There is a market correction going on in Atlanta. Consider the options available to those who live in-town. Like most metros, Atlanta’s in-town single family homes are reserved for the wealthy and or dedicated. These homes are either very expensive or very old; which costs a fortune to maintain. Either way, the single family, in-town home is serious money. For this reason, urban dwellers for the most part, live vertically.
Here is where the Pandemic exposes a problem. Vertical life does have its drawbacks, most notably in its shared access. While the current Pandemic will surely end at some point, home buyers are now faced with the sad realization Pandemics may become more frequent and part of our everyday lives. Given that, shared access becomes a gamble many don’t want. Life is stressful enough without every coming and going from your home being considered a health risk.
Vertical life is also small. Small as in square feet. For the most part, life in a Condo requires shared access areas to justify its costs. (Pool, Gym, Club Room, etc.) But, take shared access away, and life in a condo means living in much less than 2,000 square feet. Why? Because, two thousand square feet in a condo has long been the point where it exceeds a $1M+ in price. It’s also the point where HOA dues rise to the level where you’d think they’d put your name on the building.
The solution to shared access without massive cost, is the townhome. The front door has suddenly become a “must have” on many buyer’s lists. In reality, townhomes check many boxes; secured entry, a lot more in square feet, multi-levels, garages, storage, additional security, and much lower HOAs. And, the best part about our current market; Atlanta has undervalued these properties for years.
The job for agents is to learn about these communities. For the most part, these properties have small foot prints, many are hidden or out of sight and no longer have any public facing Internet presence. If an in-town agent doesn’t make a point to learn about these communities, they lose. For a metro the size of Atlanta, we have a very small number of in-town, townhome communities.
Prior to the real estate crash of 2008, townhomes weren’t that popular and after the crash they weren’t built. But now, notice how many of our in-town communities are new. The townhome trend is blinking red-hot.
550 N Highland
764 Memorial (New Construction)
Atlantic Stacks (New Construction)
Briar Cove (New Construction)
Brownstones on Central Park
Centennial Park North
Enclave on Collier (New Construction)
Gables on Peachtree
Heritage on Memorial (New Construction)
Hillgrove (New Construction)
Madison Yards (New Construction)
Madison Village (New Construction)
Old Fourth Ward (New Construction)
Views on Ponce (New Construction)
All of the townhome communities mentioned in this blog have values of less than $1M per unit. Many of these communities should have values well over that. Until recently, townhomes communities didn’t feel the love when it came to appraisal time. But, that is changing. The rapid growth in new townhome construction is causing a universal reappraisal of the entire market. Builders are placing their bets. And remember, they don’t build unless there is data telling them to do so. And, with so many Builders going all in on townhomes, it’s further validation of just how hot this market really is. As they say; follow the money.
Appraisers take note: some of these communities have characteristics never seen before. Take the Centennial Park North community. It has several homes over 4,000 square feet. There is no track record of sales for in-town, townhomes of that size. How is that appraised? Many communities now feature roof-top decks. For the most part, they didn’t exist two years ago. How do you put value on that? With so much new construction, covering wide swaths of downtown Atlanta, how do you appraise value to an “area” that never existed before?
These are some of the barriers Agents need to be aware of when pricing their Listings. Without any consistent sales history, Agents, Appraisers and Lenders are all flying a little blind. But know this, the direction is due north.
Question: Which in-town property will have the best appreciation over the next 3-5 years?
Answer: Single family homes. Like you, I have no idea how so many people have so much money. But, the “practical answer” for those who work for a living is: the townhome. Agents, ask yourselves; how much longer will the 2,500 square feet, multi-level, in-town home remain under a $1M dollars? A year? Two?