North Atlanta Real Estate Market Update

North Atlanta Real Estate Market Update

Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes

That Atlanta market peaked on July 2007 and bottomed in March of 2012. We have since made a complete "V" shaped recovery since March 2012. At this significant bottom, and retail real estate were trading at 1996 prices. Today we are at 2004 prices entering 2005 prices. YTD Atlanta real estate market is up 18.75%. If the last 12 month appreciation in Atlanta repeats itself in the next 12 months, homes in Atlanta will be trading at prices at the peak of the market before the crash in July of 2007.

I spend a lot of time studying demographic changes and Atlanta and Los Angeles are in a 15 year cycle. These two markets are very interesting to me becuase of this cycle. 2011 is 1996 and the demographics of 01/01/2014 of the north side of Atlanta will look much like the demographics of orange county, CA of 01/01/1999.

The north side of Atlanta is the new Orange County.

Irvine - Johns Creek
Alpharetta - Tustin
Milton - Coto de Caza
Suwanee - Foot Hill Ranch

In 1990, Irvine ethnic demographics looked like this:

white 68.8%, black 1.8%, Asian, 22.1%, hispanic 6.8% - 1990
white 61.1% black 1.4% Asian 29.8%, hispanic 7.4% - 2000

In 2010, Johns Creek's ethnic demographics looks like this:
white 63.45% black 8.8% Asian 23.36%, hispanic: 5%

In 2013, 30% of Johns Creek is now made up of Asian households

Johns Creek's Asian population grew from 13% to 23% within 3 years period of time.

All of Johns Creek High Schools are among the best of Georgia:
Northview, JC High, and Chattahoochee

All of Irvine High Schools are among the best of California:
Uni high, Northwood, Woodbridge, and Irvine High

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Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y

@James Park

I do assume that all your figures are again based on those sub-suburbs and not really on Atlanta?

I apologize, I'm not trying to attack you. I'm German and very straight forward and I'm not very good at being subtle ;-).

It's just that someone reading this in another state, they will think that your numbers pertain to Atlanta - and they do not. The northern far out suburbs are completely different from the Atlanta market. And they've also gone through different cycles. For example, Atlanta had a major slump in '99-'02, due to overbuilding for the Olympics. Even thought he Olympics were in '96, there were many condo projects on the books that came to fruition after '96.

Your area OTP is money and soccer moms and families. Whereas ITP has many different neighborhoods that each have their own values and cycles. Some have become hip and cool in the past few years (Midtown). Some have lost their hipness (Buckhead). You have a good number of revitalizations (Kirkwood, Cabbagetown, Reynoldstown, Edgewood, East Lake etc) and some that have stayed lower income neighbohoods. Many of the revitalized areas are singles or couples, straight or gay.

So, to be honest, it sort of bothers me, if you call your area 'Atlanta' , when it is really more suburbs of Atlanta suburbs. People from the suburbs tend to want to claim 'Atlanta' when it's convenient, but want to have nothing to do with us otherwise.

See this reply in the discussion

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  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
  • Mike HurneyPro Member
    Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
    12y

    @James Park  You've got some good stuff here!

    The Investor I am the most impressed with is Marc Garrison. He had us Kicking Super Deals in KC in 1997. Tremendous insight to Emerging Markets.

    Thanks, Mike

    PS The most surprising thing with those emerging markets, when your Buying, Fixing and Selling at a High Profit is: Why isn't everyone here doing it?

  • Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
    12y
    Originally posted by @James Park:

    From my previous post of the wealthiest cities in America with a population of 70k or more. Johns Creek has the lowest median home price among the top 11 wealthiest cities. The quality of life in Johns Creek is good as the median home price / income ratio is the lowest among the list below.


    Rank City State Per Capta Median household inc

    1 Newport Beach CA $86,586 $123,958.
    2 Newton MA $56,285 $104,493
    3 Pleasanton CA $52,075 $131,644
    4 Arlington VA $59,098 $101,171
    5 Santa Monica CA $59,530 $70,084
    6 Mountain View CA $50,250 $92,528
    7 Thousand Oaks CA $47,338 $99,800
    8 San Francisco CA $47,420 $73,789
    9 Johns Creek GA $45,053 $110,648
    10 Sandy Springs GA $55,752 $71,592
    11 Sunnyvale CA $45,455 $89,543

    Curious about where you got this list from?

  • Investor · Roswell, GA · Member since 2008 · 231 posts · 104 votes
    12y
    Originally posted by @James Park:

    @Justen Ashcraft,

    I do most of my school research on www.schooldigger.com. You are correct that Buford High is one of the best high schools in Gwinnett County with North Gwinnet. I believe that the Forsyth is the future and North Gwinnett and Buford are good schools today. I provide my supporting data why I think Forsyth Schools are the future.

    Here are the rankings from Atlanta Magazine. Three high school clusters make up the entire city of Johns Creek. Northview (rank #1), Chattahoochee (rank #4) and Johns Creek High (rank#8)

    Best Public Georgia High School Rankings
    1. * Northview - Johns Creek *
    2. Walton
    3. Dekalb School of the Arts
    4. * Chattahoocee HS - Johns Creek*
    5. Lassiter
    6. Pope
    7. Alpharetta
    8. *Johns Creek HS - Johns Creek*
    9. Milton
    10. Starrs Mill

     James, you could draw a similar conclusion for the East Cobb area with Walton, Lassiter and Pope as 3 of the top 6.  I very much agree with your fundamental selection criteria of school systems as a primary indicator.

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
  • Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
    12y
    Originally posted by @James Park:

    Thanks James,

    Interesting stuff.  I had my interest peaked as you see that I'm in Newton, MA which ranked 2nd on that first list and now 7th on this other one.  I new we had an affulent community but didn't realize how much so based on our size as well.

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y

    @Shaun Reilly

    I sort of interpret this data like PE ratio for stocks in valuation. You can see that Pleasanton  CA is ranked 3 in income / per capita. Median home price is $769,500. $769500 / $131,644. The HI ratio here is: 5.84. Johns Creek, GA is rank #9. Median home price is $329,500 with a median income of $110,648. Johns Creek's HI ratio is 2.97. The lower the HI ratio is the better the valuation and quality of life. You can see that Johns Creek, GA has the lowest HI ratio compared to the top wealth center cities in America.

  • Investor · atlanta , GA · Member since 2012 · 287 posts · 148 votes
    12y

    Good points James regarding school clusters, especially in Gwinnett.  I work within the Gwinnett County School system, and anything south of I-85 and 316 is very suspect.  As far as the south end of the county, better stay north of Hwy 78 in terms of school clusters there.  

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
  • Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
    12y

    @James Park You are basing future appreciating home values in GA mainly from wealthy Asian nationals mostly from China?  While this certainly happened in southern California, Orange County and the San Gabriel Valley, you really think that will happen in GA as well?  I'm not trying to doubt you and I say this with all due respect but there are currently signs that China's economy is weakening.  Their real estate market is in what many consider a bubble and their central banks are printing more money than the Federal Reserve!  Again, not trying to doubt you but perhaps you know something I don't!  :)

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
  • Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
    12y

    @James Park 

    So you are saying the influx of Korean speaking people will cause property values to go up in GA? Will these Koreans be 1st generation immigrants, 1.5/2+ generation, or simply Korean nationals who want to maintain a US address?  And finally what is bringing these Korean speaking people to Atlanta's exburbs?  Oh, same questions as above for the Desi community as well. 

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
    @Jay Y,

    I prefer not to derail so much from the Northern Atlanta Real Estate Market update so this will be my last post on Asian migration and demographics . The Asian migration trends and how it relates to real estate valuation can turn out to be whole another topic in a another thread.

    I am a 1.5 to 2nd generation Korean American, and surprisingly I am seeing a lot of 1st generation Korean immigrants flooding into this area, particularly in Johns Creek, Suwanee, Duluth, etc. This area today reminds me of when my family immigated to the states back in February 1982.  The major immigration gateways back then were New York, Jersey, LA, and Chicago.

    The wealthy Asian demographics who are driving up the real estate prices in South Forsyth are not the Koreans, but the Asian Indians. Several of my clients who have bought in the premium asset SFRs have already cleared six figures on appreciation alone in my farm area. North Fulton and South Forsyth public schools rank among the top 2% in the state of Georgia.  

    Jay Y, it appears that you are local here in Atlanta. Have you have ever checked out the Atlanta Korea town? In my opinion, the only city that has a better and vibrant K-Town than Atlanta is LA. What Pleasant Hill and Buford Highway looks like today is much like what Olympic and Wilshire Blvd looked like in the 80s. 







    Originally posted by @Jay Y.:

    @James Park 

    So you are saying the influx of Korean speaking people will cause property values to go up in GA? Will these Koreans be 1st generation immigrants, 1.5/2+ generation, or simply Korean nationals who want to maintain a US address?  And finally what is bringing these Korean speaking people to Atlanta's exburbs?  Oh, same questions as above for the Desi community as well. 

  • Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
    12y

    @James Park 

    Yes, I have been up to H-mart on Pleasant Hill but in my opinion, it's a far cry from the Ktown in LA - I know because I used to live in northeast LA. In my humble opinion, NYC Ktown comes second to LA followed by the Bay Area, Honolulu, and Seattle. I'd imagine Houston to be a couple notches above Atlanta, I personally feel Buford Highway/Pleasant Hill is on par with Annandale, VA (I lived in Alexandria before).

    But I commend you for all the research that you have done regarding Asian migration and home values, you should consider teaching an Asian American studies course at UGA!

    Now I have to research and study the Desi community as I see a great window of opportunity opening for some great business ventures!  :)

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y

    Atlanta Price Index

    136.47 in July 2007
    82.54 in March 2012
    121.38 in Dec 2014 - estimate
    130.12 in Dec 2015 - estimate
    136.47 by Mar 2016 - estimated month/year back to peak July 2007 level.

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y

    Forsyth County is where I have focused my real estate investments in the last 5 years. Forsyth County's population has just surpassed the 200k mark this year. I am very optimistic about the future of this county. Forsyth County is the wealthiest county in the state of Georgia, 19th wealthiest county and 7th fastest growing county in the nation. Forsyth schools are ranked among the top 5 counties in the state.

    Demographics:

    White 86.4%
    African American 3.3.%
    Asian 8.2%
    Hispanic 9.6%

    Asians are among the fastest growing demographics in Forsyth County currently concentrated in the southern half of the county.

    Per Capita Income: $34,742
    Median Household income: $87,585

    Below is the Forsyth County's population growth trend.

    Forsyth County Population Growth Chart

    Year     Population

    2010     176,815

    2011     182,439

    2012     187,927

    2013     195,405

    2014     202,028

    2010176815
    2011182439
    2012187927
    2013195405
    2014202028
  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    Atlanta is the 3rd lowest valued housing market after Detroit (#1) and Cleveland (#2). The overall population decreased in both Detroit and Cleveland between 2010 - 2013, but Atlanta's MSA population grew by  236,214 between 2010 - 2013. Atlanta's housing appreciation by Dec 31st, 2014 should be right around 7.1%.  

    The only two metro cities that have surpassed its previous peak and setting new highs are Denver, Colorado, and Dallas, Texas. I believe that Atlanta housing prices should reach back to its previous peak of July 2007 sometime in mid to late 2016. We are still about 11% away from our previous peak and I believe that Atlanta housing market should outperform inflation in 2015 and 2016. Atlanta is still a very strong "value" buy and hold market compared to the rest of the country and I continue to remain optimistic as a long term buy and hold investor in this market. 

    Two Atlanta markets I would stay away from are Henry and Paulding County as more than 35% of the housing purchases there are by hedge funds and institutional investors. Single Family investments in the "A" neighbors and school clusters will continue to outperform the average appreciation of home prices in Atlanta. 

  • Investor · Decatur, GA · Member since 2014 · 56 posts · 16 votes
    11y

    James,

    Thanks for the info on the Atlanta area.  As we've talked about, I'm also a believer in Atlanta. However, can you enlighten us on why a rise in Koreans increases home values. I'm more in the Tucker, Chamblee area where there are tons of immigrants but it's a totally different story.

    Thanks,
    David

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    @David Cohen

    David, it is not just the Korean demographics but the Asian demographics as a whole including Indians and Chinese. Atlanta's largest Asian demographics are the Indian, then the Korean, then the Chinese. This theory of Asian demographics influence on real estate prices have been touched upon several times in BP so i will not repeat it here. Below is Jay Hindrichs post which explains this concept well.  

    Jay Hindrichs wrote:

    The Asian influence in RE values is indisputable.. I actually grew up in Cupertino we moved there in 1962 and I graduated Cupertino high in 74.. There were maybe 10 Asians total in our high school of 2k... Today its probably 60 to 75% Asian.. As well when I return I look at the stores that we used to shop in and they have all been converted to Asian markets. The Asian community by and large is well educated highly driven and is nuts about Real Estate and owning it. Look at Vancouver B/C same dynamic happened there when the Hong Kong lease expired in 1997 huge influx and the accompanying huge run up in values. But as @J Scott save some cataclysmic event Bay Area is not going anywhere and values will be what they are set by supply and demand.. And the just incredible job market that is there. I lived in Palo Alto for 10 years.. town of 60k with a work for of well over 100k and its just not HIgh TEch its Stanford, Ford Philco and others.

    I have also touched upon the Korean migration patterns here.

    http://www.biggerpockets.com/forums/48/topics/1441...

    Now, rather than just talk about theories, let's talk about real numbers. 

    Below is the ranking of the top 11 high schools in the state of Georgia. The dark red color in the map above is the #3 ranked Northview High School. This is the first Asian majority high school in the state of Georgia and there are subdivisions here that are made up of 95% Asian households. The city of Johns Creek had about 11% Asian population in 2007, today that % is close to 30% and growing. If you look at the spreadsheet below,  the lower the "D" ratio, the higher the demand of homes in this school cluster and easier for the seller to unload their properties due to low inventory and high demand. I see a strong correlation of a lower "D" ratio, faster appreciation, and the concentration of Asians in that school cluster. In the northern suburbs of Atlanta, the schools are what drives the demand and prices in real estate. 

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    Attached is the 2013 demographics profile of Forsyth County.

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    In terms of population inflow from 2010 - 2013, Atlanta ranks #7 with a population growth of 236,214. It appears both Houston and Dallas will have a population growth over a million by 2020. 

  • Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    @James Park How does Chamblee support (or not) your theory?

  • Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
    11y
    Originally posted by @Rick Baggenstoss:

    @James Park How does Chamblee support (or not) your theory?

    In my opinion, it doesn't.  The Asians in Forsyth county are a much different breed than those in Chamblee.  Chamblee residents tend to be lower income and more recent immigrants from Latin America and southest Asia.  Yes I'm generalizing and I'm not going to pull up stats and charts but this is going by my gut when I drive around Buford Highway, New Peachtree St and areas close to the Chamblee Marta station.  However it is possible that Chamblee may be next for gentrification much like how Brookhaven has over the past 10 years.

    Forsyth Asians tend to be highly educated professionals who make high combined incomes who family values involve archiving high academic success.  However with that said, Forsyth Asians are a much different breed then the ones in California - South Bay Area and the San Gabriel Valley.

    California Asians tend to be very successful entrepreneurs and have successful businesses back in Asian (many are from China).  They see a $2 million dollar home which they think is cheap and they buy it with all cash.  They may live in it for a couple months out of the year and it sits empty or they let family members live in it off and on.  They also buy their children M5s and Porches because compared to places like China, they are considered dirt cheap in the US.  

    And yes, I'm generalizing big time here again and there are exceptions but what I describe is what I have observed having lived in both places.  If anyone disagrees, I would love to hear what your observations are!  :)

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    So where is the population growth taking place from 2010 - 2013? Rank #1 is Texas, #2 is California, #3 is Florida, #4 is North Carolina, and #5 is Georgia. Georgia's cousin is North Carolina. I also believe that real estate investments in "A" and "B" neigborhoods in North Carolina will do very well for the buy and hold investor between now and 2020.

    In the last 10 years, the south has grown the most at 14.3 million, then the west at 8.7 million, then midwest at 2.5 million, and then the northeast at 1.7 million. The south is clearly the winner in terms of where the population is moving both domestically and international inflow migration.

    From 2000 - 2010, North Carolina's population grew by 1,486,170 while Georgia's population grew by 1,501,200. Between 2010 - 2014, these two states are again neck to neck fighting for the #4 spot in terms of population growth in 2020. 

  • Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    I like your analysis, but I'd add you can make numbers say a lot of things.  I'd point out that you're not adjusting growth based upon square miles.   Population growth in big states like Texas or Alaska would be easily absorbed.  Where as 7.4% growth in DC is enormous.  The growth in MD and MA would also be understated.

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