Can we still afford Atlanta?

9 reasons why we’re facing an affordability crunch

Can we still afford Atlanta?
In February, this 1,054-square-foot Cabbagetown cottage was on the market for $589,900.

Photograph by Joshua Dudley Greer

We don’t have enough housing
Housing affordability is, at its most basic, a supply-and-demand problem: Too many people are looking for places to live, and there aren’t enough available options that they can afford. That may be hard to believe considering the number of cranes and bulldozers in Midtown and along the BeltLine. In fact, since 2012, Atlanta has built roughly 34,000 apartment units and added around 54,000 people. But the recent boom period of building is not enough, says Ben King, an affordable housing developer and advocate. According to his research, Atlanta today is constructing less housing than it was in 1994—“we’re not keeping pace,” he says. New construction has focused on multifamily units to cater to the changing housing tastes of millennials and baby boomers looking to downsize, and the vast majority has been marketed to people earning higher incomes. Want a one-bedroom, one-bath apartment in Midtown? It will cost $2,200 a month. At the same time, thousands of privately owned affordable units have been lost to demolition. Between 2013 and 2016, according to Scott Markley, a PhD researcher at the University of Georgia, the City of Marietta tore down more than 1,100 apartment units, displacing nearly 2,000 people, many of whom were black or Hispanic, to attract economic development to Franklin Road. By King’s estimate, if Atlanta is to house the city’s projected 900,000 new residents over the next 30 years, we’ll have to double the current number of housing units—we’re talking apartments, condos, single-family homes, duplexes, quadplexes, and everything above and in between. Oh, and not lose any more units.

High-wage workers invaded
Between 2013 and 2018, according to real-estate firm CBRE, metro Atlanta added nearly 32,000 tech jobs, second only to San Francisco. Those workers earned an average of $96,050 and, because metro Atlanta rentals remain cheap relative to San Francisco or New York, they spent just 15 percent of their salary on rent. Layer on top of that other emerging industries, like film production and healthcare, and Atlanta became a magnet for high earners. Developers took notice: In the building-boom years following the Great Recession, 95 percent of all multifamily units constructed in the city were marketed as luxury, says Dan Immergluck, a professor at Georgia State University and an affordable-housing expert. In the process, an entire market got overlooked. “When you have tech or high-paid jobs, you’re also creating more restaurant and retail jobs. But those jobs can’t afford those rents. The market isn’t creating units that are affordable for those workers.”

Atlanta affordability
Photograph by fstop123/Getty Images


Investors are buying homes that families used to
One of the most reliable and stable investments in America is the single-family home. So, it’s no surprise that Wall Street began taking increasing notice, especially in the months and years after the Great Recession. In the year before the recession hit, about 45 percent of homes in America were sold to medium- or large-scale investors—those buying at least 10 homes. But as the bottom fell out of the market, especially in neighborhoods across southwest Atlanta, Wall Street stepped in. In 2013, Blackstone Group, a private-equity firm, bought 1,400 Atlanta properties in a single day.

But since then, big investors have taken a back seat to flippers looking to buy one or two or three houses, renovate (or not), and either rent out or sell for a profit. Nationwide, in 2018, more than six out of every 10 homes were sold to such small investors.

The effect in Atlanta has been dramatic, as speculators in high-demand neighborhoods (such as BeltLine-adjacent areas) buy up properties. Consider a few of those zip codes. In 30310, which includes neighborhoods such as West End, Adair Park, and Oakland City, the percentage of houses bought by investors went from one out of five in 1999 to one out of two in 2018. In 30314, which includes Vine City, investor-purchased homes went from 20 percent in 1999 to 64 percent in 2018. Likewise, in 30311, home to areas like Cascade Heights, the percentage of homes purchased by investors quadrupled over 20 years.

Does increased speculation in desirable neighborhoods drive up sale prices? Well, look at 30310, where the median sale price between 2012 and 2019 went from $20,000 to $182,000, according to Redfin.

Verbena Street
This apartment complex on Verbena Street in Dixie Hills could benefit from the same strategy used in Vine City, where, with the help of nonprofits like the Arthur M. Blank Family Foundation and city agency Invest Atlanta, developers are rehabbing and converting vacant or dilapidated housing into affordable units.

Photograph by Joshua Dudley Greer

Urban migration is driving up demand
In the 1980s, when young Atlanta professionals got ready to buy their first houses, they often just searched further and further outside the Perimeter until they met their budget. But things started to change in the 1990s. Across the country, Gen Xers, and then millennials, have moved into city centers—and stayed there. This trend was confirmed by Dr. Yongsung Lee, a postdoctoral researcher at Georgia Tech, in a study of the nation’s top 20 urban areas published last year in the Journal of Regional Science. He believes this revolution reflects more than just the prolonged effects of the recession, which caused some young adults to postpone life events such as having children or taking on mortgages. Lee points to two more possible reasons for the shift: (1) Americans are more well-educated than ever before, and highly educated people are more likely to prefer amenities like restaurants and theaters, which are more plentiful in cities. (2) Millennials appear to be less materialistic, valuing experiences over homeownership. They don’t mind sharing, and they are motivated by environmental concerns, technology, and active lifestyles. Lee’s research also indicates that—unlike in some other cities—young Atlantans are eager to live mostly in popular areas like Midtown or along the BeltLine rather than just anywhere ITP. And while Lee expects some of them to eventually settle in the suburbs, he thinks the “intensity” of the flight won’t be as great as in the past.

City of Atlanta rents keep rising, but wages lag behind. Rents have gone up 48 percent since 2010, but wages have only gone up 22 percent. (Source: House ATL)

Property Taxes are going up
In 2017, homeowners in a quarter of Fulton County neighborhoods saw their property taxes increase by half. Some saw their bills double. The cause was twofold: rapidly rising property values compounded by the county’s failure to keep accurate assessments in the first place. Widespread outrage prompted the county to revert to the 2016 assessments until the General Assembly could pass legislation capping at 2.6 percent the year-over-year increase on an Atlanta home’s taxable value. The new law, which took effect in 2018, also allowed homeowners to choose their base value from any of their home’s three most recent assessments, adjusted for inflation.

Problem solved, right? Well, not exactly.

This solution left renters in the lurch, since the cap was only for owner-occupied homes. It also created inequitable property values for new homebuyers. When a new buyer purchases a house, the new assessment is based on the sale price—so neighbors with near-identical homes could pay vastly different amounts based on when they moved in.

“It actually makes things worse for them,” Immergluck says. “You’ve shifted the need for taxes to [renters and new homebuyers].” When public expenses inevitably grow and the local government needs more money, it’s limited in how much it can pull from existing homeowners now, meaning that additional demand will fall on the remaining tax base. What lawmakers should have done, according to Immergluck: give low- to moderate-income homeowners the value-increase cap. “This is a huge windfall for people with expensive houses.”

The pricier your home, the more you’ll save.

Labor shortages are driving up the cost of construction
Here’s how serious the construction-labor shortage is in America: There are actually more skilled-labor jobs open now—7.4 million—than there are unemployed people total. This reality is especially pronounced in cities like Atlanta, where the building boom, at the moment, shows no signs of slowing down. Econ 101 tells us that when labor is scarce, wages go up. In the case of general contractors, who rely on subcontractors for a lot of specialized work, that means subcontractors jack up their prices, both because they’re in demand but also as a hedge against the next downturn. Throw in material costs, and the average home-construction cost has increased by 24 percent, according to the Atlanta Regional Commission. All this means that the bottom-line cost to build a home goes up. And up.

Atlanta tore down its public housing
In 1993, Atlanta had 14,000 public housing units—all of them in brick-and-mortar apartment buildings that housed the city’s neediest families. By 2011, all but a relative handful of those units had been demolished, replaced with mostly market-rate housing. Ideally, the city and its housing authority would have secured other, similarly stable housing options to replace all of the ones lost. Ideally, the mixed-use communities that replaced the demolished projects would have devoted a more robust portion of their new units to those families. Ideally, Atlanta’s many newly built apartment complexes would have set aside, in exchange for a subsidy, a meaningful portion of their units for those families. Ideally, the city would have expanded its housing-voucher program to make it available to any of those families who couldn’t find housing elsewhere. But none of those ideals fully materialized—at least not to the extent that they make up for the loss of those traditional public housing units.

50 best things to do in Atlanta - Atlanta BeltLine
Atlanta BeltLine Eastside Trail

Photograph courtesy of Atlanta BeltLine Partnership

So there’s this thing called the BeltLine
Housing prices started to rise along the southern, lower-income sections of the Atlanta BeltLine in response to media reports even before Atlanta BeltLine Inc., the nonprofit created by the city to design and develop the project, was formed in 2006, according to Immergluck. In 2008, ABI created a trust fund for affordable housing along the trail, financed by a percent of city-issued construction bonds. It was expected to raise $120 million over 25 years. Unfortunately, construction ground to a halt during the recession. Limited funds that were raised went to parks and amenities rather than affordable housing. Eventually, board members of the project’s fundraising arm, including BeltLine visionary Ryan Gravel, resigned largely over this failed promise. Prices are still skyrocketing in adjacent neighborhoods, especially south of I-20. Last year, median prices went up 47 percent in Oakland City and nearly 64 percent in Adair Park, according to Now under new leadership, ABI in 2020 announced its largest budget allocation ever for affordable housing: $11.9 million. Most of that sum will be spent acquiring land and on predevelopment. By law, the BeltLine must produce 5,600 units of affordable housing by 2030. By the end of 2019, the city and ABI had created 1,640.

We need to muster political will
Just before leaving office in 2017, then Mayor Kasim Reed was asked what he would have done differently during his eight years leading Atlanta. His answer: He would have bought more land during the Great Recession, when property prices were at historic lows, for the city to bank for affordable housing, but he was concerned about the potential carrying costs and harming Atlanta’s credit rating. The response was a reminder that affordable housing is just as much a political challenge as it is a financial or policy problem.

Terri Lee, City Hall’s chief housing officer, last year outlined policies the city could implement to create or preserve 26,000 units of affordable housing by 2026. In late 2018, HouseATL, a coalition of Atlanta academics, nonprofits, and civic leaders that had spent a year studying the issue, delivered to Mayor Keisha Lance Bottoms an 80-page report with detailed recommendations.

One of the barriers to making progress on affordable housing, according to HouseATL? Lack of political will. Cities and counties have an incentive for property values to go up, as higher values mean higher taxes, which equate to more revenue to spend on services people want and need. But economists will also tell you cities need people living on low incomes and middle-class workers to live near where they work if Atlanta will ever move the needle on income inequality.

This articles appear in our April 2020 issue and was written prior to the outbreak of COVID-19 in Atlanta.