Metro Atlanta home prices have steadily increased, but the region is still considered affordable and continues to lure people from across the nation, according to a report this week from a national real estate firm.
The median price of houses sold in the metro area last month was $235,908, up 7.2 percent from October of last year, according to Re/Max.
That gain comes against the backdrop of a mismatch between supply and demand. Experts say the number of houses for sale is less than half of what’s needed for a balanced market.
And when there are too few homes for sale, buyers compete against each other, causing prices to rise, said John Rainey, vice president for Re/Max Georgia. “Our local market remains a seller’s market.”
The affordability of Atlanta housing — compared to metropolitan areas in the Northeast and on the West Coast — has long been a lure to footloose professionals. But home prices here began to climb steadily in 2012.
The median sale price in metro Atlanta is almost the same as the median for the country’s 54 largest metros: Atlanta’s median is $235,908 – $92 less than the national.
That makes Atlanta look pretty good compared to, say, the Washington, D.C. metro area, where the median price of recently sold homes is $403,950, according to Re/Max.
And Washington was nowhere near the top. The median price in the New York City metro area, which includes a large swath of northern New Jersey, is $495,000. And even that looks cheap compared to the San Francisco metro area, where the median price of home sold is $975,000.
Of course, salaries are generally higher in those regions than in Atlanta.
While there are many other factors – the cost of transit, for example – a quick comparison indicates that Atlanta incomes still go farther. The ratio of home price to median household income in metro Atlanta is 3.77, which means the home price is 3.77 times more than median income, according to data from the Census Bureau.
The rule of thumb used to be that buyers could afford a home if the price was not more than 2.6 times their income. That means that many homes are out of reach for area residents, but Americans are also more likely now to spend a greater portion of their income on housing costs.
In Washington, D.C., home prices are 4.21 times higher than incomes. New York’s median home price if 6.88 times the median income, and San Francisco’s home price is more than 10 times that of income.
Still, a cautionary note: Other metro areas in the southeast are apparently more affordable. The ratio of home price to income in Houston, for instance, is 3.73.
Prices everywhere depend on location, and some parts of Atlanta have seen much more rapid price hikes. For instance, Atlanta’s intown neighborhoods have surged in popularity, but there isn’t much building, said Bill Adams, president of Adams Realtors.
“A lack of supply seems to be the primary driver of this trend in the marketplace,” he said. “Several of our markets are nearing record high sales prices this year.”
Prices in Decatur now average nearly $700,000, while Grant Park is close to $500,000, Adams said.
So long as the economy is growing, there’s no reason to expect the trends to reverse, said Rainey of Re/Max. “The rise in the metro Atlanta median sales price continues to outpace the national average.”