Is Atlanta in a real estate bubble—and will it burst?
We asked John Hunt, owner of MarketNsight, who has analyzed new and resale housing in the Southeast for 27 years.
People in Atlanta are surprised by what seems like a new benchmark every year for home prices. Is the peak in sight?
No—it’s already been reached and exceeded, and we suffered the consequences. Not a lot of people know, but all housing dipped unexpectedly in April  across the country. We overdid pricing. And the market, because of people’s incomes having been static, couldn’t take it. Sellers had to start dropping their prices.
That doesn’t sound like a bubble bursting—but maybe straining?
There is no bubble. It’s just not happening. Yes, there’s a lack of inventory. But people’s incomes will not let them go above a point. There’s a lid on it, and I think that’s a good thing. Average prices now are just getting above where they were in 2006—the peak, fueled by cheap financing money, bad lending practices. Those prices, 11 years later, are exactly where we should be, on an inflation-adjusted scale.
So a young couple waiting on the sidelines for prices to come down might be waiting a while?
They might be waiting a long time. What I am seeing, in the very early stages, is innovation beginning to creep in on the new home construction side.
We’re at the very forefront of stuff we’ve never seen before in Atlanta. Now that we know millennials will rent a 560-square-foot apartment for $1,600 a month at Ponce City Market, it makes sense that they’ll pay $180,000 with a $750 monthly mortgage payment for a 400-square-foot condo across the street. This deal, called 567 Ponce, will be available for sale this spring. [At the Moderns at Sugar Creek Mill project on Memorial Drive near Kirkwood,] we’re seeing townhome units as narrow as 12 feet under construction. We’re having to meet the demand at the price people can afford intown.
Is there any move back to the suburbs?
I’m sure that’s happening, but my industry for the past four years has predicted that was going to happen en masse, because that’s the way the world used to work. The truth is, they’re not going out to the ’burbs like they used to. They’re choosing to stay intown.
This article originally appeared in our February 2018 issue.