of Atlanta for deals, very few people are thinking about the area as a whole. The school systems on the Southside are terrible. ( Jonesboro, College Park, Riverdale are in Clayton County and South Fulton school districts which I would argue are probably in the top 5 worst school districts).

East point and some parts of College are close to a private school ( Woodward Academy). If you can find houses in this area for a discounted price, you probably could make a decent profit flipping. Everywhere else on the Southside I don’t see flipping being that profitable, unless maybe you’re supplying affordable housing.

I do feel like we’re almost at the end of this current market cycle, so for that reason I’m personally not buying anything in Atlanta. I’m aggressively saving money so when the market does turn I’ll be in a great position to buy. However, in 6-9 months if there hasn’t been a slow down, I might look to buy but I’m not in a rush.

The most important thing to remember when investing, is its all about the numbers. The number have to make sense. Set your property criteria, Be conservative in your underwriting, and never just take a person’s word for something. And don’t invest off of speculation.

I hope This helps.

Feel free to reach out to me with any other questions you may have.

Just my 2 cents.

Canesha

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  • Matt Hershberger
    Riverdale, GA · Member since 2019 · 49 posts · 27 votes
    7y

    Hey @Kavian Anderson-Spells welcome to BP! I would advise to look into the south side of Atlanta if you are getting started. Generally lower price points and many pockets are appreciated quite fast. Specifically I would look into the East Point, Riverdale, Jonesboro, Union City, College Park, Stockbridge, and Conley area. Of course this is just my opinion so you should do your own research and find a right pocket that fits what you are looking for. Hope this helps!

    8Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Kavian Anderson-Spells

    Welcome to BP. Honestly, I believe the Atlanta market is over priced, especially closer to the city. I do agree that the south side of Atlanta has lower price points but it really depends on what type of investor you’re looking to be and what type of tenant you want.

    I say this because while everybody is looking to the Southside of Atlanta for deals, very few people are thinking about the area as a whole. The school systems on the Southside are terrible. ( Jonesboro, College Park, Riverdale are in Clayton County and South Fulton school districts which I would argue are probably in the top 5 worst school districts).

    East point and some parts of College are close to a private school ( Woodward Academy). If you can find houses in this area for a discounted price, you probably could make a decent profit flipping. Everywhere else on the Southside I don’t see flipping being that profitable, unless maybe you’re supplying affordable housing.

    I do feel like we’re almost at the end of this current market cycle, so for that reason I’m personally not buying anything in Atlanta. I’m aggressively saving money so when the market does turn I’ll be in a great position to buy. However, in 6-9 months if there hasn’t been a slow down, I might look to buy but I’m not in a rush.

    The most important thing to remember when investing, is its all about the numbers. The number have to make sense. Set your property criteria, Be conservative in your underwriting, and never just take a person’s word for something. And don’t invest off of speculation.

    I hope This helps.

    Feel free to reach out to me with any other questions you may have.

    Just my 2 cents.

    Canesha

    14Reply
  • Kavian Anderson-Spells
    OP
    Member since 2019 · 4 posts · 4 votes
    7y

     Thank you for the information @Canesha Edwards. I'm specifically looking to be a buy and hold investor. For my first property, I'm looking to do a house hack with a duplex. I've noticed (in my limited research) that Multi-Family properties are a little harder to come by in Atlanta. But I'm not married and don't have any children so good schools are not a priority for me. Would your advice change at all? 

    1Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Kavian Anderson-Spells

    My advice wouldn’t change. Think about it this way. The location of your properties are going to determine the type of tenant that rents from you. So, just keep that in mind.

    I’m not saying that the Southside is a terrible area, I live in College Park myself. What I am saying is that the Southside is like what the West End, Used to be before gentrification. However, I honestly don’t see these areas appreciating like the West End did because of the school system and other economic factors ( there’s not any legit shopping, restaurants, or grocery stores in these areas, especially Riverdale. What you do have are liquor stores, check cashing places, and multiple fast food chains. So, just keep that in mind.

    Yeah, small multi family properties are hard to come buy. If you know where you want to invest, I would suggest driving the area to get familiar with the area. I’ve found some great deals driving for dollars.

    House hacking can be a great way to get started. It will give you first hand experience on being a landlord.

    5Reply
  • Kavian Anderson-Spells
    OP
    Member since 2019 · 4 posts · 4 votes
    7y

    I'll be sure to incorporate that into my strategy moving forward. Thank you @Canesha Edwards!

    0Reply
  • Kevin PolitePro Member
    Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
    7y

    @Canesha Edwards I always thought there were two East Points and College Parks. EP and CP close to  EP and CP Marta stations seem to have increasing price points and there are all the new restaurants along the street in College Park next to the Marta station. There are some beautiful old homes near Woodward and East Point has some really nice Craftsmen houses.  The Aerotropolis in College Park near the Airport should help as well. The other areas are more suburban and I totally agree with you as far as any appreciation in the immediate future.   

    1Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Kevin Polite

    Kevin, I completely agree the area of College Park and East point that run along Main Street are definitely seeing a lot of investment in the area. I would say the area between Oakland city Marta station and College Park Marta Station are prime investing areas outside of the city.

    I see you’re in Decatur, how are things out that way?

    3Reply
  • Kevin PolitePro Member
    Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
    7y

    @Canesha Edwards I like that area near Oakland City Marta. My brother has a house in Sylvan Hills and wanted to sell, easy commission for me, lol, but I told him to hold on to it for another 5 years, he won't be sorry. There are 4 Decatur areas. The ones I like are doing fine, much much more inventory and the bad flips still sell but take longer and with price reductions. Good flips still sell in 30 days or less. I remember when 90 days was considered standard so I'm not sure there is much of a slow down as a leveling off. Rates look to remain low so I'm still buying in the next year or two.

    5Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Kevin Polite

    Good advice, I wouldn’t sell anything in the Oakland City area either. It’s a gold mine.

    What price point are you buying your flips in Decatur? How much do you put into properties? What’s your profit margin?

    I haven’t looked much into the Decatur area, but if there are still decent deals in the area, I might look further into it.

    0Reply
  • Nelson De la Torre
    Rental Property Investor · Atlanta, GA · Member since 2019 · 11 posts · 9 votes
    7y

    @Canesha Edwards, I agree with 100%. I’m myself also looking for properties, but kinda waiting to see what happens in the market in the next couple of years. Don’t get me wrong, if I see a good deal I’ll take action, but I feel we’re at the top at least in Atlanta.

    I’m also in City of Decatur and house sales at least in my immediate area have slowed down somewhat. It seems also impossible to cash flow in Decatur rental properties. I’m looking at south Atlanta and OTP, and learning about different areas, since my pass rentals have been ITP and in Decatur, Reynolds Town, Westview, and East Point which have gone up in price.

    I’ll send you a request to get together and network, maybe we can meet in person.

    3Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Nelson De la Torre

    I definitely think we’re near the top of the market here in Atlanta. However, I think the Southside will be the next area of interest, but I don’t see the residential side of things taking off until there is expansive development in the commercial space.

    I’m all for networking with fellow investors. Let’s make it happen.

    2Reply
  • Robert Collins
    Rental Property Investor · Greenville County SC / Atlanta, GA · Member since 2017 · 403 posts · 120 votes
    7y

    @Canesha Edwards you nailed it! Those were my exact thoughts & plans. I use to do a lot of driving for dollars and it almost seem like prices changed dramatically over night,

    I’m pretty much doing the same , just stacking for now, I still be on the look just to see what’s going on in the market & to see if I need to adjust my plans but I feel like things definitely are overpriced, 

    with me being new I wonder if the market correct it self or is this is a new normal. 

    My main goal is to buy&hold doing the brrrr method so I can capture my capital & repeat. 

    Sometimes I think maybe I should just go to the Southside, Macon or Columbus & buy a cheap property but that’s just the impatient me thinking the days of being able to cop something affordable in Atlanta are over lol , like I have some kind of clock saying if you don’t buy now even those areas will get super hot & then you have to go Birmingham & pick up scraps there 😬 but I know it’s  just a cycle 

    3Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Robert Collins

    I can definitely understand the impatient side of you. I’ve been there. I have my eye on a few properties as well, but I’m not moving on anything unless I can obtain the price I need for the deal to make sense.

    Is the Atlanta market headed for a decline? I say yes. The question is when. When you have major commercial developments such as the West End Mall redevelopment and the Aerotropolis some could argue that the party will continue. However, when you have articles reporting that foreclosures in Atlanta have more than doubled in some counties in GA, Fulton being in the forefront......it makes one wonder.

    I’ve stuck my pinky toe in the Columbus market. The issue here is not the pricing of the houses but the age. So, you might get a great price on the property, but when the the property needs 6 structural pillars replaced, the price tag doesn’t look so appealing. Also, the population in Columbus has been more on the stagnant side.

    Regardless, the key is not staying out of the market, but taking the next best step, and letting the numbers be the decision markers. If the numbers are right the deal will get done regardless of the status of the market.

    Just my 2 cents

    Happy Investing!

    5Reply
  • Nick Fitzpatrick
    Real Estate Broker · Marietta, GA · Member since 2014 · 135 posts · 105 votes
    6y

    @Canesha Edwards What makes you think the Atlanta market is declining, other than you don't like the current prices? I've heard the same thing since 2014 and yet, here we are. 

    3Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    6y

    @Nick Fitzpatrick

    2014 was a different time and prices weren’t nearly as high in certain areas as they are now. The Atlanta market is over priced and there is too much speculation In the market. I could be wrong and the market could keep going up for 10 more years, nobody really knows. But it’s my opinion that we are closer to the top of the market than the bottom.

    The signs are there. The thing is that most people will let all their other bills get behind before their mortgage, so there’s always a lag there. But look at the student loan debt, auto debt, credit card debt, etc. All of these things coupled together with start to have an impact on housing. Foreclosures in GA have seen a great increase in year or year data. With Fulton county being in the forefront. I read an article here on BiggerPockets about it. Properties are sitting on the market longer, price reductions are happening, etc.

    There are still luxury apartments/condos/ townhomes being built when the current inventory is still sitting with high vacancies.

    Supply is increasing for these class A properties but will the demand stay consistent? No it won’t. The buyer/renter pool for this property class is small. Where are the affordable housing developments ( not section 8, but decent quality housing for the average working family)?

    Every major metropolitan city has an affordable housing issue, Atlanta is no different.

    Honestly, whether the market is declining or rising isn’t my concern. My concern is that I stick to my underwriting criteria and I’m positioned to move on a great deal when it comes my way. Regards of the current status of the market.

    But like I stated, we are closer to the top than the bottom in my opinion not just in Atlanta but globally.

    2Reply
  • Charlene Fetzer
    Investor · Nashville, TN · Member since 2019 · 40 posts · 25 votes
    6y

    @Kavian Anderson-Spells Thanks for starting this post and good luck on your investment journey!

    I am new to REI myself and grew up OTP. I have been researching ITP and specifically driving the west side (hunter hills, wash lark, Mozley, west view, west end, grove park) to get a feel for what the condition is like and how far is it from developing. I think you really need to drive around these areas to understand where you would want to invest because it will dictate your tenant as @Canesha Edwards said. To me, until you can find a great deal in this area the rent rates will not give me a good enough return. I’ve heard more and more about the south side having increased potential. From what I’m seeing people are asking too much for the condition of their homes in these areas and most deals don’t make sense, off market may be a better option. I’m also right there with you @Robert Collins trying to be patient, which can be hard when you’re ready to go! But until the deal makes sense with the rent rates it will take some time and effort. 

    3Reply
  • Nicholas LaGatta
    Real Estate Broker · Atlanta, GA · Member since 2017 · 229 posts · 145 votes
    6y
    Originally posted by @Nick Fitzpatrick:

    @Canesha Edwards What makes you think the Atlanta market is declining, other than you don't like the current prices? I've heard the same thing since 2014 and yet, here we are. 

    I see a lot of semantic confusion in these types of discussions.  Honestly, I'd like to have a better understanding of the key factors involved myself.  What I do know is that market pricing does not equal market rate of change.  

    I haven't seen data to support a market price decline in Atlanta and I haven't seen anyone forecasting a decline as of present.  However, I have seen anecdotal evidence to support a present slow down in the rate of increase of market pricing, although I understand there is still an upward trajectory.  

    I understand the average purchase price of homes in Atlanta continues to increase, but not as quickly as in the past year.  List price could also be used as an early proxy for market trajectory, but it's a weaker correlation than purchase price since list price changes based on a combination of Porter's 5 Forces (basically the whim of market stakeholders).

    Does this make sense? Does anyone have a different point of view or access to better data/analysis? I'm eager to get access to MLS in the next few weeks, so I can do more substantive quantitative market analysis.

    0Reply
  • Nick Fitzpatrick
    Real Estate Broker · Marietta, GA · Member since 2014 · 135 posts · 105 votes
    6y

    @Canesha Edwards @Nicholas LaGatta There are a couple of things happening at once in the macro level and different variables on the mirco level. 

    On the macro level, the overall real estate market, across all asset classes, has slowed. But it is still growing yoy, just at a slower pitch. Interesting enough is the rise in the DOM and Bid/Ask ratio. This isn't 2017 where you throw up a price and someone pays you for it. Now, if you price at market your property will sell and if you try and push it, the property will sit for longer and sell for less than asking. 

    If we look at the different asset types and classes, we see there is a wide variety between our boom and bust markets. Single Family homes under $400,000 are still in a strong seller's market. DOM is up but the bid to ask ratio is tighter. As you go up from that price point to $1m, it becomes less of a seller's market and over $1m, it's a true buyer's market. I get that no one is investing in $750k rental homes, but looking at the overall market tells us what buyers are comfortable buying. The under $250k market is extremely strong. 

    The Multi-Family market is tight overall with a lot of demand. Landlords in Class A markets are seeing high rents and stable tenants so they are looking for a high price to sell. The value is in Class B and C+ markets. Oddly enough, Class C and D markets are selling for a good bit more. 

    Office and Retail is still strong. 

    2Reply
  • Nicholas LaGatta
    Real Estate Broker · Atlanta, GA · Member since 2017 · 229 posts · 145 votes
    6y

    While trying illustrate the point I was making above, I came across this page: https://www.zillow.com/atlanta-ga/home-values/

    There's plenty of evidence to support and counter my points.  Whatever alchemy goes into the Zillow Home Value Index and Zillow Home Value Forecast seems to supports my position, while actual single family median sale price does appear to be down by 8% since June.  As for forecasts, if anyone has a crystal ball that's correct more than 50% of the time, please DM me.

    0Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    6y

    @Nicholas L.

    If you’re looking for better data collect it yourself. That’s the best way to get real time reliable data.

    For me as an investor Atlanta is over priced, that’s just me. My opinion of the Atlanta market is formed from physically being in the market, talking to tenants, walking the units, talking to property managers. I collect and analyze my own data, I’m not reliant on a source. I don’t care if an agent send me a rent roll. I’m going to talk to rents to get the truth.

    Another investor could say I’m crazy and the party is going to continue for another 10 years, who knows and I frankly don’t care. My underwriting conditions don’t change with market trends. I buy when a deal meets MY criteria regardless of where we are in the market cycle.

    2Reply
  • Kevin PolitePro Member
    Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
    6y
    @Nicholas LaGatta Westside is probably the hottest market so I did a quick pull YOY pricing, list to sale price, days on market, List Price of All Listed Properties, and sold price of Solds for 30310, 30311 and 30314 from GaMLS that includes Westview, WestEnd, ashview, etc. as you can see all have increased price points year over year using Jan 1-Nov 1. which confirms what you said. 39 days on market is fantastic, especially when historically it’s been 90 days. markets seems to be leveling off to a normal market. With another rate cut by the Fed today it’s a great time for homebuyers. Will present problems for finding buy and hold. foreclosures are at an all time low even after Fulton shotup last month. There are still deals but nothing like 2011-16. I wish there was better data for rentals. Zillow has a ton but for some reason doesn’t monetize or report.

    1Reply
  • Kevin PolitePro Member
    Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
    6y

    Here 30310

    0Reply
  • Andres A.
    Specialist · Atlanta · Member since 2019 · 88 posts · 53 votes
    6y

    In what areas are you all currently investing? What returns are you seeing?

    1Reply
  • Charlie Anne
    Member since 2020 · 89 posts · 45 votes
    6y

    @Canesha Edwards thank you for all of the insights on the Atlanta market!

    Would you mind sharing your underwriting conditions? 

    0Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    6y

    @Charlie Anne

    If you’re looking to buy right now or within the next 3-6 months , I would be very conservative with my numbers. There’s a lot of uncertainty around everything right now.

    How familiar are you with Atlanta or the area you want to invest in? It’s important to know the area well. That will shape your underwriting criteria.

    My number one factor is cash flow. I don’t like slim margins, in a time like this those margins disappear quickly tenants stop paying the rent.

    My other factor is leverage. How much do I need to leverage to get into the property? Am I comfortable with this?

    Quick example:

    I look for really ugly value add properties with a min Purchase CAp rate of 10%. I'm talking C or C- properties. Now, if an agent sends me a pocket listing of a property let's say along Main Street in East Point, GA that has a purchase CAP of 8%.

    Even though the property doesn’t meet my initial criteria, it still might be worth a look because I know the area. The area is home to a great private school. There’s been several new stores opened close by and the city is seeing a lot of industrial development interest which means new jobs, etc.

    Shoot me a PM. I would be more than happy to discuss any questions you about your specific strategy.

    Happy Investing.

    Canesha

    0Reply
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