When Greta Bell decided to start looking for a new home, she hoped to stay in Newnan, where she rents an apartment with her son. But every house she saw in that area was out of her price range.
Her real estate agent sent her to south Fulton County, instead.
Home prices have risen over the past several years as metro Atlanta has worked its way out of the Great Recession. But in south Fulton County, median home prices have actually fallen in 2018, mainly because builders are constructing smaller homes to keep them affordable.
In addition to areas south of I-20 in Fulton, a larger percentage of smaller, cheaper houses are going up in Cobb, Cherokee, Henry and Carroll counties, said Eugene James, the senior regional director of Metrostudy, a housing market data company. In south Fulton, it’s happening so much that it’s brought the average sales price down in the area, even though sales are surging.
For thousands of metro Atlanta residents who are struggling to find a new home they can afford, the trend is a promising sign that more affordable housing might soon be on the horizon. In south Fulton, cheaper land means builders can keep prices within affordable ranges if they make smaller houses. So that's what they're doing: In 2017, the median home was 2,543 square feet and cost $204,500. This year, it's 2,420 square feet and $199,550. That's a 2.4 percent decrease in cost, and a 4.8 percent reduction in size.
“Price points below $200,000 are desperately needed in metro Atlanta,” said John O’Callaghan, the president and CEO of Atlanta Neighborhood Development Partnership. “I think it’s an important trend. The market will be there.”
Building smaller makes sense, said James. Government tariffs have increased lumber prices; land prices are at record highs; mortgage rates are up; and there’s so much demand for houses in metro Atlanta, that bidding wars are common.
“If builders can get the price down, more people can afford to buy a new house,” James said. “I think they recognize how much home prices are going up, and they’re trying to do something about it.”
Marissa Awtrey, a spokesperson for the builder D.R. Horton, said the company has introduced a new brand, Express Homes, that is intended to be more affordable for first-time buyers.
Typically, Express Homes are more than 300 square feet smaller than average D.R. Horton homes, Awtrey said. And they have fewer options in order to keep costs low. The average sales price is $79,000 less than D.R. Horton’s typical new construction. So far this year, those smaller homes have made up more than a third of the company’s new home sales nationwide.
Ashton Woods, another homebuilder, has also introduced a new brand — Starlight Homes — intended to be more affordable for first-time buyers.
Bell still hasn’t found a house she wants to buy below her $165,000 limit, and said she’d rather stay in Newnan than move out. But there have been some houses in Fairburn that tempted her, she said, and it’s nice that south Fulton is so close to Atlanta. Besides, Bell said, she’s lived in apartments since she moved out of her parents’ house — so she likely wouldn’t notice if a house was smaller. It’s bigger than where she’s been living.
“I don’t have anything else to compare it to,” she said. “It’s sufficient for me.”
In south Fulton, closings on new homes are up 49 percent year-over-year, James said — in large part because of the type of homes that are being built there. The increase in new-home closings is higher than those in the rest of metro Atlanta’s core counties. In other areas where numbers were up, James said, it was largely due to an increase in townhomes, which also tend to be smaller and less expensive than single-family homes in a similar area.
“More people are willing to go wherever they need to to find an affordable home,” James said. “It’s making Realtors and people reconsider parts of town they otherwise would not have.”
Nick Farr, a real estate agent who works in south Fulton, said he’s seen homes that are built on less land than in the past and are, therefore, smaller. One area in particular where he’s seen builders trim size is in the bedrooms. Kailandra Banks, a south Fulton renter who is closing on her first home this week, said the house she bought has smaller bathrooms and no formal dining room, but has more space in the kitchen and living area.
Without a measuring tape, it can be hard to tell that things have changed, James said.
“To the naked eye, it was really difficult to tell where homes got smaller,” he said. “It’s great. They’re doing an excellent job of shrinking a wall here or there. It’s almost not noticeable to the human eye.”
It all means that in south Fulton and other areas where homes are shrinking, people are more likely to be able to afford something new. That’s good for the economy as a whole, James said.
O’Callaghan said he hopes homes get even smaller and more affordable — 1,800 square feet or fewer, and closer to $100,000. New home construction is happening at half the pace it did a decade ago, he said, even as more people are moving in to metro Atlanta. He expects houses to get smaller for the next decade, in order to maintain affordability.
Bell’s still not sure she wants to move out of Newnan. But she’s certain other people will follow the affordable homes.
“People are going to start flocking to south Fulton,” she said.
MORE DETAILS
The median square feet and price of new homes sold in metro Atlanta.
South Fulton County
2017: 2,543 square feet and $204,500
2018: 2,420 square feet and $199,550
North Fulton County
2017: 3,377 square feet and $663,450
2018: 3,149 square feet and $749,000
Cobb County
2017: 3,185 square feet and $390,300
2018: 2,844 square feet and $331,800
Gwinnett County
2017: 3,101 square feet and $310,400
2018: 3,135 square feet and $337,300
DeKalb County
2017: 3,076 square feet and $240,000
2018: 2,829 square feet and $299,000
Clayton County
2017: 2,398 square feet and $183,600
2018: 2,376 square feet and $200,000
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