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
    11y

    I feel very strongly in how important it is to study demographics when investing in the Atlanta housing market. From the map above you can see how uneven the housing market has been long term from 2001 - 2014. You can see that there is a lot of appreciation taking place in the north Atlanta and properties are depreciating in value south side of Atlanta. Rapid appreciation is taking place closer to the city in midtown and buckead.  You can also see how 90% of Forsyth County is green which is the county I truly believe in.

    Properties that have high cash flow (2% rule properties) can actually depreciate in value in the Atlanta market. Demographics study is key in determining which areas will appreciate faster than others. The little dark green you see in Gwinnett county is the school boundaries of N. Gwinnett HS cluster which is a 9 rated high school. The red parts you see in Gwinnett County are the 6/7 rated schools. 

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

    Real estate visionary says North Georgia ripe for younger homebuyers.

    Article Link:

    http://northatlantabusinesspost.com/stories/Real-e...

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

    @James Park  Makes sense to me.  In dense cities, the rural retreat is a trophy and alter ego of urban professionals.  As the "City in the Woods" becomes more densely populated, I would totally expect retreats of all sorts to gain traction.  

    I was distracted earlier this week by an old house in south Georgia on the 'Hooch.  I daydreamed of mint juleps and floating  .... oops there I go again.

    Last night, I met a lady buying mobile homes ($500 each) on an acre of land in Northern Forsyth.  Man, 20 of those and you're a land speculator not a slumlord. 

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

    @Rick Baggenstoss,

    I think the lady that you met is really smart and on to something. Buying $500 mobile homes on 1 acre of North Forsth land. That sounds like a great plan and I may follow whatever this smart lady is doing.

    I think North Fosyth has A LOT of potential. As the real estate prices continue to appreciate and get expensive in South Forsyth, North Forsyth is where the population will move for more affordable housing. I've driven around there many times and I see so much potential. Forsyth County is the 6th fastest growing county and 19th wealthiest county in the nation. The population of Forsyth just exceeded 200,000 sometime last year.

    The demographics of North Forsyth look very good and land values are still very cheap. If i had to bet and speculate between North Forsyth and Northern part of Gwinnett (Mill Creek HS cluster) near Mall of Georgia, I think i would bet on North Forsyth any day, any place, any time.

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

    I think the development of "The District" is going to make a huge impact in the future real estate prices of South Forsyth. Johns Creek has hired the designers who master planned the city design of downtown Pittsburgh.

    Watch out Alpharetta! "The District" is coming!

    Link:

    http://www.bizjournals.com/atlanta/news/2015/03/09...

    The mayor of Johns Creek is pitching a plan to transform 728 acres centered around Technology Park into a new downtown he calls "The District."

    "My proposal to the citizens is that we're going to study this area and look to redevelop it over time as a densely urban walkable community that is live, work, play, that is every bit as world class as any other downtown of any other major city that you might see," says Johns Creek Mayor Mike Bodker, who spoke to Johns Creek residents about his proposal in his annual state of the city speech on March 6.
    "It is ambitious," Bodker says. "It is the largest sort of redevelopment that's probably been undertaken in metro Atlanta."

    The driving force behind the new master plan is that the city is largely residential: 81 percent of its tax base is residential and 19 percent is commercial. "And that's really not sustainable financially for the long term if we are going to continue to improve services and make the significant infrastructure investments that need to be made as the city's infrastructure ages, and even to catch up from the years of neglect in the years prior to us becoming a city, we need more financial resources," Bodker says. "And the way that we can get those without asking our residents to pay more is to diversify our tax digest."

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

    The top 20 home builders in metro Atlanta according to the Atlanta Business Chronicle

    http://www.bizjournals.com/atlanta/subscriber-only/2014/08/08/homebuilders.html

    1. 1. Crown Communities
    2. 2. D.R. Horton
    3. 3. Ashton Woods Homes Atlanta
    4. 4. Pulte Group
    5. 5. The Providence Group
    6. 6. Ryland Homes
    7. 7. Lennar Communities
    8. 8. Rocklyn Homes
    9. 9. Acadia Homes & Neighborhoods
    10. 10. Traton Homes
    11. 11. Sharp Residential
    12. 12. John Wieland Homes and Neighborhoods
    13. 13. Chafin Builders/Chafin Communities
    14. 14. Patrick Malloy Construction
    15. 15. Jeff Lindsay Communities
    16. 16. SR Homes
    17. 17. Talon Homes
    18. 18. Edward Andrews Homes
    19. 19. Peachtree Residential Properties
    20. 20. Monte Hewett Homes
  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    Here is the appreciation data I pulled from Case Shiller comparing Los Angeles metro, Atlanta metro, and Chicago metro. Atlanta's market appreciated 5.2% from January 1st, 2014 to Dec 31st, 2015. Prices are starting to move higher in the North Atlanta Market with multiple offers on a decent properties in North Fulton, North Gwinnett, South Forsyth County.

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

    @James Park Thanks for all this information.  I'm finding the deals drying up in my area around Tucker/Decatur. So they must be moving up North.

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

    @David Cohen,

    It is rough out here working the buy side in the north Atlanta market as well. Just lost 3 deals where I would have an offer in within 3 hours of listing. Multiple offers above asking prices starting to become the norm around here in the 10/10/10 school zones on the day of the listing. This is the current environment we are facing in South Forsyth.

    It is time to get creative.  

  • Suwanee, GA · Member since 2015 · 14 posts · 1 vote
    11y

    James your research is quite impressive.  I am also an Agent and resident of Suwanee.  I moved here 20 years ago from Orange County, CA.  I have also noticed the similarity in the trends.

    I am exicted about the future in our area!

    Thank you for the information and statistics!

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

    Sorry, I haven't posted in a while. According to the most case shiller data Atlanta ranks #11 in terms of year over year appreciation at 5.4%.

    These are the ranking order of the top 11 appreciating MSA.

    #1 San Francisco    10.3%
    #2 Denver                10.0%
    #3 Dallas                  9.3%
    #4 Miami                  8.7%
    #5 Tampa                8.1%
    #6 Seattle                7.5%
    #7 Portland              6.9%
    #8 Charlotte             5.8%
    #9 Las Vegas           5.7%
    #10 Los Angeles     5.5%
    #11 Atlanta             5.4%

    Below is the comparison between Los Angeles Index, Atlanta Index, and S&P from 1991 - 2015. At first glance, it may see like investing in the S&P500 is the winning investment over the long run, but we are not taking into account leverage and cash flow. Let's look at 1998.. Atlanta's real estate market rose 6.4% while the S&P 500 index rose 28.6%. If i am leveraged by 75% and have a cash and cash return is 10%, my number would like this: (6.4% x 4) = 25.6 + 10 = 35.6 return in 1998 which is a much attractive yield compared to the S&P 500's yield 28.6%. 

    At first glance, the investment yield may look bit a low in Forsyth County. however there are quite a bit of location within this county where the yield are more attractive than the average. Forsyth County is the wealthiest county in the state of Georgia and sixth fastest growing county in the nation. My next post will be a closer analysis of pockets in Forsyth County where the Annual Gross Yield exceeds 10%. I believe in this county so much that I plan to concentrate my entire retirement portfolio in this one county.

    "If you want to make a lot of money, resist diversification. Brokers promote the motion that everybody should diversify. But that is mainly to protect themselves. The way to get rich is to find what is good, focus on it, and concentrate your resources there."

    - quote by Jim Rogers. 

  • Residential Real Estate Agent · Atlanta, GA · Member since 2010 · 325 posts · 335 votes
    11y

    Good stuff @James Park! We deal with a lot of the bigger builders in Atlanta at our cabinet company and they have been killing it Forsyth the last few years! 

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

    Imagine the entire real estate market as one big stock market. Each major MSA city is a blue chip stock like San Francisco is to Apple, as Seattle is to Amazon, as Atlanta is to Cola Cola, as Orlando is to Disney, and as Los Angeles is to Amgen. We can analyze the data by Counties = Mid cap stocks, Zip codes and School clusters = Small cap stocks, and Subdivisions = Micro Stocks. The analytics will provide me with the trends and allow me to identify where the future investing opportunities are. I like to analyze my data at the County (mid cap), School cluster (small cap), and Subdivisions (micro cap) level.  

    Below are the data of the counties in the Atlanta metro real estate market. The data shows the median sale price, average rent, and Annual Gross Yield. The way that the AGY is calculated is (Average Rent x 12)/Median Sale Price. Although the chart below does not take into the appreciation and future potential of the area, it is a good bench mark to compare where the yields are the highest and the lowest in metro Atlanta.

  • Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
    11y

    Hello Ladies and gents,

    After two years of absence I'm back in the real estate market and back to Bigger Pockets. I'm too making the transition from California to Atlanta. In the past two and half years, I've been dividing my time between Atlanta and L.A. working in the TV business, however Atlanta became more and more prominent in this field, so I bought a house there (Mableton) and I'm in the process of selling my house in California which will allow me to invest some cash in the ATL area. My current properties are in Round Rock, TX and Birmingham AL. I'm just getting myself familiar with Atlanta. Think about Smyrna (The New Braves Stadium), maybe Marietta and possible Sandy Springs.  I'm also thinking about Norcross where there is a new TV Studio and stages just opened up at the old Eagle Rock bottling company.
    Feedbacks are welcome.

  • Investor · Tel-Aviv, Israel · Member since 2015 · 36 posts · 6 votes
    11y

    Hi James, 

    Thank you for your great idea's and data.

    What is the date update of the data you attached above  (Median sale price by county etc.)?

    From the Data on HomeFacts (Jun 15') - Gwinnett County Median Sale Price:$174,000.

    Fulton County : 231,000$ , Cobb County: 180,000$ and more.

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

    As of April 2015, Altanta's real estate market is currently slightly under 11% from its last peak before the crash on July 2007. The market crashed 39.5% to March 2012 Bottom and bounced back 28.57%. From Jan 2015 - April 2015, we are up 2.2% and at this rate, we should have higher appreciation than 2014's 5.2% appreciation.

    Imagine that each one of the blue dots below is a blue chip stock like Coca Cola or Apple. The chart below shows the correlation of Job Growth vs Appreciation. Both Denver and San Francisco had the highest double digit appreication in the last 12 months, with Dallas following closely at 9%. Portland, OR is an outlier with a slower job growth but a higher 12 month yield. You can see that Atlanta metro's job growth is in line with San Francisco, Miami, Charlotte, Dallas, and Seattle. I believe that blue dots located in the lower right of the chart have a lot of growth potential. It seems like the big money (capital appreciation) has already been made in cities like Denver, San Franciso, and Dallas. The real estate market in Denver and Dallas are already making new highs. 

    Atlanta area job growth rate second highest in the U.S according the Gwinnett Daily Post

    http://m.gwinnettdailypost.com/news/2015/jul/10/ar...

  • Investor · Atlanta, GA · Member since 2015 · 9 posts · 1 vote
    11y

    James,

    What is your current take on the Buford area in Gwinett? Is there some growth there?

  • Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y
  • Investor · Atlanta, GA · Member since 2015 · 9 posts · 1 vote
    11y

    Thank you James for your insight. I had just noticed some road widening off of I-985 at friendship rd.

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

    As a buy and hold investor, it is important to research where the population is growing. Without people and demand, real estate has no value. I believe that faster than average appreciation can be predicted by researching demographics. Population growth is one criteria to consider when determining how your buy and hold investment will do in the long run.

    Georgia population net inflow was 409,690 from 2010 - 2014, which makes the state rank #4 in terms of population inflow growth after Texas, California, and Florida. Atlanta (MSA) is (ranked #7 out 382) in terms of population growth. 

  • Atlanta, GA · Member since 2015 · 74 posts · 24 votes
    11y

    Thanks for the information @James Park

  • Investor · Evans, GA · Member since 2015 · 190 posts · 103 votes
    11y

    James...Nice, thorough analysis and thesis for investing in the northern metro area of Atlanta.  I've been hearing so much recently from other sources/opinions that the best opportunities in Atlanta were now "past", that I hadn't thought about the tremendous growth in the northern suburbs.  Kind of reminds me of the tremendous growth we have seen down here in Columbia County close to Augusta where I currently invest (albeit on a smaller scale).  

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

    Below is the unemployment rate in all of the counties in the state of Georgia. Forsyth County is not only the wealthiest and the fastest growing county in the state, but also has the lowest unemployment rate in the state at 4.9%

    Source:

    https://www.scribd.com/doc/276500105/July-2015-GA-...

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

    The median asking price for homes in Atlanta peaked in May 2008 at $219,675 and bottom at a low of $150,800 in January 2012. Quite often I am asked by my clients where we are currently at in the current real estate cycle. In the north fulton, south forsyth area, median home prices have already reached the July 2007 peak prices. In order to properly answer this question, one needs to look at the inventory data and understand simple economics concept of supply and demand. You can see the inventory levels reached its peak at 138,442 (peak) in Sept 2007 and dropped to 38,832 (bottom) in Jan 2013. If the inventory levels in Atlanta reached 140k or above today, I would say that we are a bubble and real estate prices can potentially crash like it did in 2007, but today's Atlanta metro inventory sits close to 45k, unlike the pre-crash inventory of 138k.

    I see this as a simple Econ 101 rule of suppy and demand. If the demand of homes in Atlanta far exceeds the existing 45k inventory, prices have no where to go except up. Builders can't build fast enough to accommodate the buyer demand.  So when will be a good time to unload your buy and holds and take profit. Personally, I would wait until I see inventory levels in metro Atlanta spike up above 100k, and prices leveling off before I would consider unloading my properties.   

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