“I went up (on the price) because inventory is low,” he said. “I was looking at another property akin to my house in the Atlanta University Center area for about the same price, but that property needed anywhere from $40,000 to $50,000 in renovations.”
The challenges come as Clayton has struggled the most in metro Atlanta with the COVID-19 pandemic. Its unemployment rate at 7.9% is the highest in the region and it has a poverty rate of about 20%. The county has borne the brunt of economic downturns in recent years because of its high percentage of workers in retail, hospitality and other service industries, housing and economic development experts said.
This contrasts with how the county was doing before the pandemic. Unemployment had fallen as low as 3.5% and there was a sense of new growth with revitalization efforts in downtown Jonesboro, a massive renovation of the county’s “Beach” waterpark with new walking trails, and the opening of a location of popular eatery Slutty Vegan.
Taking a stand
The purchase of more rental property by investors has forced Clayton leaders to quickly find solutions to help renters, who make up about 50% of the county’s population. Nationally renters have struggled the most during the pandemic with only 75% of them paying full or partial rent by Dec. 6, according to figures from the National Family Housing Council.
The Clayton County Commission earlier this month set aside $1 million in Coronavirus Aid, Relief, and Economic Security Act to try to head off what members fear could be a surge in families without a roof over their heads if a national moratorium on evictions is not extended past its Dec. 31 end date.
201215-Forest Park-Nancy Henriquez and Devan Pinckney bought their Forest Park home in August. Houses in the area are snapped up quickly by investors who often pay cash, making it harder for people to buy a personal residence. Ben Gray for the Atlanta Journal-Constitution
Credit: Ben Gray
Credit: Ben Gray
The county’s school system on Tuesday also said it had asked its social workers to reach out to families that might be having trouble paying the rent because of concerns that students facing housing instability will suffer academically.
“We want to decrease the number of children who will be thrown into homelessness,” said Angela Horrison-Collier, director student services for Clayton County Schools.
Housing experts said the issue also exposes the uneven impact the pandemic-fueled economic downturn has had on Americans, especially those living in largely black communities like Clayton County.
Wall Street investors, real estate trusts and average residents who were able to hold onto jobs in which their incomes were not affected by COVID-19 have been able to take advantage of historic low mortgage costs. Meanwhile those in areas where jobs losses hit hardest are trying to hold on to what they have.
“COVID hit certain job sectors harder than others, particularly trade and transportation and also leisure, hospitality,” said Eugene James, chief investment officer at Atlanta-based homebuilder Paran Homes. “The airport is in Clayton County and travel has tanked and is still suffering.”
Part of the problem, especially for Black Americans, is a lack of generational wealth from which to invest in homeownership, said Vanessa Gail Perry, who recently authored the “2020 State of Home Ownership in Black America” for the National Association of Real Estate Brokers.
Black Americans are often saddled with higher student loan debt, have lower savings and still face discrimination in lending, she said. And homeownership, more so than work salaries or savings, traditionally has helped create wealth because of the appreciation of the investment.
“Even when Black people achieve homeownership, they don’t get the same values for their property as their counterparts in white communities,” she said.
Rising home values
Clayton has seen its housing values steadily climb, Paran Homes’ James said. The price of a new home in Clayton is about $228,000 — up from $216,000 around this time in 2019 — and new home values have appreciated 6% in the third quarter of 2020 compared to the same period in 2019. The appreciation for existing Clayton homes grew 10% during the period.
About 32% of Clayton homes were bought in cash in July, August and September of 2020, he said. For comparison, Forsyth County — the fastest-growing county in the region — saw about 22% of its home purchases in cash, James said.
Homebuyer Pinckney bought his three bedroom, one-and-a-half bathroom home in Forest Park with an eye of its future value. He said he believes gentrification is moving southward from East Point toward Clayton and he wanted to be there before home prices skyrocket.
“The next six to eight years will be an exciting time for real estate in Forest Park,” he said. “Investor returns on investment will only improve.”
Devin Williams, a mortgage loan originator for Regions Mortgage, said companies like his are trying to play a role in bringing more homeowners to Clayton. The bank has loan programs that offer cash for qualified purchasers that is forgivable in an effort to get more homeownership.
“This is one of our biggest markets right now,” Williams said.
Clayton State University lecturers Russell Spears and Brian Hunt said Clayton has made great strides in housing in the past decade, but more needs to be done. In addition to wrangling its rental population numbers and addressing the prevalence of cash buyers, the county needs to have more housing diversity.
Part of the reason Clayton has been so attractive to investors is because builders have decided the sweet spot for home prices is around $75,000 to $150,000 and have added little inventory outside of that price range. Building more homes around $250,000 to $300,000 could begin to open things up in the county.
That could mix in more diverse income levels and bring in more homeownership to flatten out the steady rental growth.
“There are people who have high paying jobs but live elsewhere because they can’t find what they want here,” Hunt said.