Is Atlanta affordable?
It’s a question I’m often ask as the executive director of an organization whose mission is to promote the responsible use of land and build walkable thriving communities. National data suggests that yes, Atlanta is affordable relative to peer cities. 72% of homes are affordable to those earning the area median income according to the Housing Opportunity Index.
But if Atlanta were so affordable, why do conversations I have about housing always start with “there’s a tear down on my street that is going for $600,000” or “my cousin has been priced out of her apartment on Windy Hill for the second time in a year”. That certainly doesn’t feel affordable, especially for millennials, new families, and seniors. It doesn’t feel affordable to half the workers in Atlanta’s economy who earn $45,000 per year. Despite this, there is ample data to suggest that overall Atlanta is affordable in terms of median home price and percent of income spent on housing. Many practitioners believe that Atlanta is simply experiencing a maturation of the real estate market.
So, what is going on? Is Atlanta experiencing market maturation, or is there something more to it?
A key term in the affordable housing literature is determining the number of cost burdened households, which is any household that spends more than 30% of their total income on housing. This equation is simple when it’s calculated for someone who lives in a city with lots of transit options and connectivity (think New York City or Washington, DC). Since Atlanta has no geographic boundaries like other cities do, transportation cost is a key driven of the cost burden equation.
According to the Center for Neighborhood Technology, the combined cost of housing and transportation for someone making $45,000 per year in Atlanta is 62% of their income. That only leaves 38% for non-transportation and shelter related costs. Atlanta now moves from being relatively affordable to the 5th worst for percentage of cost burdened households in the country.
Two variables contribute to this problem. The first is that Atlanta’s affordable inventory is isolated from job centers and transit, making individuals spend a much higher percentage of their income on transportation. The second is basic supply and demand. Atlanta was producing 60,000 units per year in the early 2000s. Today, we are building half that amount.
Overall production is down and the scarcity is driving up cost. New housing that has been produced is concentrated at the high end of the market. Existing apartments (those built before 2012) have increased from an average of $850 per month to nearly $1,100 per month, pushing prices beyond what the average Atlantan can afford.
What these numbers might suggest is that Atlanta’s affordability is waning and scalable solutions appear in short supply. So where do we go?
This question is something that ULI Atlanta’s Livable Communities Council (LCC) has committed to helping define the problem and identify solutions. The individuals who make up this council are all ULI members who are not only industry leaders and thought leaders but proponents of building walkable communities and transit oriented development through smart growth.
The data shows that long-term solutions to maintaining Atlanta’s affordability must focus on the transportation part of the equation. The good news is we are making good headway on transit funding and overall mobility solutions throughout the region. The bad news is that these solutions are not going to impact affordability next week, next month, or even in the next few years. We must focus on the housing component now while we invest in transit for the long-term.
In the coming months, LCC and ULI Atlanta plan to engage the broader housing ecosystem to find consensus on the problem, coordinate efforts, and put together actionable approaches and solutions to Atlanta’s affordability problem. We know with certainty that addressing Atlanta’s affordability requires an all hands on deck approach and look forward to engaging our members and partners in this important work.
Featured photo Atlanta Skyline at Piedmont Park by Kemet Alston