For the last two years, the real estate market in metro Atlanta has been heating up. According to the Atlanta Journal Constitution, rents rose in 2015 by 8.1 percent per year, then in 2016 by 6.5 percent over the past year. Steady growth within the Atlanta market over the last two years is bolstered by a strong economy with continued job growth.
Fueled By Hot Job Market, Atlanta Rent Growth Outstrips U.S.
As of August 2016, Atlanta rent prices have grown for eight straight months. The city was able to avoid late-2015 rent decreases that affected many markets in the U.S., perhaps due to the region’s strong job market—69,400 jobs were added between June 2015 and June 2016.
Additionally, employers are relocating from the Atlanta suburbs to downtown. Interface moved from the suburbs to downtown, bringing up to 200 new jobs to Atlanta. Duluth-based NCR is cementing a major tech presence in Midtown. Its second tower is projected to bring over 5,000 jobs to Midtown Atlanta. As major companies migrate downtown, landlords can expect the demand for luxury apartments in Atlanta city limits to rise accordingly.
Axiometrics reports that Atlanta metro real estate is projected to add 10,246 new individual units in 2016, and 9,644 units in 2017. While Atlanta developers have been building new apartments, homes, and condominiums, demand is so high that these properties should be snapped up as they go to market. This will keep the rents high at present.
Atlanta Rent Tops $1,100 Average, a New Record
As of July 2016, Atlanta average rents cracked $1,100 for the first time, representing a new high. In July 2015, Atlanta’s average rent was $1,047. The occupancy rate has hovered steadily at 94.6 to 94.7 percent, which is good news for landlords.
Nationwide, the average rent in July 2016 was $1,291, compared with $1,252 in July 2015. The national occupancy rate also held strong at 95.1 to 95.2 percent. While the national market prices top Atlanta’s, Atlanta enjoyed a stronger annual effective rent growth than the U.S. market. Annual effective rent growth for Atlanta was 5.7 percent in July 2016, whereas the national annual effective rent growth for the same time frame was 3.1 percent. Overall, Atlanta’s real estate marked ranked 13th in the nation.
Weak Housing Market Keeps Rentals Rallying
In September 2016, Atlanta home sales fell 24 percent from one year before. Some have panicked that the metro Atlanta boom was ending; however, other formerly hot markets saw reduced home sales during the same time. Many point to the low supply of housing stock in Atlanta, which fell by 8 percent over the last year.
Until more proposed developments proceed to market, the supply remains low. All of the most desirable properties have been purchased, and homes that remain on market may be undesirable due to location, work required, condition, or other factors. The “anecdotal” evidence, reported by Curbed, of real estate bidding wars points to the shortage of top-desired home for sale.
With stagnant home sales, more individuals are choosing to remain in rentals as they wait for the perfect home to buy. This spells good news for real estate investors seeking to make the most from their investment in Atlanta properties.
Curbed also reported that homes were selling faster than previously and commanding a higher price point. This may keep some Atlanta residents who want to buy a home renting for longer than they wish while saving extra money to be able to afford the higher prices. Again, this is good news for property owners who want to keep good tenants in their apartments.
Atlanta Rental Property Trends for 2016-2017
Given the steady performance of the Atlanta market over the last year, and reported problems with the housing market, it is fair to say that the rental market will remain vibrant for the upcoming year. As long as the job market remains robust, and the new units that are coming to market move quickly, things should look good for real estate investors. One caveat to this good forecast in the U.S presidential election, which could change the job market nationwide in positive or negative ways, depending on outcome.
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