He does not expect this strong acceleration to continue. Spring is usually a month of high apartment demand, so the wave of new leases is likely to decrease, as will rent increases.
But predictions right now are risky, McClenny said. “A lot is at stake here. We are just in uncharted territory.
The national moratorium on evictions, in place since the start of the pandemic, is also expected to expire at the end of this month. This could encourage some landlords to further increase rents.
Supply and demand are more fundamental to the market and how they balance each other – or not.
In the rental market, the landscape has long been owner-oriented, so rents rose steadily, albeit modestly, for a decade before the pandemic. Rents increased 4% last year and 4.6% the year before.
But things changed last year, in part because of the housing market, which had tightened even before COVID-19. When many potential sellers decided they didn’t want strangers walking into their homes, listings became scarce – and prices skyrocketed.
Home prices in the Atlanta metropolitan area surged in May, capping a year-long surge in which the median price of a home sold in 11 central counties rose 27.4% from May 2020. There simply weren’t many homes for sale – a most acute shortage among cheaper homes that typically attract first-time buyers.
Some people couldn’t buy a house. And what keeps people from buying, keeps them from renting.
Meanwhile, the demand for apartments was already swelling. The population of Metro Atlanta has grown by more than 400,000 people since 2015, according to the Census office. During this period, less than 60,000 apartments were added.
As a result, potential tenants are competing less and less for vacancies, said Eddy O’Brien, Managing Partner of Blaze Capital Partners, a Charleston-based company that owns four apartment complexes in the Metro Atlanta area with approximately 1,000 units.
Despite all the talk about work anywhere, very few Atlantians were getting new jobs that required them to leave, he said. On the other hand, many professionals working from home in expensive cities were eyeing Atlanta.
Last year, Atlanta was one of the fastest growing metropolitan areas, adding 34,000 people, according to Census Bureau estimates.
The average rental in the Atlanta metro is $ 1,380 per month, according to ApartmentData.
But price increases affect households differently.
The apartments run the gamut in terms of quality, desirability and price. In industry parlance, units range from Class A, typically the newer buildings for white collar workers, to Class D, which are typically over 40 years old, are located in less desirable areas and often house government-subsidized tenants.
Class A apartments in the Atlanta subway cost an average of $ 1,774 per month. Class B costs an average of $ 1,424, Class C an average of $ 1,217 and Class D an average of $ 967.
As a general rule, it is not wise to spend more than 30% of your income on housing, experts often say. But many low-income workers are forced to go much further. Median incomes in metro Atlanta are less than $ 19 an hour, or about $ 3,200 per month, according to a 2018 Brooking study.
Choices are limited in the lower price ranges. Fewer than 700 units in the Atlanta metro area are listed at $ 1,000 per month or less, according to Atticus LeBlanc, general manager of Atlanta. PadSplit, which connects low-income people to shared housing.
“It comes down to the same thing, a lack of supply,” said LeBlanc.
The biggest challenges are for people with unreliable income.
In 2019, 32-year-old teacher Keosha Roache had a $ 1,000-a-month apartment in Ellenwood. She was studying for a master’s degree, but took time off from her job, she said. “I had to; I had a baby. Then I couldn’t pay the rent.
Faced with the eviction, she passed through a series of temporary locations, including three different PadSplit houses where she shared space but paid lower than market rents.
However, more than 500 homes are listed by Zillow for sale in the Atlanta metro for less than $ 125,000. That’s despite the median price hitting $ 363,000 in May, according to the Atlanta Association of Realtors. So, for someone with a modest income, it may even make financial sense to buy a house, as long as the income is stable.
For months Roache went to college and worked weekends as a home help. In the past few months, she has landed another job teaching at a public school.
It changed her calculation for housing, she said.
By putting together a small down payment, she bought a house in Morrow for $ 118,000 with a mortgage payment of just $ 771 per month. “I’m back in class and I have a salary and that’s all the bank needed.”
New rental units added, Atlanta metro
2017: 11 547
2018: 8 084
2019: 11 535
2020: 13 584
2021: 2 165
New Single Family Homes Added, Atlanta Metro
2015: 20 082
2016: 23 081
2017: 25 130
2020: 27 746
Source: Market Nsight
Average Rent Increase, Atlanta Metro
2021 *: 10.9%
* 12 months until May
Change in the average rental price * in the Atlanta metro
Last 3 months: 22.8%
Last 6 months: 14.8%
Last 12 months: 10.9%
* until May
Number of apartments in the Atlanta metro by category
Class A: 122 175
Class B: 150 628
Class C: 93,015
Class D: 95 294
General descriptions of apartment categories
Class A: the newest, most upscale and most desirable areas
Class B: over 10 years old, well maintained
Class C: over 30, blue collar, long-term tenants
Class D: over 40, many government subsidized tenants