Atlanta, a metro area that historically has been dominated by homeowners, has seen a dramatic surge of apartment construction the past decade – along with a steady flow of young professionals, many of whom are comfortable with renting. (Special to the AJC)

Atlanta rents rise, but not as fast as home prices

If you can afford the down-payment and you’re going to stay a few years, experts say the math is pretty clear: it’s generally cheaper to buy a home rather than rent.

But the equation in Atlanta has been shifting.

Atlanta, a metro area that historically has been dominated by homeowners, has seen a dramatic surge of apartment construction the past decade – along with a steady flow of young professionals, many of whom are comfortable with renting.

And the variables are changing – especially for first-time buyers.

Not that rents are dropping, rents throughout Metro Atlanta are up an average of 2.4 percent during the past year, with the median two-bedroom at $1,170 a month, according to Apartment List.

All 10 cities tracked by the company in the region have seen rents rise, according to the San Francisco-based online rental site.

But home prices are rising faster.

The median home price in metro Atlanta has climbed 5.9 percent, according to Re/Max Georgia. The hike is even more pronounced in places where the most affordable homes might be.

For instance, the median price of a home in DeKalb has climbed 10 percent in the past year, Re/Max said.

More crucially, inventory – that is, the number of homes listed for sale – has been dwindling. That pushes prices higher, but also simply makes it harder for a prospective homebuyers to find what they want.

According to research done by Re/Max for the AJC,  sales have fallen for homes that cost $175,000 or less.

For example, in September, there were 1,749 sales. During the same month a year ago, there were 1,889. 

If you can share costs with a roommate, that further tilts the equation toward renting, said Cheryl Young, a senior economist for Trulia, a real estate site.

“Starter home inventory dropped 20.4 percent year over year,” she said. “Low inventory and stiff competition for house hunters may be enough of a deterrence for renters … to stay put if the margin between renting and buying is slim.”

As a destination for companies and ambitious young people, Atlanta has historically sold itself on high quality of life and low cost of living.

But its affordability has been waning – at least compared to its potential rivals in the southeast, according to Abodo, which lists more than 1 million rentals: Atlanta is the 17th most expensive city to rent in, but Atlanta’s most often-mentioned competitors for business, Charlotte and Dallas, are cheaper places to rent.

In the South, only Miami is more expensive for an apartment, said Abodo.

For both apartments and single-family homes, there are two ways to slow price hikes, said Svenja Gudell, chief economist for Zillow: One is a recession, the other is to build more homes.

Median rents for a two-bedroom apartment

Tops in the nation:

San Francisco, $4,285

New York City, $3,293

San Jose, $2,766

Boston, $2,759

Washington, DC $3,278

Source: Abodo

Median rents for a two-bedroom apartment

Tops in the Southeast:

Miami, $2,434

Atlanta, $1,906 (city only, not metro area)

Nashville, $1,570

Dallas, $1,599

Austin, $1,443

Raleigh, $1,305

Orlando, $1,243

Source: Abodo

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