What’s going on in the North Atlanta real estate and rental markets, and how can you best position yourself and your investment properties for the current trends and those that are likely coming?
This is the focus of our discussion today. As your local Atlanta property management resource, we want to make sure you understand how the local economy, the housing market, and the general pool of tenants are impacting what you can do as a real estate investor here in the Atlanta market and in those communities just north of the city.
Let’s take a look at the trends you want to watch for the rest of this year and the coming year.
When rents began to rise by a lot, we saw that some tenants simply could not keep up. This created a situation where more and more people moved into roommate situations to keep costs low or they moved in with family. The reason that vacancy rates are higher in the rental market now than they were even a year ago is simple: pricing.
Even as rents begin to stabilize and peak, there’s not a lot of urgency for tenants to get back into the rental market. They’re moving out of their homes, and landlords will need to be more creative and proactive in keeping those good tenants in place.
We recommend focusing on tenant retention in order to reverse this trend for your own portfolio of properties. The best ways to hold onto your tenant and make sure that you’re not facing vacancy or turnover costs include:
● Providing a great rental experience, with responsive communication and ongoing availability.
● Allow pets; renters with pets are more likely to renew their lease agreements.
● Provide conveniences such as online rental payments and maintenance requests.
● Respond to maintenance needs right away.
● Be reasonable with your rental increase when it’s time to offer a renewal.
The average vacancy rate nationally is 6.3%, and Atlanta’s is currently at 8.7%. We expect that things will improve now that rents are not rising as quickly as they were, but be prepared to entice tenants quickly by providing an attractive, updated property; and create a plan for holding onto those tenants when the lease period ends.
The rental market is always impacted by the sales market and, in the sales market, there are fewer homes being sold. One of the reasons for this is high interest rates. In order to get a mortgage now, a homeowner would be spending a lot more money on that loan than they’re likely paying on the mortgage for their current property. Most people are staying put, unless they have a very good reason to sell their home and move.
This is good news for the rental market because it’s keeping more tenants in their rental homes. Instead of moving out to buy their own place, they’re finding that it simply costs too much money to buy a home right now, so they’re waiting things out for a while. This will increase demand in the rental market even while demand slips in the sales market.
If you’re hoping to invest in Northern Atlanta real estate, you will have to do some legwork to find the right property. There’s less on the market now than there was a year ago, and we’re not sure how many more new properties will be arriving on the market for the rest of the year.
Investors looking to buy multifamily properties are in better shape; permits for those developments are being approved faster in 2023 than ever before.
While the dramatic climbs have calmed down in our market and across the country, prices are still comfortably high for anyone selling a home or renting one out.
According to Redfin, the median home price in Atlanta for July 2023 was $395,000. That’s slightly higher than the median price a year ago. You can expect that prices will hover around where they are, at least for the rest of the year. Sales tend to drop a bit during the holidays and the end of the year, anyway.
In North Atlanta, median house prices are even higher, coming in at around $551,694.
For the rental market in Atlanta, median rental prices are around $1,986/month, according to Zillow. That’s a 0.8% increase over rental rates last year. Don’t expect rents to go much higher; the tenants in our market are already feeling squeezed. They should remain about where they are for the rest of the year.
Atlanta will remain a strong housing market for the rest of 2023, even while buyers hesitate and renters look for more affordable options. The local economy is strong and growing, with a lot of tech companies setting up in the Atlanta region and providing jobs. There are offices for Google, Microsoft, and Apple. Construction jobs increased by 12,000 over the last year, and the unemployment rate is at 3.2%, which is not at all alarming.
Atlanta is a fast-growing city and has experienced rapid population growth over the last few years. With remote work remaining popular, employees who can work from anywhere are choosing cities like Atlanta as excellent places to be based. They get all of the history, culture, entertainment, and recreation of a large city without the prohibitively high price tags of other cities. There’s an enviable blend of quality of life and low cost of living, and that’s going to keep people moving into Atlanta for the rest of 2023 and into 2024.
This is just a high-level overview of the trends we see taking hold in the Northern Atlanta real estate and rental markets. We’d love to talk about your investment property specifically and what the current market trends mean for your rental income, home value, and future goals and plans. When you’re ready to talk, please contact the Atlanta property management experts at Elite Property Management.
