OPINION: Median metro home cost is $405K. What are 1st-time buyers to do?

After the bubble burst setting off the Great Recession, metro Atlanta stopped building homes for years and has never made up for the shortfall. It's a tough market for first-time buyers. (Andrew Caballero-Reynolds/AFP/Getty Images/TNS)

Credit: TNS

Credit: TNS

After the bubble burst setting off the Great Recession, metro Atlanta stopped building homes for years and has never made up for the shortfall. It's a tough market for first-time buyers. (Andrew Caballero-Reynolds/AFP/Getty Images/TNS)

The median price of a home in metro Atlanta has hit $405,000.

Now, $405,000 ain’t what it used to be. But it’s still a considerable nut for most of us.

Humans need roofs over their heads and home ownership is the American dream, so most of us will take the plunge. A home is usually the biggest expense most people make and the buying experience can cause night sweats first time.

It has gotten more difficult to own in metro Atlanta. The Atlanta Regional Commission, chewing through Census numbers, said homeownership was down 3% in metro Atlanta from 2000 to 2019.

Hence, all those apartment complexes popping up like mushrooms as folks stream into the area.

Being a father, I’m concerned about how young people are able to do it. But somehow they do. In a report last year, The National Association of Realtors said first-timers made up 32% of all home buyers. That was down from the historic rate of 38%.

People are apt to apply their own experiences to absorb an issue. Here’s mine:

A single family style home is shown for sale, Wednesday, December 7, 2022, in Dunwoody, Ga. (Jason Getz / Jason.Getz@ajc.com)

Credit: Jason Getz / Jason.Getz@ajc.com

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Credit: Jason Getz / Jason.Getz@ajc.com

In 1991, my wife and I had a new baby and wanted to buy. We looked at Candler Park and bought an old two-bedroom Craftsman bungalow for $117,500. It seemed like lots of money. The median price of homes in metro Atlanta at the time was $95,000 — yes, less than a quarter of what they are today.

With inflation, that bungalow today should be $267,000, but in that neighborhood, houses now go for more than $600,000. My old house has been renovated and is now valued at $1.4 million. The $95,000 median home in 1991 Atlanta should be $215,950. But it is $405,000.

I get it, people make more money. But not four times as much. At least not the large majority of people. The Social Security Administration says U.S. wages have almost tripled since 1991. But prices are up 230%, so its largely a wash.

A friend of my kids’ named Andrew Jacon, 27, just bought his first house, for $442,000 in southeast Atlanta, less than the $460,000 asking price. He first scoped out the now-hot Atlanta neighborhoods of Kirkwood and Reynoldstown but realized they were out of his range.

“I hit at the perfect time, when people were waiting for the (interest) rates to drop,” said Jacon.

How’d he pull it off? Well, first, he’s a Georgia Tech grad who has a good job. He’s frugal and has squirreled away money.

“Plus, I was lucky enough to not have student debt, thanks to Mom and the HOPE Scholarship,” Jacon said. “But I’m the only one I know who bought solo. Most everyone else got help from their parents for the down payment or did it with a spouse.”

Andrew Jacon in front of the home he recently purchased in Southeast Atlanta with his girlfriend, Lydia Koenig.

Credit: Courtesy photo

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Credit: Courtesy photo

Eugene James, a real estate appraiser and analyst who is also a broker, has been in the business 30-plus years and knows that funding strategy well — “the bank of Mom and Dad, which is common these days.”

“The past few years, I’ve struggled with what is the first-time homebuyers’ price point,” he told me.

The rule of thumb used to be spending about 30% or less of family income to afford a house. Now, more people are having to stretch that.

“They now have to have dual incomes and a lot of them aren’t married, especially the first-time buyers,” said James. “And there’s the old adage, drive until you qualify.”

That means, the farther out you go, the cheaper the home. But that is not always true. Forsyth County, which once was the boonies, had the highest median price for homes in the Multiple Listing Service survey, at $653,000. Cobb is $418,000, Gwinnett $425,000 and Henry is $342,000.

Minorities are having a harder time of it, he added. The ARC report I noted earlier said the homeownership rate of white households in metro Atlanta was 73.7%. In Black households, it’s 47.5%.

Eugene James, Atlanta-based regional director for Metrostudy (photo contributed)

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John Grimes, a retired Cobb firefighter who now sells homes, said, “It’s never been easy to get in that house but it’s harder now. They have to make sacrifices. You have to be realistic.

“They are being underwhelmed by what they are seeing (within their price range.) They have to adjust their expectations. Go farther out, Get three bedrooms, not four.”

Another factor is the hedge funds buying up a tremendous number of homes to rent out in metro Atlanta, a subject the AJC investigated last year.

“They buy homes with cash; the average home buyer doesn’t have a chance,” Grimes said. “ I think they are taking out a generation of homeowners by design.”

Jimmy Baron, the one-time radio host on 99X, is now a real estate agent. He has noticed many “first-time home buyers have unrealistic expectations, unrealistically high. They believe the big, beautiful home they grew up in, that took 20 years for their parents to get into, is what they want now.”

“We are a society where people want the best of everything, even though it’s not affordable to them,” he said, later adding, “People will see homes they can’t afford over and over and get frustrated.”

He said a couple will come to him and say, “We have a budget of $550,000 and want a renovated home in Sandy Springs.” It’s his job to do a reality check and say, “That’s not happening.”

“I tell them I can find the house you want; I can’t promise you the location you want,” Baron said. “You really need to understand the art of compromise.”

I know people hate compromise. But today, there’s little choice.