As metro Atlanta home prices rise, so does the talk about renters needing to shift into homeowner mode.
For many renters who think of buying a home someday, the increases may seem like a warning that by the time they are ready to buy, prices will be way out of reach. As price hikes outpace incomes, they worry they will left behind from owning -- as a commitment and an investment.
Home prices on average have climbed 21 percent since the housing market started to turn around in 2012, according to the monthly analysis by Case-Shiller’s monthly analysis.
The specter of higher interest rates only worsens the trepidation. Higher rates may cool the market, but they effectively limit a homebuyers purchasing power.
“All of my friends are buying homes,” said David Shapiro, 27, a broker with Re/Max around Atlanta.
The pressure seems to be ratcheting up, he said. “We could see prices hitting a plateau, but I do not think they will.”
HOME PRICES RISING: IT’S A SELLERS’ MARKET
Shapiro is part of the trend, he said. “I just bought a home in Brookhaven with my girlfriend, because we were scared that the interest rates were going to keep going up.”
There’s a common feeling of professionals in his age bracket, he said. “A lot of these people didn’t have a real interest in buying a home, but their parents have been telling them they were foolish for renting. Even people who think they are not going to be here in three years.”
And that could be the rub – how long a new homeowner stays.
"It takes more than two years before buying the typical U.S. home makes more financial sense than renting it," said Skylar Olsen, senior economist with Zillow. "It takes even longer in many areas with sky-high home values."
In Atlanta, on average, it takes one year and nine months to make it worthwhile, she said.
In San Francisco, in contrast, it would take about five years, she said.
MAYBE MILLENNIALS WANT TO BUY AND JUST CAN’T AFFORD TO
Besides, the rents in metro Atlanta are going up, too.
But whether or not they are keeping up with home prices depends on which town or city you are looking at. The city of Atlanta, for example, saw rents increase just 2.3 percent during the past year, according to Andrew Woo, a data scientist at Apartment List, an online, San Francisco-based rental marketplace.
The median rent in the city is $1,000 for a one-bedroom apartment and $1,150 for a two-bedroom apartment.
The modest increases in Atlanta is likely the result partly of a spurt in apartment and condo construction in the city. But there has also been a wave of building in the suburbs, so renters have a lot more choices.
Newnan rents have climbed the most – up 10.6 percent in a year, Woo said. The median rent for a one-bedroom is $1,030. A two-bedroom goes for $1,190 a month.
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