What made the ATL real estate market resilient last year? How is it possible that we had a market boom during a pandemic? I believe the resiliency of the Atlanta real estate market was due to the very nature of our great city: the strong economy for jobs and growth, and the housing affordability of Metro Atlanta. Add to that the fortunate favorable mortgage rates, and you have a resilient real estate market.
Jobs and growth
Georgia showed impressive economic progress in the first half of 2020, despite alarming closures and job losses. And according to an article in the Atlanta Journal-Constitution, by the end of 2020, while jobless rates were still considerably lower than in 2019, employment rates were growing in 10 of the 14 metro areas. Labor commissioner Mark Butler spoke enthusiastically of “the resilience that Georgia has to offer during this economic rebound.” Where are all these jobs?
There has been an increase in jobs in construction, legal, tech, finance, and the education and health industries. Many Atlantans already worked from home pre-pandemic, and this number certainly and necessarily increased in 2020. Last year many jobs were retained in Atlanta due to the flexibility of both employers and employees.
Metro Atlanta has a significant and growing tech hub and home to 23 Fortune 500 companies. That equals a continual increase in jobs; many of them high-paying. Under construction now are Midtown Union, the new Invesco headquarters located at W. Peachtree and 17th Street; 1105 West Peachtree — a mixed use development which will include Google’s Southeast headquarters; and the Norfolk Southern 1.5 million sq. ft. headquarters, also located on W. Peachtree. Microsoft just announced its new hub in Atlantic Yards, bringing 2,500 jobs with it, and future plans for developing the mixed-use Quarry Yards in West Atlanta. These developments not only provide construction jobs now, but they guarantee thousands of jobs in the tech and hospitality industries and ultimately increase the demand for housing in Metro Atlanta.
The entertainment industry loves Georgia — we rank #1 for film production. In 2019 over 400 feature films and tv shows were shot in Georgia. And despite the pandemic, in 2020 $2.2 billion was spent filming. Over 40,000 production workers will be employed on an expected 75 production projects during the next year, with 50 currently in production or filming prep.
Although still down from pre-pandemic levels, Metro Atlanta job-growth has doubled for the last few months. All these factors show Georgia’s economy to be resilient.
Lower Interest Rates
Mortgage rates are one of the primary drivers of the success of the housing market. Interest rates in 2020 reached lows not seen since the 1970s. Rates dipped as low as 2.66% in December for a 30-year fixed rate mortgage. This factor alone can boost home sales dramatically. Millennials are leading the way for first-time homebuyers thanks to these low rates. Leading institutions indicate that although there will be increases in 2021, rates will remain relatively low, possibly reaching 3.4%. Rates are predicted to increase more in 2022, making 2021 a promising year for new mortgages.
|Mortgage Interest Rates Forecast|
|Mortgage Bankers Association||3.4%||3.9%|
Metro Atlanta’s Affordable Housing
Even with housing prices increasing by an average of 8% last year, Metro Atlanta has remained an affordable place to live. The national monthly average cost of home ownership is 30% of income. Metro Atlanta comes in at 23.8%. Compared to New York City (40%) Atlanta is in the upper tier of affordable cities with a large population. For many people relocating to Atlanta from more expensive real estate markets, the increase in the local cost of housing here was not an obstacle.
Affordable housing, a robust (but still unsettled) economy, and job growth are factors that combined last year for an expected increase in real estate demand. Add to this: changes in lifestyles, relocations for jobs, and the record-breaking low interest rates and the results speak for themselves. Atlanta has a booming real estate market. One plain obstacle to a thriving market in 2021 is the short supply of homes. But even that angle won’t slow the Metro Atlanta market. Although there are building materials supply challenges, new construction is expected to increase 9% in 2021, with a forecast for 50,000 new units (MetroStudy). In this exciting and profitable market, many would-be sellers are recognizing the opportunity and are ready to cash in on their equity.
What is your experience with the 2020 housing market? Do you have any stories to share? I’d love to read about them…please comment below!