Metro Atlanta rents, like home prices, rising fast

Metro Atlanta rents have been climbing sharply in the past year, really turning on the jets since spring, despite a moratorium that has kept landlords from evicting most non-paying tenants.

A jobs recovery, stimulus checks and the continued flow of new residents has helped fuel the price runup, despite pandemic closures, massive early layoffs and a still-uncertain economic recovery.

One other big factor: Fewer homes listed for sale and much higher prices for them have kept many wannabe buyers in their rental units, taxing rental supply.

The average metro Atlanta rent rose 10.9% in the 12 months through May. Between the end of February and the end of May, rents were up 5.7%, a 22.8% annual pace, according to ApartmentData.com, a research firm that tracks rents in several cities.

“You’ve heard the description of a graph that goes up ‘like a hockey stick.’ Well, there it is,” said Bruce McClenny, the firm’s president.

He doesn’t expect that sharp acceleration to continue. Spring is typically a month of high demand for apartments, so the wave of new leases will likely ebb and so will the rent hikes.

But predictions right now are dicey, McClenny said. “A lot of things are at play here. We are just in uncharted territory.”

The national moratorium on evictions, in place since early in the pandemic, also is set to expire at the end of this month. That could embolden some landlords to raise rents further.

More basic to the market are supply and demand and the way they balance — or don’t.

In the rental market, the landscape has long been tilted toward landlords, so rents were steadily, if modestly, increasing for a decade before the pandemic. Rents were up 4% in the year before last and 4.6% in the year before that.

But things changed last year, partly because of the housing market, which had been growing tighter even before COVID-19. When many potential sellers decided they didn’t want strangers traipsing through their homes, listings became scarce — and prices shot skyward.

Metro Atlanta home prices jumped in May, capping a year-long surge during which the median price of a home sold in 11 central counties rose 27.4% from May 2020. There just weren’t very many homes for sale — a scarcity most acute among the lesser-priced homes that typically appeal to first-time buyers.

Some people couldn’t buy a house. And what keeps people from buying, keeps them renting.

Meanwhile, demand for apartments was already swelling. Metro Atlanta’s population has surged by more than 400,000 people since 2015, according to the Census Bureau. In that time, fewer than 60,000 apartment units were added.

So potential renters are competing for ever-fewer vacancies, said Eddy O’Brien, managing partner of Blaze Capital Partners, a Charleston-based company that owns four apartment complexes in metro Atlanta with about 1,000 units.

For all the talk of working from anywhere, very few Atlantans were getting new jobs that required them to leave, he said. On the other hand, many work-from-home professionals in expensive cities were eyeing Atlanta.

Last year, Atlanta was one of the fastest-growing metro areas, adding 34,000 people, according to Census Bureau estimates.

The average rental in metro Atlanta is $1,380 a month, according to ApartmentData.

But price hikes hit different households differently.

Apartments run the gamut in quality, desirability and price. In industry parlance, units range from Class A, typically the newest buildings catering to white-collar professionals, to Class D, which are generally more than 40 years old, located in less-desirable areas and often house government-subsidized tenants.

Class A apartments in metro Atlanta average $1,774 a month. Class B averages $1,424, Class C averages $1,217 and Class D averages $967.

As a rule of thumb, it’s unwise to spend more than 30% of income on housing, experts often say. But many lower-income workers are forced to push well past that. Median earnings in metro Atlanta are less than $19 an hour, or about $3,200 a month, according to a 2018 Brookings study.

Choices are limited at the lower price ranges. Fewer than 700 units in metro Atlanta are listed at $1,000-a-month or less, according to Atticus LeBlanc, chief executive of Atlanta-based PadSplit, which connects lower-income people to shared housing.

“It comes down to the same thing, a lack of supply,” said LeBlanc.

ExploreEven for people with good jobs, buying a home in the Atlanta market can be tough

The biggest challenges are for people with an unreliable income.

In 2019, Keosha Roache, 32, a teacher, had a $1,000-a-month apartment in Ellenwood. She was studying for a masters degree, but took time off from her job, she said. “I had to; I had a baby. Then I couldn’t make the rent.”

Facing eviction, she went through a series of temporary places, including three different PadSplit homes where she shared space but paid lower-than-market rents.

Yet more than 500 homes are listed by Zillow for sale in metro Atlanta for less than $125,000. That’s despite the median price reaching $363,000 in May, according to the Atlanta Association of Realtors. So for someone with a modest income it might even make financial sense to buy a home — so long as the income is steady.

For months, Roache went to grad school and worked weekends as a home caregiver. In the past few months, she landed another job as a teacher in a public school.

That changed her calculus for housing, she said.

Scraping together a small down-payment, she bought a house in Morrow for $118,000 with a mortgage payment of just $771 a month. “I’m back in the classroom and having a salary and that’s all the bank needed.”

New rental units added, metro Atlanta

2015: 8,705

2016: 10,302

2017: 11,547

2018: 8,084

2019: 11,535

2020: 13,584

2021: 2,165

Source: ApartmentData.com

New single-family homes added, metro Atlanta

2015: 20,082

2016: 23,081

2017: 25,130

2018: 25,840

2019: 26,057

2020: 27,746

Source: MarketNsight

Average rent increase, metro Atlanta

2015: 5.6%

2016: 6.4%

2017: 5.1%

2018: 5.5%

2019: 4.6%

2020: 4.0%

2021*: 10.9%

*12 months through May

Source: ApartmentData.com

Average rental price change* in metro Atlanta

Last 3 months: 22.8%

Last 6 Months: 14.8%

Last 12 Months: 10.9%

*through May

Source: ApartmentData.com

Number of metro Atlanta apartment units by category

Class A: 122,175

Class B: 150,628

Class C: 93,015

Class D: 95,294

Source: ApartmentData.com

General descriptions of apartment categories

Class A: newest, higher end, most-desirable areas

Class B: older than 10 years, well-maintained

Class C: older than 30 years, blue-collar, long-term renters

Class D: older than 40 years, many government-subsidized renters

Source: Staff research