Can higher interest rates cool metro Atlanta's red-hot housing market?
Power Poll respondents doubt it, but agree more needs to be done to make room for first-time homebuyers
Interest rates may be climbing, the stock market sputtering, and a possible recession looming, but can they slow down metro Atlanta’s red-hot residential real estate market? Consider that the average home price in the metro area in early June was $367,000, an increase of 20 percent in just a year. The prices are driven in part by institutional investors, who were responsible for a third of all home purchases in metro Atlanta in the first quarter of 2022. (One investor, who never even set foot in Georgia, bought up 300 homes last year for his clients from his home in Florida.) The net effect is that an already tight market has grown even tighter, and climbing prices are stoking worries of a real estate bubble. Researchers at Florida Atlantic University concluded that metro Atlanta’s real estate market is more than 50 percent overpriced.
Where’s it all headed? Four out of five respondents to this month’s Power Poll believe higher interest rates will have either no effect or only a slight impact on metro Atlanta’s real estate market. Only 19 percent think the higher interest rates will cool things down “significantly.”
In the city of Atlanta, the housing crunch even prompted Mayor Andre Dickens to call for the federal government to step in to limit investor purchases, which would presumably loosen the housing supply and also keep prices from increasing so swiftly. Power Poll respondents were equally divided on this idea (assuming such a move were even plausible). Forty-seven percent of poll takers agreed with the statement that investors need to be reined in, lest the city crowd out all but the wealthy. But 45 percent disagreed, saying this is how free markets work.
Nevertheless, one thing is undeniable: As residential real estate price increases continue to outpace growth in income, more and more homebuyers are being locked out of the market. And that can’t but change the kind of city Atlanta is. At least, that’s the conclusion of almost three out of four respondents this months, who either completely or somewhat agreed with the statement that the city has an affordable housing crisis that threatens to change the nature of the city for the worst. Only 15 percent disagreed with the statement.
Of course, this isn’t just a city of Atlanta issue. The Atlanta Regional Commission crunched the numbers and concluded that the 11-county metro region lost almost 60,000 affordable rental units in the five years before the pandemic. And 148,000 tenants in that 11-county are spending at least half their income on housing.
Sure, we’ve hosted the World Series, the Final Four, the Super Bowl, but when the FIFA World Cup comes to town in 2026, it will be the biggest sporting event Atlanta has seen since the 1996 Olympics. Atlanta has always been good at dusting itself off when the cameras are pointed toward us, but what should we really prioritize between now and 2026, when the best soccer teams in the world will square off on temporarily installed grass at Mercedes-Benz Stadium? The options presented were a mix of pie-in-the-sky (yes, we know light rail is a Jurassic age away from coming to the BeltLine, if it ever does) and more quotidian concerns, like crime. The mood of our respondents? Stick to the basics. Overwhelmingly, it’s reducing crime that tops the to-do list, followed by concrete steps to address chronic homelessness. In third was fast-tracking the $3.5 billion Gulch redevelopment project, aka Centennial Yards. Makes sense, given that those 40 (currently unsightly) acres are essentially out the front door of Mercedes-Benz Stadium.
To some degree, we’ll be pursuing most of these projects simultaneously. As Bill Bolling rightly points out in the discussion below, “We can work on community issues at the same time we host soccer games.”
About Power Poll: Power Poll asks questions of the most powerful, influential people in U.S. cities. It is not a scientific survey. But because the people responding to the surveys comprise the leadership structure of their cities, the results afford a fascinating glimpse into the thoughts, opinions, and beliefs of those in a position to make change. Power Poll is distinctly nonpartisan.