As metro Atlanta home prices rise steadily higher, that push has produced an equal and opposite worry: people with modest incomes might be priced out of the market.
Sales prices of metro Atlanta homes have been steadily climbing since 2012 – the core five counties of the region have seen a 21 percent rise during the past three years, according to Re/Max Georgia.
That brought the median price to $254,900 – that means, well over half the homes sold are now far out of reach for households with the region’s median income of about $63,000. But people with limited means shouldn’t forget the flip side of the equation, said Jenni Bonura, president and chief executive of Atlanta-based Harry Norman Realtors: many homes are still within reach.
“There are definitely opportunities,” she said. “I think it comes down to, what do you want as an individual?”
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Demand for “starter homes” is growing, she said. Millennials – now the largest group of working Americans — are increasingly buying homes. “Millennials account for more than 50 percent of the mortgages being written.”
But are there homes for all the potential first-time homebuyers? Bonura thinks there are, if those people are flexible. “They may not find exactly what they are looking for, but homes for them to buy definitely do exist.”
No doubt, they face challenges. Many don’t have the savings for a down-payment. And many have paychecks already stretched thin handling living expenses and rent. But owning offers tax benefits, so owning means getting something back for that monthly payment. And despite the way the recession savaged home values, polls show that most people do think a home is still a good long-term investment.
But, since the recession, most construction has been at the upper end – a choice dictated for many builders by rising prices of land, labor and materials. To achieve the profit margin they need, they must build more expensive homes. And many of the already lived-in homes that are put on the market are likewise priced above $300,000.
First-time buyers can find homes in their price range, if you know where to look, said Wendy Bunch, owner of Re/Max Pure in Marietta.
It’s just that there are a lot of other wannabe first-time buyers also looking for decent, affordable homes, she said. “They can find some nice homes in nice areas. But they could get into multiple bid situations, too, since those homes are moving.”
Experts say that someone making the median income, can afford a home priced higher than $200,000 – perhaps up to $240,000, depending on how much they want to stretch and how solid their credit rating is.
So where should they look?
Cobb, median: $298,500
The median home price for a house in Cobb County signals a surge in higher-end construction and sales, yet experts say buyers willing to look away from the high-prestige school districts can find much lower prices, Bunch said. “We have 166 homes on the market right now that are priced below $200,000.”
The highest prices tend to be in East Cobb, she said. “But in areas of South Cobb, North Cobb and West Cobb – they can find some nice homes.”
Which is where the competition is intense.
A client listed a four-bedroom, 1,800-square-foot home, in West Cobb near the Silver Comet Trail.
“We put it on the market on Friday at $204,900,” she said. “By Sunday, we had 24 showings and 14 offers on the table.”
The home was sold for more than the asking price.
Gwinnett, median: $252,000
That median income is plenty for someone who wants to buy a home, said Cleve Gaddis, managing partner and broker for Re/Max Center with offices in Duluth, John’s Creek, and Dacula.
“You can absolutely, positively qualify for a mortgage – especially if you don’t have a lot of debt,” he said.
Finding a home in your price range means being selective, he said. “You may have to pay more attention to geography. You may have to spread out your search a little, but anyone with the median income can find a house.”
“In Gwinnett, if you say, ‘tell me places where there’s a reasonable chance that an average person can afford a home,’ I’d say Snellville, Norcross, Lawrenceville, Lilburn and Loganville. And that’s it.”
Fulton, median: $380,000
Modest income should not be an obstacle to home ownership, said Torrence Ford, broker and owner of Re/Max Premier in Atlanta, who said he has worked with teachers who were making $35,000 to $45,000 and bought homes for as much as $170,000.
For people banking on modest paychecks, he recommends a look at what he calls “the Westwood pocket,” Zip code 30310, where homes are available $170,000 to $180,000
“It’s up and coming,” he said. “It’s hip, it’s diverse, It’s safe. It feels like suburbs but it’s in the city. It can be a great first home.”
He too sees acute competition, citing a home that had needed work, and was listed at $125,000. “My client went $20,000 over the asking price and we did not win the bidding. It was on the market just two days.”
The growth of the city’s population – much of the new residents affluent – has boosted a number of neighborhoods, adding to their attractiveness, although their prices are still affordable, Ford said: parts of College Park and East Point, for example, as well as Fairburn and Hapeville.
“These are affordable neighborhoods that will appreciate in value,” he said.
DeKalb, median: $293,750
The focus on price is a little misguided, said Collette McDonald of Collete & Associates, a Re/Max agent in Brookhaven.
People consider many non-financial factors in making a decision, she said. “The thing about housing in Atlanta is that it’s not only income that matters, it’s life quality.”
In a sprawling metropolis, homebuying is more than one equation, she said. “Where do you work? Where do you play? What is the lifestyle that you want? Do you want to be on Marta? Do you want to be on the Beltline? What do you need?”
In DeKalb, there are pockets that combine affordability with solid housing and good neighborhoods, she said. “There’s Lithonia, Ormewood. I would say the best options are the outskirts of Decatur, then Clarkston and Ellenwood.”
Clayton, median: $133,250
Clayton was the close-in county hit the hardest by the housing crash. Home prices virtually collapsed in many areas and have only recently begun recovering.
Moreover, the prices in Clayton were always a bargain compared to the other, previously developed counties. So even after the tentative recovery, prices look like a bargain county-wide, said Gaddis. “Pretty much all the areas of Clayton County have homes priced below $230,000.”
The best targets for a buyer are areas that are safe, where values promise to keep rising but there are plenty of homes for sale so that the buyer doesn’t face a bidding war, he said.
If you don’t mind crossing the county line in Henry County, you might do better, he said. “If you look at all the safety metrics, I’d say that the best place to look is Hampton. The average price there is $184,000.”