Cathy Janelle loves renting.
She and her dog, Bella, live in Alpharetta, where she gratefully surrendered the responsibility she had in years past as a homeowner.
“If anything minor goes wrong, I call the office and before I hang up the phone, maintenance is at my door,” she said. “And there are so many amenities. Everybody should live here.”
Rents for a two-bedroom at Northwinds, where Janelle lives, range from $1,423 to $1,609 – above average for metro Atlanta. But she calls it a bargain, comparing it to the home she was leasing just before moving from New York. “I was paying two times the amount for something that was not as suitable.”
It’s not just New York: lots of other big metros are more expensive. Atlanta still looks relatively affordable.
Of course, that perspective may not be shared by longtime Atlanta residents who have seen their rents steadily climbing for years.
In the past year, average rent for a one-bedroom apartment in Atlanta was up 7.5 percent to $1,450 a month, according to a report by Zumper, a San Francisco-based online rental marketplace. In that same period, rent for a two-bedroom climbed 9.5 percent to $1,840, Zumper said.
With people moving to Atlanta, house prices growing fast and the housing market crimped by a lack of homes for sale, demand for apartments is simply growing more rapidly than the supply of new units, Zumper said.
Amazon or no Amazon, rents in the past year have risen in seven of the top 10 metro Atlanta communities, a continuation of a long, post-recession trend, according to several surveys released this week.
This demand-heavy equation comes despite the surge of building in recent years, according to RealPage, a Texas-based provider of software and analytics to the real estate industry: Average rents have soared 35.1 percent since 2010, making Atlanta one of the hottest rental markets in the nation.
“Atlanta overall remains a very strong, active market with good long-term fundamentals,” said Dan Gladden, president of the east region for AMLI Management Co., a national rental powerhouse which owns the Northwinds. “It still has good job growth, good culture, a good lifestyle and good weather.”
AMLI has 10 separate complexes in metro Atlanta, a total of 3,700 units, priced to appeal to professionals, corporate transients and empty nesters.
The surge of construction has only dampened the pace of increases, Gladden said. “Atlanta has a great dynamic (for owners), but it can still be fairly affordable.”
And by comparison to many other marquee cities, Atlanta rents don’t look bad at all. Atlanta is a bargain compared to Austin and it’s downright dirt-cheap compared to San Francisco or New York. Even Seattle – the home of Amazon – averages two-bedroom rents that are nearly $500 a month higher than Atlanta’s.
The median rent for a two-bedroom in the city of Atlanta is $1,170, according to Apartment List, an online market for rentals: that means a two-bedroom is $210 a month cheaper than a median two-bedroom in Austin.
But compare it to the city where Apartment List is headquartered: In San Francisco, a two-bedroom averages more than $3,000.
Still, everything is relative.
Among Southern cities, a smattering of cities have higher rents than Atlanta – all of them in Florida and Texas. The highest southern rents are in Ft. Lauderdale, where a two-bedroom apartment goes for $1,440 a month, but others more expensive than Atlanta are, Austin, Miami, Orlando, Tampa, Arlington and Irving.
A number of Southern cities are cheaper than Atlanta, among them: Fort Worth, Raleigh, Nashville, Charlotte, Dallas and Jacksonville, where a two-bedroom apartment rents for $1,060.
There is historically a kind of push-pull between the home sale and rental market. When homes are cheap and plentiful, it sends people in search of a purchase, which undermines demand for apartments and undercuts rents.
But when home prices climb, it tends to keep people renting – which drives rents up, but also provides incentives for more construction, which eventually leads to more supply.
There is now the additional wild card of demographics: the huge wave of millennials has been much less likely to buy homes than previous generations. Many analysts believe that will dissipate as the millennials age, make more money and start families, but no one is quite sure.
On the supply side, there may be some price relief on the way, according to RealPage: 12,566 units are currently under construction.
Of course, if Atlanta is selected as the site for Amazon’s second headquarters, that will mean 50,000 new residents of the area, many of whom would presumably be young and likely to rent.
Charolette Steed, an associate broker at Re/Max Unlimited in Kennesaw, said the trajectory of prices is driven mostly by demographics. “There are just so many people coming in and the young people need homes. I think Atlanta is going to see increasing home prices and increasing rents, too.”
But buy-or-rent dilemma is complicated, she said. Home prices have been climbing faster than incomes, so — particularly for first-time buyers – the challenge of putting together a down-payment and making the monthly mortgage can be daunting. Steed recently worked with a Cobb County renter who did buy – in Cartersville, where home prices were more in line with her income.
“You know what they say – drive until you qualify,” she said.
As an agent, Steed argues that buying a home generally makes sense, but she also owns and rents out seven houses in Cobb County. “I think rental property remains a very good investment.”
She says she’s been able to raise rents significantly whenever a tenant leaves and she puts a house back on the market. “I have raised the rent on one by $350 a month in three years.”
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