The Atlanta real estate market has been hot for several years now, so investors would want to know if it is still a good investment in 2022.
Before we go in-depth with our analysis, here is a quick Atlanta real estate market overview. The Metro Atlanta housing market has recovered smoothly from the pandemic. The city is now home to 18.7% more residents compared to 2020. As the government eased restrictions early in the year, Atlanta’s GDP grew by 8.2%. Employment growth was also slightly higher than the national increase (4.7% vs. 4.4%).
The main concern, however, is the dwindling supply of houses for sale. Because of low supply and high demand, prices skyrocketed from the beginning of the year until June. They then slightly lowered in July onwards when home buyers decided to wait out the market.
The median price of houses sold so far this year was $359,000. This is 21.72% higher than the median price of houses sold from January to September last year. Going into 2022, prices are likely to decrease and increase slightly depending on the demand.
In this article, we take a closer look at the Atlanta real estate market’s performance this year, including:
- The key factors that affected the real estate market in the city
- Trends in Atlanta’s housing demand, price, and supply
- Performance of rental properties in the area
- Atlanta real estate market forecast 2022
- Is investing in real estate in the Atlanta market a good idea?
5 Key Factors Driving the Real Estate Market in Atlanta, GA in 2021
Before going through the Atlanta real estate market forecast for 2022, it is important to look into what impacted the Atlanta, GA real estate market this year.
Population Growth
The Atlanta Journal-Constitution recently reported that Metro Atlanta is in the top five fastest-growing large cities in the US. From 2010 to 2021, its residents grew by 13.58%, from 5.30 million in 2010 to 6.02 million in 2021. Atlanta alone has 498,715 residents, which is an 18.7% growth from the previous year.
A lot of this migration is made possible by Georgia consistently ranking as one of the best states for business. Area Development magazine named Georgia as the number one state for doing business in 2021. They cited its “longstanding momentum regardless of the business cycle, the pandemic, or policy changes” as the reason.
Quick stats:
- Metro Atlanta is the most populous city in the state and the ninth-largest metropolitan area in the country.
- DeKalb, Gwinnett, Fulton, and Cobb are some of the most populated counties in the area.
- The median age of residents in Atlanta is 36.8 years with 42% of the population between the ages of 20 and 49.
Job Market
The Federal Reserve Bank of Atlanta estimates the city’s GDP to have grown by 8.2% as of November 10, 2021. Their estimate is based on subsequent releases from the US Census Bureau and the US Bureau of Labor Statistics.
Employment growth in the area was 4.7% as of August 2021, which is slightly better compared to the national increase of 4.4%. According to the US Department of Housing and Urban Development, the median household income in Atlanta is $86,200, a 4.23% increase from 2020. Meanwhile, the unemployment rate is at 2.5% (as of September 2021).
Quality of Life
The US News recently ranked Atlanta as one of the best places to live and one of the best places to retire in 2021-2022. As one of the nation’s fastest-growing metropolises, it has been attracting newcomers from all over the country who are looking for a mix of culture and commerce. According to Nerdwallet’s cost of living calculator, the cost of living in Atlanta, GA is 48% lower than in San Francisco, CA.
Tourism
Despite the pandemic, Georgia’s travel industry made a huge comeback in 2021 according to 11Alive.com news. But while the coastal areas and the north Georgian mountains saw their beach houses and condos booked quickly, most of Atlanta did not share in the incoming travel boom. This is because many tourists sought destinations that offer socially distant activities.
COVID-19
WSBTV reported in March 2021 that Georgia’s “open for business” mentality, especially for its bars and restaurants, led to a lot of economic success. Residents who were laid off in the past year opened their own businesses to take advantage of the above-average state economy. While the US economy is down 6% in terms of employment, the state of Georgia is doing better.
Atlanta Real Estate Market Statistics and Trends in 2021
The Atlanta Realtors market brief provides Atlanta real estate market news for 11 counties in Metro Atlanta, namely Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Paulding, and Rockdale. Here are their findings:
Housing Demand
One of the Atlanta real estate market trends to look at is the housing demand, which is measured by the number of home sales. Residential sales from January to September were at 59,045 total, an increase of 2.23% from the same period last year.
It is likely that record-low interest rates have enticed buyers to acquire their own property. Even as prices increased, the low rates allowed home buyers to afford houses that they would not have been able to before the pandemic. However, this changed in June when the prices were just too high for a majority of home buyers to afford.
The first quarter saw a 2.16% increase in sales because of the strong gains from 2020 that continued into January and real estate agents finding creative solutions for their clients.
Meanwhile, the second quarter was great compared to last year, with a 17.14% increase. The third quarter was the strongest sales quarter year-to-date, but it is weaker compared to last year with a 9.16% decrease in sales. The Atlanta Realtors Association (ARA) cited two likely factors that may have contributed to this:
- 30.29% decrease in inventory compared to last year
- Popular travel destinations re-opening for the summer meaning that pandemic-weary households went on vacation instead of buying houses
- Steadily increasing prices caused buyers to wait out the market
Home Prices
The widening gap between housing demand and inventory drove an upward trend in housing prices, which also impacted affordable housing in the Atlanta real estate market. From January to September, the medium property price was $359,000, which is a 21.72% increase compared to the same period last year.
The median price in January was $309,000, up 17.90%, and continued to rise until June, in which the median price was $372,500 (up 26.30%). This upward trend reflected the inventory shortage, which remained historically low with 1.1 to 1.2 months’ supply. The median price began to lower from July ($370,000) to September ($359,000), which is likely due to buyers pulling back because they are either priced out or want to wait it out.
Housing Supply
The ongoing decrease in available inventory back in 2020 was further reduced in the first and second quarters when housing supply in the Atlanta, GA real estate market fluctuated between 1.1 to 1.2 months’ worth. Experts consider the market to be balanced if the number of listings is equal to six months of sales; lower than that and it becomes a seller’s market, higher than that and it becomes a buyer’s market.
The New York Times reported that the shortage is partly due to the COVID-19 pandemic that started in March 2020:
- Homeowners were reluctant to sell their house during the pandemic; and,
- The government’s mortgage forbearance prevented homes from getting foreclosed on or being forced to sell by homeowners who could not pay their mortgage.
Aside from that, they said that the consequences from the 2008 housing crash are still felt many years later:
- Fewer houses were built compared to historical averages;
- The housing crash destroyed the building industry and pushed construction workers into other jobs;
- Local building restrictions and neighbor objections slowed down new construction;
- Strict immigration policies further reduced the labor supply in the building industry; and,
- The previous administration’s tariffs pushed up the cost of building materials.
To summarize, how is the real estate market in Atlanta, GA? Because of the low supply and rising prices, many homebuyers are staying put because they either cannot find a house they want or they cannot afford it anymore.
Atlanta Rental Properties Trends in 2021
Our Atlanta real estate market analysis would not be complete without looking at the rental properties:
Traditional Rental Properties
Since 2015, at least 50% of houses in Atlanta have been renter-occupied. What is interesting, however, is that even though housing prices went up, rent prices from March through May 2020 were down by 2.2% compared to the previous year. By June 2021, however, the average rent matched 2019 prices and has surpassed it ever since. As of November of this year, the average rent for a one-bedroom apartment is $1,725, an 18% increase from the same period last year.
An Atlanta real estate market report from Atlanta Business Chronicle said that because of the rising prices of homes for sale, millennials and gen Z, who make up 42% of the population in the metro, cannot afford to become homeowners. So instead, they look for single-family homes to rent.
Airbnb and Other Short-Term Rental Properties
Using Mashvisor’s data analytics feature, we found that Atlanta Airbnb and other short-term rentals are slowly recovering. In 2019, the occupancy rate was 45.7%. It even rose to 48% in December 2020. As of November of this year, however, the occupancy rate is down to 43.31%.
Because the majority of tourists are looking for getaways that will still let them practice social distancing, Atlanta properties near parks and nature preserves were in demand. Condos in the city, however, have yet to make a comeback.
In terms of income, the daily rate has increased from $150 at the beginning of the year to $186 as of November. Despite the lower occupancy rate, the increase in daily rate shows how much tourists are willing to pay for a socially distanced getaway after being stuck at home for a year.
And lastly, the number of active listings in Atlanta during the third quarter of this year is 12,757. This is 43.02% higher than the same period last year but >1% lower than in the third quarter of 2019. Airbnb investors are counting on the economic recovery in the city to also boost tourism, so many are either uploading new listings or reactivating their properties.
Atlanta, GA Real Estate Market Forecast for 2022
For next year, the main concerns would be the housing shortage and the increase in prices. Will anything happen that could disrupt these trends? Here are some of what we think would happen to the Atlanta residential real estate market next year:
Real Estate Appreciation Will Continue
According to Zillow, the typical value of homes in Atlanta is $349,162, which is 15% higher than last year. In 2022, their market value will still increase but at a smaller rate compared to this year. Because of the shortage of houses for sale and the steep prices, many homebuyers can no longer afford the property they wanted and have decided to pause their search.
Affordability Will Become a Problem
The median home price in Atlanta is $359,000 as of September 2021, which is 1.76% higher than the median price nationwide ($352,800). Housing demand dropped 10% during this month compared to the same period last year, and the Atlanta Realtors reported that this is due to home buyers getting priced out.
Foreclosures Will Not Affect the Market
When the federal moratorium on foreclosures expired on July 31st, many were concerned that the market will be flooded with foreclosures. However, the Mortgage Bankers Association reported that 77% of homeowners that exited the forbearance already had a loss mitigation plan:
- 27.6% deferred their loans or made partial claims
- 24% continued their mortgage payments
- 15.3% had their loans reinstated
- 10.2% had their loans modified
In Atlanta, one in 3,421 housing units (0.03%) filed for foreclosure in the third quarter of this year. This small number will not be enough to replenish the low inventory of houses for sale and cannot temper the rising home prices.
Demand for Rental Properties Will Get Stronger
Because of the low inventory of houses for sale and high prices, those who move to Atlanta may opt to rent instead. This will also cause the rent to increase. Additionally, more tenants would want to live in condos and in the urban areas again as establishments like bars and restaurants are opening up.
More companies are requiring their employees to go back to the office now as well. So those who have been working from their home in the suburbs might decide to rent an apartment near their workplace. If you have an Atlanta investment property that you lease out, you can expect more income next year.
Airbnb Atlanta and Other Vacation Rentals Will Recover
As restrictions ease and businesses open up, Atlanta will welcome more leisure travelers, especially in the summer and fall next year. This means that Airbnbs in Atlanta, even the ones located downtown and other urban areas, will soon get more bookings. However, until pro and college football games return to the city, a majority of vacation rentals will only have up to a 45% occupancy rate. Those that are near nature, however, might be booked at a higher rate.
Should You Invest in the Atlanta, Georgia Real Estate Market in 2022?
Based on these forecasts, property investors like you would wonder if next year is a good time to invest in the Atlanta real estate market. The answer is yes. The metropolis remains to be one of the top rental markets in the country. Turnkey properties are being constructed, with several hundred units becoming available for sale next year. A lot of the properties, when invested, generate a cap rate of up to 10%.
It is also a good sign that the Atlanta Regional Commission projects that 1.2 million jobs will be added by 2050 and that the population will grow by 2.9 million people by then.
If you want to know which areas would provide lucrative investment, here is a list of Atlanta real estate markets by neighborhood that you can look into based on your preferred rental strategy:
Top 5 Neighborhoods for Traditional Rental Investment in 2022
- Druid Hills
- Median Property Price: $664,900
- Price per Square Foot: $315
- Average Traditional Monthly Income: $3,058
- Average Traditional Cash on Cash Return: 3.87%
- Ridgewood Heights
- Median Property Price: $577,000
- Price per Square Foot: $349
- Average Traditional Monthly Income: $3,031
- Average Traditional Cash on Cash Return: 4.10%
- Peachtree Heights East
- Median Property Price: $824,000
- Price per Square Foot: $442
- Average Traditional Monthly Income: $3,024
- Average Traditional Cash on Cash Return: 2.53%
- Lindridge-Martin Manor
- Median Property Price: $527,000
- Price per Square Foot: $267
- Average Traditional Monthly Income: $2,353
- Average Traditional Cash on Cash Return: 4.54%
- Ormewood Park
- Median Property Price: $457,500
- Price per Square Foot: $334
- Average Traditional Monthly Income: $2,276
- Average Traditional Cash on Cash Return: 3.71%
Top 5 Neighborhoods for Airbnb Investment in 2022
- Mays
- Median Property Price: $321,500
- Price per Square Foot: $158
- Average Monthly Airbnb Rental Income: $3,349
- Average Airbnb Cash on Cash Return: 11.13%
- Average Airbnb Occupancy Rate: 46%
- Ivan Hill
- Median Property Price: $267,450
- Price per Square Foot: $174
- Average Monthly Airbnb Rental Income: $3,220
- Average Airbnb Cash on Cash Return: 16.71%
- Average Airbnb Occupancy Rate: 43%
- Atlanta University Center
- Median Property Price: $135,000
- Price per Square Foot: $128
- Average Monthly Airbnb Rental Income: $2,280
- Average Airbnb Cash on Cash Return: 24.28%
- Average Airbnb Occupancy Rate: 55%
- College Heights
- Median Property Price: $285,000
- Price per Square Foot: $178
- Average Monthly Airbnb Rental Income: $1,795
- Average Airbnb Cash on Cash Return: 4.69%
- Average Airbnb Occupancy Rate: 47%
- Wildwood
- Median Property Price: $131,500
- Price per Square Foot: $126
- Average Monthly Airbnb Rental Income: $7.74
- Average Airbnb Cash on Cash Return: 7.74%
- Average Airbnb Occupancy Rate: 35%
Conclusion
Real estate property is one of the biggest investments a person will make, not only for actual investors. This is why it is important to keep tabs on how the market in a certain area performed and how it may look like in the future. To summarize this report, there were five key factors that affected the Atlanta real estate market this year:
- Positive population growth
- Optimistic job market
- Quality of life improvements
- Slow recovery in tourism
- Early lifting of COVID-19 restrictions
These factors boosted the demand for houses as more people moved into the city. But because of homeowners’ reluctance to sell as well as delays in new construction, the low supply caused prices to skyrocket until a majority of buyers were priced out. While this is bad news for homeowners and investors looking to sell, it presents a great opportunity for those with rental properties in the area. New residents are likely to rent first while they wait out the market.
Based on these trends, these are what we forecast will happen in the Atlanta real estate market next year:
- Property values will continue to appreciate but at a slower rate.
- More homebuyers will have a hard time finding a house that they could afford.
- Foreclosures will not flood the market.
- Demand for properties for lease will get stronger.
- Airbnb and other vacation rental properties will slowly recover their income.
Invest in the Atlanta Real Estate Market With the Help of Mashvisor
If you feel bullish about the real estate market in Atlanta and want to invest, Mashvisor can help you find a lucrative investment property in that city. You can search our database containing hundreds of thousands of properties by typing in a city or neighborhood to get a quick overview of the houses for sale in that area.
If you find a neighborhood or property that interests you, you can click on it to find a more detailed analysis of the average rental income, cash on cash return, median home price, and more. You can also determine which rental strategy would work best in that area. You will not need to leave your home or call up an agent; Research and analysis are just a few clicks away.
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