State of the Union Spring 2017: Supply is limited and demand is only increasing!

Spring 2017.     Atlanta Condos, Townhomes and Single Family Homes continue to be in great demand.      For buildings built 2005 and newer, most all of them are hitting new all-time highs.     Buildings built prior to 2005 are split with some hitting new highs, and others still 5-20% below their pre-2008 recession levels.    Continued, historically low interest rates, an ongoing lack of new housing supply for sale, and an improving labor market that is finally surpassing an inflection point, coupled with continued, rapidly advancing Atlanta  rental pricing has pushed more and more people to home ownership.     The field is so crowded now that most properties are going under contract at or above list price.   Discounts to list price over 3% are increasingly rare and hard to find unless a property has been on the market more than 8 weeks.

Atlanta continues to make the transition to a larger regional hub with the industry, fortune 500 companies, and educational institutions to support the growth.    Unfortunately, transportation and mass-transit options continue to lack and lag, but future plans and referendums should help dispel these concerns.      Light rail options like street cars moving East to West through the city, and the plans to “cinch” Downtown to Midtown by covering the freeway and creating more space for development will develop an enhanced urban center.

One of the largest stories over the past year is Atlantan’s adoption of “The Beltline”.    In fact, in The Real Estate world we have coined it “Atlanta’s Waterfront”.     The glorified, wide sidewalk has seen vast and quick adaptation from both users, and businesses.      As the next leg of the Eastside Trail and spurs develop down through Reynoldstown, many are placing large bets on this next expansion.        As I have watched the Beltline develop, more recently this year I have noted the rise of The Million Dollar Townhome.  Many are now selling out or being developed near Ponce City Market, Piedmont Park, and all over various parts of Buckhead.       Urban living, from luxury highrise apartments averaging $2000 a month for 1 bedrooms, to these new Million Dollar additions speak to the ongoing trend of Urbanization, and filling in what was one of the least densely populated 5-Million-person-plus metro areas worldwide.

Another important aspect to touch on is the Hollywood effect on Atlanta.    Money from The Film Industry continues to pour in to Atlanta with new studios being developed every year.    While North Carolina, New Mexico, Michigan and other states have had their share of tax incentives come and go, the Georgia incentives have seemed to resonate the best, and have led to what looks to be a significant ongoing, longterm presence.  That said, I currently often joke with people that many of the dining establishments I used to frequent 5 years ago,  now have menu and drink prices that are roughly 50% higher than Pre-California levels.   In fact, at some points last year, I’d often see many Intown Restaurants raising their prices 2-3 times over the course of the year, and to their credit most Atlantan’s and the Movie Set didn’t bat an eye.

After record breaking runs buildings like Terminus, Astoria, The Brookwood, Luxe, 1010 Midtown, Twelve Centennial Park, Aqua, and Cornerstone Village Lofts seem to be finally taking a breather, likely before another record setting run in the Summer.     Buildings like The Eclipse, The Viewpoint, The Spire, Metropolis, Tuscany, The Aramore, Realm, and Park Central are all hitting record, all time highs right now and I do not see that abating prior to summer.       Our firm’s Viewpoint 36th floor corner Penthouse listing for unit 3611 is currently under contract and set to close at a new record for the building, about $500 a foot.      As consumers look to purchase real estate, they like highrise condos given the relative ease of ownership and the ability to track their investment in a relatively easy way vs. other units in the building.

There looks to be 2 more Federal Reserve Interest Rate Hikes on the horizon for 2017.    While I do not see anything getting away of the demand for housing this year, 2018 will be a balance of record rental rates pushing people to ownership, and higher interest rates pushing the Atlanta market out of reach for greater segments of our population.     The future of US Real Estate is already forming.   It is one where fewer people, or more concentrated group (or organizations/companies) own more and more of the inventory.   The Atlanta Metro market is chugging along at roughly 6% annualized growth the last few years, but that really does not tell the story of Inside The Perimeter, where growth have been much closer to 8%.

As the year progresses, I will be watching the gauge closely.      That said, those who sit on the sidelines and continue to spend more more of their income on rent will wait for the next “crash” and may be severely disappointed.      Mortgages today are backed by people with real verifiable incomes.    The instruments are not the smoke and mirrors of 10 years ago.      The market, population growth, job growth, Movie Industry growth, end slow-but-steady transit growth will likely lead to high prices moving forward.    As always myself and my team are here to help those seeking the best options to capitalize on these catalysts.










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