North Atlanta Real Estate Market Update

207 Replies

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

But if you're looking at the North side, that really doesn't have much relation to the actual Atlanta. You're comparing suburbs that are 45 min. drive North from Atlanta with Atlanta. Apples and oranges

Sorry Michaela,

Perhaps I should have named this thread North Atlanta Market update as my area of real estate expertise is in North Fulton, South & West Forsyth, and North Gwinnett.

Here is another interesting fact. Among wealthiest cities in America with more than 70,000 in population, there are two cities from Atlanta that made the top 11 list: Sandy Springs rank #10, Johns Creek rank #9. 7 of the cities are from California.

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

After moving to Atlanta, I bought my primary and concentrated my SFR investments in South Forsyth from 2010 - 2013.

Here is the reason why:

6th Fastest growing county in the nation:

Source:
http://money.cnn.com/galleries/2010/real_estate/1006/gallery.fastest_growing_US_counties/6.html

20th wealthiest county in the nation:

Source: http://money.cnn.com/galleries/2010/real_estate/1006/gallery.fastest_growing_US_counties/6.html Demographics of Forsyth County looked ripe for growth.

White 87.5%
Black 3.1%
Asian 7.4%
Hispanic 9.6%

Median household income: $88,262
Per Capital income: $35,277
Median value of owner occupied homes: $274,200.

5 elementary schools in south forsyth are ranked in the top 10 among 1165 elementary schools in Georgia.

2 middle schools in south forsyth : Riverwatch (rank #2) and S. Forsyth Middle (rank #3) are ranked in the top 10 middle schools among 483 middle schools in Georgia. Vickery Middle School which is in west forsyth is ranked #10 in the state.

Last, but not least, the weather in Atlanta has been in the 70s in December so far. :)

James, thanks for all your thought-provoking threads! They've been quite educational to me.

Your comparison of Johns Creek to Irvine & Suwanee to Tustin is interesting. I live in Suwanee now, lived in Huntington Beach for the 12 years previous. Followed the RE market in both areas, and love both, but they are so different. I can't say I agree with you, but you've certainly got me thinking!

How are your high-end rentals doing in these wealth-centered areas in GA? Investing in Johns Creek/Duluth/Suwanee has crossed my mind more than once, but my assumption was that the because of higher wealth, most people will want to buy instead of rent so flipping would be the better option. I'm very interested to hear what your experience has been.

Sheree,

It is nice to meet a fellow neighbor in Bigger pockets.

If you see the history of Atlanta appreciation from 1991, you'll see a continual rise of inflation 2 - 6%. Atlanta real estate rose modestly from 1991 - 2007. Then we entered a 5 year crash. Atlanta homes fell 4.3% in 2008, 14.3% in 2009, 2.2% in 2010, 6.3% in 2011, and another 14.8% to the bottom of March 2012. If you bought a home in March 2012, you would have bought at the same price as someone who had bought a home in Atlanta in 1996.

Los Angeles/OC is more cyclical. During aerospace recession prices fell between 1990 - 1995 while homes prices rose from 1990 - 1995 in Atlanta.

Let me give you an example. When my wife was a teenager in the 90s, her parents rented a home at 28 Foxhill, Irvine, CA 92604.

http://www.zillow.com/homedetails/28-Foxhill-Irvine-CA-92604/25487946_zpid/

This 4 bed/3 bath 2592 sq/ft SFR was purchased in Oct 1996 for $310,000. Today this home would be trading around $910,000.

Let's say you bought a home within the Northview High School (#1 ranking high school in Georgia) cluster in Duluth, 30097. You bought that home for $310,000 on Oct 1996 and today it is only worth $423,987. Compared to Irvine, you may think that this was crappy investment. So can we assume that for next 15 years homes in Duluth, 30097 homes will only appreciate 36%? I disagree. The demographics of Northview High cluster was practically corn fields with 90% Caucasian households mostly middle class households. Today there are more wealthy Asian households living in Northview High cluster than white households which matches the 1996 demographics of Irvine's flagship highschool University High.

Sheree, my higher end rentals have done very well for me. In 2011, I remember seeing a big sign off of McGinnis Ferry and Old Atlanta road " New Single Family Homes" starting from the $140k. I remember saying to myself, "damn these new SFRs" are cheap.Today that same sign shows starting in the low $300k.

Whatever we have seen in the Atlanta market in the past 17 years, will look very different in the next 17 years, as the demographics, job growth, population growth is now different.

Hope this information helps.

James



I copy and pasted this information from my excel spreadsheet. One can see that there was modest appreciation of 2-6% for 16 years from 1991 - 2007 in the Atlanta housing market

The market crashed 40% from July 2007 peak to March 2012 bottom. We are seeing unprecedented appreciation of 13.5% last year and 18.5% this year. Only Los Angeles, San Francisco, and Las Vegas has a higher YTD appreciation than Atlanta in 2013. My forecast the appreciation will not look like it did from 1991 - 2007 in Atlanta.

These are two Irvine California housing ads I have kept since 1997. The demographics of Irvine 15 years ago matches almost identically to Johns Creek, GA today.

@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.

Michaela,

You are correct and I had mentioned that I should have labeled this thread "Northern Atlanta" update rather than "Atlanta update". The northern part of Atlanta is made up of suburbs, but we are still considered metro Atlanta. It is sort of like LA county ("the old") is ITP and Orange County ("the new") is OTP. This thread may not be of interest to you as I will be only be covering the market update in the northern suburbs of Atlanta which I am most familiar with.

Perhaps you should start another thread that tracks the Atlanta market in the ITP?

Source: Case Shiller

YTD, the Atlanta market is up 18.75%. In the chart below you can see a steady rise from 1991 - July 2007. The market crashes for 5 years and hits a bottom in March 2012 where home prices are back to August 1996 prices. Since then we have made a complete "V" shaped recovery. If the last 12 month appreciation repeats itself into 2014, we will back to July 2007 prices right before the crash.


Atlanta is an interesting market where certain areas there is better cash flow, and certain areas will have faster appreciation. There are three authors that have influenced me the most in teaching me how to invest and selectively purchasing 1-2 higher end SFRs a year to meet my retirement goals in the northern suburbs of Atlanta. Looking at the the chart above the party in Atlanta is just beginning.

Investing in Real Estate - Gary W. Eldred
Emerging Real Estate Markets - David Lindahl
Building Wealth One House at a Time - John Schaub



@James Park, it's obvious that you're very dedicated to numbers and these are very impressive. I'm also an outsider now resident in Atlanta and I have to say imo @Michaela Graham has clearly got your number on this post!

Northview High is ranked #1 in the state of Georgia. There are three high school clusters in the city of City of Johns Creek. Northview HS, Chattahoochee, and Johns Creek High. Northview is the first high school in Georgia where the Asian students have exceeded the White student in 2012. The white asian student ratio is 83.9%. Walton HS which is another elite public school in east Cobb has a ratio of 87.7%.

I will compare this data to the flag ship high school in Irvine, California and an elite public school in Silicon Valley in Cupertino.

When i invested in Johns Creek starting from 2011, I followed all the research of job growth, population growth, demographics shifts to the area. I also researched the schools and closely monitored the ethic changes of the school.

Uni High is Irvine California's flag ship high school that covers the most expensive real estate in Irvine zip code 92603. In Uni high, one can see that the asian demographics is growing very fast surpassing the white demographics in 2004. Northview HS in Johns Creek, GA is following this exact trend 8 years behind University High. The white asian ratio of Uni High is 88.5%

Monta Vista High is a magnet public high school in Cupertino, California. You can see the trend of rapid asian population growth. The asian population surpasses the white population in 1995. Monta Vista is 9 years in the future of University High and University High is 8 years in the future of Northview High. What i predict is that what happened in Irvine in the late 90s is going to happen here in Johns Creek.

Johns Creek, Georgia 02/07/2014 is Irvine, California 02/07/1999.

@James Park this thread is very helpful. I'm a beginner investor and have been looking at Altanta market since mid 2012 and tried to close a deal Mar '13 and it fell through because the appraised value compared to comps was too low. I tried to get the deal through a turn-key provider. I also like northern Atlanta area because areas are nicer although price points are higher. What are your thoughts on this market for this year? I live in NJ but invest in markets numbers make sense. I'm looking at Dallas and Houston right now but would like people's opinions on this market. Can you provide some numbers (i.e. purchase price, ROI, cashflow, etc) around your type of investment property? Thanks!

@Marvin Song,

I am glad that this thread is helpful. Atlanta is now the fastest growing new Asian hub of the south, home to the fastest growing Korean population. I think of Atlanta as the "New LA"

The title of this thread is a little misleading as it should be called "Northern Atlanta Market update" as this is the market I know very well. My crystal ball tells me that that appreciation will slower in 2014 to maybe 7% compared to 18% in 2013 due to rising interest rates and higher home prices. The emerging hot new "Asian" magnet locations northeast of Johns Creek I can realistically see a 10%+ Appreciation in 2014 due to the lack of inventory and strong asian demand to buy there.

The link below from Forbes is interesting. This article believes that Atlanta is 6th best place to invest in 2014. Home prices are 26% below the equilibrium. Sort of like valuating a stock, we are still well undervalued compared to the other metro areas.

http://www.forbes.com/pictures/emeg45hfmk/6-atlanta-sandy-springs-marietta-ga/

6. Atlanta-Sandy Springs-Marietta, Ga.

Pop.: 5,475,213
Actual Home Price: $170,701
Equilibrium Home Price: $230,994
Difference: -26%
3-year Growth Forecast:26%

I'm more comfortable analyzing demographics change in income, education, vs. race or culture. That's not to say that it's not relevant or right. I just wouldn't know what to do with that information.

How do you interpret and act upon an increase in Koreans and/or Asians?

Thanks,

Rick

@Rick Baggenstoss

I personally do not know Atlanta local market as either of you gentleman & James Park.

But I honestly think James is onto something. I can only speak for what I have seem in the last 40 years in major cities of Canada.

In the 70's & 80's influx of Asain migrate to Ontartio, all cities & towns surrounding Toronto just boomed. In the 90's this happened in Southern part of Vancouver(Richmond), British Columbia. And today in Southern part of Winnipeg(Fort Richmond).

Whenever there are a change of ethic group in a area, not only it will increase housing demands, thus raising property value, job creation & employment( local retail, office & commercial demand goes up).

Five years ago from my townhome in Chicago, I looked at the U.S. Map and wanted to move my family to either the suburbs of LA (IRVINE) or Atlanta (JOHNS CREEK). I just couldn't stand the cold, high property taxes, and had no interest in investing or starting a brokerage in Chicago. Let's just say that i wanted to get out of Chicago really bad to start a new chapter in my life.

I wanted to move to an emerging real estate market where I had a chance at the american dream by owning a small business and investing in SFRs. In 2009, I picked up a book from David Lindahl (Emerging Real Estate Markets) and was fascinated that one can see the future of an emerging real estate market coming by study demographics : population growth, job growth, affluence growth, weather. I researched the same criterias as David but i also researched where the new hot spot migration is for Koreans living in the U.S. I found it fascinating that Johns Creek was literally the new Irvine, but 15 years younger. Today 40% of Irvine (real estate has already boomed) and 25% of Johns Creek (real estate is emerging to boom) is made up of Asian households. In 2007 only 13% of Johns Creek was made up of Asian households. Three years i started a poll "Which U.S. City has the best Korea town". I wanted to see which city was the new hot spot for Asian migration that clearly Atlanta was it. Atlanta was also the most undervalued among the other cities in the poll.

In 2011, I pack up my 1 year old twins and headed to metro Atlanta with my wife as i knew this city was going to boom. We came here without knowing a soul, but with a dream.

Page 39 from David Lindahl's book Emerging Real Estate Markets

Emerging Markets are not same as hot markets

Many investors make the mistake of investing in hot areas. These are the places you read about in popular magazines. Everyone is talking about them because they've performed great for several years. The amateur reads such as article and thinks "Great... it's hot!" The professional reads the article and says "Hot = stale... stay away!"

When you chase after hot markets, your 're chasing yesterday's winners. These markets attract a lot of dumb money. These are investors who are buying simply because other people are buying. They're the same people who bought internet stocks at the peak of the stock market bubble. They're spoilers, because they bid up the values of properties ( or stocks) way beyond the underlying economic realities.

In contrast, emerging markets are under the radar, not to be found in any popular magazines. They are waiting to be discovered.

What David Lindahl describes in his book is what exactly what the city of Johns Creek is today. No one outside of Georgia has ever heard of this city situated in the northern suburbs of Atlanta.

Johns Creek, Georgia data

Population: 77,213
Per Capita Income: $45,053
Median Household income : $110,648
Average Household income : $152,879
3 JC High schools rank in the top 3% in the state

US Census Bureau reports that a majority of Johns Creek households earned between $100,000 and $149,999 in 2010. By 2012, the Census has released figures that show a majority of households earning more than $200,000 per year. For cities with a population greater than 70,000, Johns Creek is now among the top ten wealthiest cities in the country, with Newport Beach, CA taking the #1 spot.

Johns Creek is the new Buckhead.

My college roommate's grandmother lives behind the Governors mansion in one of the most prestigious areas of the city. When she and her husband bought the house, Buckhead was a suburb and Peachtree was a gravel road that led to the City. People knew each other because Buckhead was so small.

I've been to John's Creek. It's a well thought out, very wealthy area. No doubt it will continue to be one of the most affluent areas of the City for decades to come.

Thanks for the info. I agree on the emerging vs. hot markets. I see this 'hot focused' market a lot on BP. It's like craps table mentality. ... hot market is on a streak. You know it's dangerous to bet the streak will continue, but you believe in streaks so you bet until. BOOM!

Thanks,

Rick

The top 10 cities Americans are moving to. Atlanta ranks #1.

http://money.cnn.com/gallery/real_estate/2014/01/27/cities-moving/

Whether it be stocks or real estate, I like to invest in assets that people don't talk about. When a city like Irvine makes the front cover of the money magazine as the #4 best place to live in America... you know the party is over to make money in that market.

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

@Rick Baggenstoss

Rick thanks for pointing out James to me. Appreciate the details you have provided.

@James Park

Hello neighbor ! Went through your post and find the details very informative. Your research has definitely saved me a lot of time. I have been eyeing the Alpharetta, Roswell, Johns Creek, Cumming areas for some time now and cant agree with you more. Like many of naïve real estate investors, I have missed out on some of the deals in the recent prices as always had someone outbid me and the homes closed fast.

You had mentioned on my post that South Forsyth, looks promising. Also with its lower property taxes it looks attractive there. Some of my friends who appraised their homes (residential not rentals) for refinancing have found that their appreciated significantly. While I find its a long commute from Atlanta for folks working, I

Can you advise on which zip codes/neighborhoods in S. Forsyth would be good to focus on for rental markets.

Thanks again for all the details provided.

Amit

Amit,

Back in 2011, right in the intersection of Old Atlanta Rd and McGinnis Ferry (division line of Johns Creek and South Forsyth) there was a big red sign from the Riverbrooke subdivision stating "Brand New Homes" starting from the $160s. Today that same sign says Homes starting in the low $300s. Back then, I knew that the new Lambert HS would be a hot commodity as the high school below Lambert is Northview HS (#1 ranking public high school in Georgia) and this demographics was moving north to Lambert. There are no apartment options in South Forsyth HS and Lambert, but there are more new apartments building in Northview. The demographics of Northview is moving to Lambert and South Forsyth which I call the path of progress.

Path of progess:

1. Northview HS - rank #1 HS in Georgia (N. Fulton)

Premium vs Standard Assets of Forsyth County

Ranking:

1. Lambert HS : Premium Asset (rank top ten high school)

2. South Forsyth HS: Premium Asset (rank top ten high school): PPSF is higher and more desirable in S. Forsyth Middle vs Piney Grove Middle. S. Forsyth has hardly any townhomes except for James Creek. More townhomes are available in Piney Grove Middle.

3. West Forsyth HS: Premium Assets: (rank top twenty high school) Vickery Creek Middle Standard Assets: Liberty Middle

4. North Forsyth : Standard Assets: Mostly white demographic : 90% +

5. Forsyth Central HS: Standard Assets.

I would start researching rank #1,2,3,4... then 5 in Forsyth County. Also the taxes are less 1% which is good for cash flow.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here