Atlanta Is Fast Outgrowing Its Housing Market, Jeopardizing Its Competitive Edge
ATLANTA — The mayor of Sandy Springs, a suburb just north of Atlanta, watched all three of his adult children get priced out of his city in the past 18 months.
“They're leaving because they can't afford it in Sandy Springs,” said Rusty Paul, who was elected mayor in 2013 and was a city councilor before that.
Housing prices have skyrocketed in his jurisdiction, like every other Atlanta suburb and many across the country. The cost to buy a median house in Sandy Springs has risen 35% over the past 15 years to $545K in May. Just last year, the median sales price was less than $500K.
The Paul family story is a common one in Atlanta these days, as people looking for reasonably priced homes are forced to go farther and farther from the urban core to find a place to live. In a region long infatuated with driving and living in single-family houses close to the city, a massive influx of people and steepening housing prices means it is growing out, not up.
“The middle-class folks, who we totally depend on, are the ones who are in the squeeze right now,” Paul said. “That's who I am most concerned about. It's folks like my kids who are starting their families. That is the opportunity that is evaporating.”
Urban sprawl has been felt acutely in Georgia’s capital, but the coronavirus pandemic has accelerated that trend all over the country.
“We're in for another major sprawl boom. A whole 'nother belt of sprawl,” said Carlton Basmajian, an expert on urban sprawl and the author of Atlanta Unbound: Enabling Sprawl Through Policy and Planning. “And it's not just going to be Atlanta. It's going to be New York, it's going to be Los Angeles.”
Homebuyers are traveling farther afield, to cities and towns 30 or more miles from urban centers, and developers are launching new single-family construction to sop up the demand. But permanent jobs in Atlanta aren’t following the rooftops: Midtown Atlanta has attracted the lion’s share of new jobs, including large commitments from Microsoft, Airbnb and Google this year alone.
The dichotomy is raising alarm bells from economists, planners and politicians like Paul that, if the sprawl isn’t kept in check, Atlanta could lose the edge that has allowed it to attract some of the biggest office deals in the country this year.
"If they've got to commute 50 minutes and the lifestyle is too onerous, they will move somewhere else,” Paul said. "If the talent goes elsewhere, so do the companies.”
Beyond its competitiveness, sprawl means worsening congestion, longer commute times, ballooning prices of homes close to employment centers and transit, and higher levels of pollution. Already, Metro Atlanta’s children have double the national average of asthma cases per year.
“As an urban planner, this scares me to death because this feels like the opposite of what we need to be doing,” said Basmajian, who also is an associate professor of community and regional planning with Iowa State University. “But at the same time, I get it. Americans have long shown that they prefer some kind of miniature estate, even if it's just a 10th of an acre. They want that.”
Uncontrolled sprawl has a host of negative effects on a region. Between 2009 and 2019, the average commute time in Metro Atlanta rose 10%, from 30 to 33 minutes, according to the Atlanta Regional Commission, among the highest in major U.S. cities. Congestion has led to poorer air quality for the region — over the past 15 years, Atlanta averaged 40 “code orange” days every summer, with a 35% increase in emergency room visits for respiratory-related illnesses.
Atlanta’s suburbs have recently voted down chances to expand transit, therefore are almost entirely car-reliant, and therefore are major contributors to greenhouse gasses that exacerbate climate change. Vehicle-dependent suburbs — where only 25% of U.S. residents live — contribute to half the total greenhouse gas emissions in the U.S., according to a 2014 study from the University of California, Berkeley.
Christopher Leinberger, a professor emeritus at the Center for Real Estate and Urban Analysis at George Washington University’s School of Business, said the climate consequences for Metro Atlanta could be especially dire given the sheer size of the sprawl across the region.
“[Atlanta] added more square miles, square kilometers, of urbanized land than any other previous metropolitan area in history,” Leinberger said.
Getting Bigger And Bigger
Today, Metro Atlanta's population stands at nearly 6 million residents, and experts say the population is expected to grow to 8.6 million people by 2050, according to the ARC. With new people comes the need for new housing, but demand has far outpaced supply, driving up prices.
The median price of a single-family home in Metro Atlanta has risen from $245K to $352K over the past 15 years. But the time it takes to travel from Midtown to a median-priced home in the region has doubled over the same time period, according to data compiled by the residential brokerage firm Engel & Volkers.
For a median-priced home in 2006, an Atlanta buyer could find a house in Sandy Springs and Dunwoody, both less than 15 miles from Midtown Atlanta and home to a station on Atlanta’s MARTA train line, according to Engel & Volkers.
In 2021, a home that sells for the region’s median price is far more likely to be twice as far: the median home in Acworth, more than 30 miles away from Midtown, sold for $337,646 in the 12 months between May 2020 and May 2021. In Woodstock, roughly 28 miles away, the average home sold for nearly $363K, according to Engel & Volkers.
“Particularly since we don't seem to be doing anything about transit right now, I have a huge amount of concern,” Paul said. “People seem to forget about congestion during the pandemic. Well, guess what? It's back.”
Housing costs are already stressing the finances of hundreds of thousands of metro households. Nearly a third of all households in Cobb, Cherokee, Gwinnett, Fulton, DeKalb, Clayton, Fayette, Rockdale, Henry and Douglas counties are cost-burdened, meaning at least 30% of their income is spent on housing, according to a 2019 Atlanta Regional Commission study. The report doesn't factor in Forsyth County, which officially joined the ARC earlier this month, becoming the 11th county to be designated part of the metro region.
Urban Institute Senior Research Associate Yonah Freemark said the counties farther from the city limits — Paulding, Henry, Bartow and Hall, each between 35 and 50 miles from Atlanta — nearly matched the pace of population growth in the last decade of closer-in counties Gwinnett, Cobb, DeKalb and Fulton.
“We're already starting to see that significant exurban growth that you're talking about. It's already happening,” Urban Institute Senior Research Associate Yonah Freemark said. “The Atlanta region is just getting bigger and bigger.”
While Fulton and Gwinnett counties had the most single-family housing permits issued last year, according to property search site NeigborWho, counties that are at least 30 miles or more from Atlanta’s border saw a rash of construction last year: 2,485 new permits were issued in Forsyth, 2,385 in Cherokee, 1,888 in Paulding, 1,770 in Henry and 984 in Coweta.
Recent applications filed by developers with the Georgia Department of Community Affairs, which evaluates projects that will have a regional impact, show how far housing developments in Metro Atlanta are spreading with large projects proposed in Newton County 38 miles east of Atlanta and Barrow County 57 miles northeast of Atlanta.
“You've got to go really far out,” Compass Real Estate Team 360 Atlanta principal David Jones said.
Sherri Godwin, a broker in Atlanta with 35 years of experience, said more millennials are in the market for houses, and they are willing to travel as far as 80 miles north to cities like Elijay in Gilmer County to afford them.
“Ball Ground is really hot, and I can remember when that was not easy to sell years ago. Now it's definitely hot,” said Godwin, a residential broker with Overlook Brokers.
'It's Going To Be A Mess In The Coming Years’
Further sprawl in Metro Atlanta could hurt the region’s economic development prospects, especially as housing price increases erode the metro area’s reputation as an affordable city.
When the ARC interviewed economic development professionals across the country to help hone the region’s strategy, they said the price of housing was a top driver in a company’s decision on whether to relocate, ARC Managing Director of Research and Analytics Mike Carnathan said.
“The No. 1 challenge that continues economic development success is affordable housing. That’s what economic development professionals think,” Carnathan said. “If you want to continue to be a successful place, you're going to have to figure out the affordable housing. As land becomes more sparse in your urban core, more and more of that housing is going to have to be located outside of the urban core.”
During the past decade, corporate site selection has been turned on its head as companies' decisions were focused on attracting talent, rather than catering to its executives' interests.
The trend has benefited Metro Atlanta, especially Midtown, which has seen a surge of companies opening offices here. But that could have an opposite effect one day, Sandy Spring’s Paul said, if the talent becomes disenchanted with Metro Atlanta lifestyles, commutes and affordability.
Midtown has become Atlanta’s hottest corporate hub. Companies have added more than 21,000 new jobs to the 1.2-mile section of the city of Atlanta since 2015. Total non-farm jobs in Metro Atlanta tally more than 2.7 million today, with more than 82,000 in Midtown.
While an increasing population is good news for the region, housing affordability has become a key topic in the city. Mayor Keisha Lance Bottoms has been pushing to add to affordable housing stock in the city in recent years. Despite the push, the city has just over 6,300 rental and owner-occupied affordable housing units, pushing thousands of working-class people to leave the city to find housing in their price range.
“It's going to get more and more expensive inside the city," said Mark Pendergrast, a researcher and author of City on the Verge: Atlanta and the Fight for America’s Urban Future. "It's going to be a mess in the coming years, I'm afraid."
Despite efforts by Atlanta officials to reform its zoning laws to allow for more density — including a possible ban on single-family-only land, which covers 65% of the city's land area — Leinberger said NIMBYism, which is happening in cities across the country, is blocking governments from upzoning their land.
“Absolutely they are fighting this, and that's the baby boomers. We basically said, ‘We got ours, and fuck you very much to the generations behind us,’” he said. “This has to be an absolute mandate that these zonings go up [in density] along these corridors.”
Atlanta’s urban revitalization over the past decade did lead to an influx of new multifamily housing and was largely driven by millennials. The Pew Research Center defines millennials as those born between 1981 and 1996.
Post-recession, those millennials were overwhelmingly looking for an urban lifestyle, choosing to rent luxury buildings with high levels of amenities inside and out. But the generation's housing preferences have shifted with time.
Ninety percent of millennial homebuyers surveyed by Redfin in 2019 said they would prefer single-family houses over an equally priced triplex unit with a shorter commute. In May, another Redfin survey found more than a third of millennials reported buying a home sooner than expected, largely fueled by extra savings they accrued during the pandemic.
“I kept hearing, 'These millennials, they just want to rent, they don't want to own,'" Paul said. "But this is my counterargument, and it's proving to be true today: In their 20s, because of economic conditions, because of student debt, because of social factors, these kids are starting families much older than previous generations. When you start a family, the same things that were important to our great-grandparents, our grandparents and me” become important to them.
Despite the concerns, some maintain that this next wave of Atlanta sprawl may not be as impactful on the region. For one, the pandemic’s impact on the way Americans work could be a saving grace. As more employers shift to a hybrid work strategy for their employees — requiring them to show up to the office fewer than five days a week — people are more willing to live farther away from work, said Jim Chapman, founder of homebuilder Jim Chapman Communities in Atlanta.
“As these younger couples go further out, I don't consider it sprawl ... I think a majority of them telecommute,” said Chapman, who recently served as president of the Home Builders Association of Georgia. “I guarantee you, especially after the pandemic, they are going in two or three days a week. They are not going in five days a week.”
Experts say development in the suburbs is not the same as Metro Atlanta experienced in the 1980s and 1990s. Municipalities are beginning to encourage density and other housing options, and focusing on creating amenity-rich city centers that offer an urban feel, which has been appealing to millennials, said Harrison Homes Chief Operating Officer Ken Warlick.
“They want all the amenities of being in town, they want the nightlife, the restaurants, but they are not 100% certain that that's where they want to be for their entire life,” Warlick said.
Meritage Homes developed 700 single- and detached housing units in Metro Atlanta last year and is building or selling communities in cities like Canton, Woodstock, Cumming and rural counties like Jackson, Hall and Walton, Meritage Homes Corp. Division President Jonathan White said.
“This is not your traditional bedroom community areas, but today it is,” White said. “The millennials have really come out of the woodwork. You sort of wonder if that's because the pandemic has pushed them to buy homes more.”
Sandy Springs is attempting to tackle the issue of affordability to help keep the middle class in place, Paul said. But its options are limited, especially as land becomes more scarce and expensive.
“You have got to be making at least $55K to rent a basic apartment in Sandy Springs,” he said, up from $30K a decade ago. “When you have real estate going from half-a-million dollars an acre to $2M an acre, it’s very hard to put affordable housing on it.”
Sandy Springs is encouraging those who buy older homes in the city to renovate them instead of tearing them down and building larger, more modern houses, Paul said, including reducing permitting fees for renovations. Paul said the city is even lobbying the state legislature to pass a higher homestead exemption for taxes to those who renovate homes versus rebuilding new ones.
“The single largest source in America historically has been homeownership, and the result of the inability of young families to buy a house, they are missing out on the wealth-building opportunities,” Paul said. “If they can't participate in the housing market, they are not going to be able to build that family wealth that has fueled so much in this country.”
The ARC, which coordinates regional planning for the now 11 counties that make up Metro Atlanta, is trying to combat the area's second wave of sprawl by encouraging different housing options through the region, but especially in the city and the inner suburban ring, ARC Community Development Principal Planner Marisa Ghani said. She said each municipality and county needs to encourage zoning codes that allow housing options like duplexes, triplexes and cottage housing — what she called Atlanta’s “missing middle” of affordable homes.
“I will tell you, if we don't figure out our burgeoning housing prices, we will start to see more movement out to places where housing is affordable,” Ghani said. “I've always said the biggest threat to our future growth is going to be housing affordability. You can't grow a population by 2.5 million people by only living in single-family homes.”