You remember the housing crisis, don't you? Plenty of ink has already been spilled covering the Great U.S. Real Estate Bubble and the subsequent housing meltdown that continues to this day. Home foreclosures have surged nationwide, and in many ways Metro Atlanta was ground zero for the whole disaster.
Well, that was the old housing crisis.
What we’re seeing now is something very different and very relevant for those considering buying or investing in residential real estate. We're referring specifically to the Atlanta market and more generally about the South, but we’re seeing this playing out across the U.S.
Believe it or not, Metro Atlanta is now facing a housing shortage.
A Housing Shortage? Seriously??
How is that possible? Aren't there millions of unsold homes just sitting around collecting dust? Absolutely: The inventory of residential single-family homes has hit 2.38 million nation-wide, with thousands of those unsold homes in Metro Atlanta alone.
But we're not talking about homes to purchase: We're talking about rentals. There is currently a shortage of rental homes, and it's about to get much worse.
It's Not Why You Think!
The reasons are simple: Huge rental demand and limited supply.
The increased demand is easy to understand. First, high foreclosures means more families are being forced to abandon their home and seek out a rental. Every new foreclosed home typically creates at least one new renter.
Second, Atlanta is still seeing a wave of new residents relocating from worse-off housing markets (such as Florida, Michigan, and California). Folks are being drawn to Metro Atlanta by the improving job market, low cost of living, and relatively low rents (compared to where they used to live.) When these families arrive in Atlanta, most will rent, either by choice or out of necessity.
So, Where Are All the Rentals?
But the real problem is supply. All during the housing boom of 2003 - 2006, developers built like crazy. But, what they built were mostly single-family homes, not rental units. The big money was in constructing homes, selling them fast, then repeating the cycle. As a result, very few new rental properties have been built in the last 10 years.
And what about all those foreclosed homes? So far, investors have nibbled around the edges of available inventory, but there has been no significant move to convert the bulk of these homes to rentals. However, there has been some recent progress on this front. In fact, this increased attention from private equity funds is even more evidence of the growing appeal of rental homes for investment.
OK, But So What?
So what does this all mean to you? Well, if you are currently looking for a rental home, you can expect to see lots more competition for the nicest ones. You should also expect rents to start climbing as other renters "bid-up" to get the home they want.
And, if you ultimately plan to purchase a home, look for programs that help you own while you rent, like our Lease-Purchase program. No matter how credit-challenged you may be today, the time to start on the road to recovery is right now!
Just remember: You heard it here first!