The average sales price of condos and townhomes in Atlanta outpaced the increase in the average sales price for single family detached homes over the last nine months – something that almost never happens. Typically, single family detached home sales prices rise faster than those for multi-family primarily due to land value appreciation.
What’s going on?
Condos and townhomes were always a lower priced alternative to detached homes particularly in Atlanta’s most desirable areas like Buckhead. However, the dramatic recovery of single family home prices in recent years made condos and townhomes prices even more attractive. A recent multitude of new townhome projects further enhanced the value in older units.
Millennials and Baby Boomers both value low or no maintenance multi-family living so they can pursue active lifestyles instead of spending time on home repairs and yard upkeep. Since Millennials and Baby Boomers make up more than two-thirds of the home buying market, demand is peaking – to a point. The high-end condo market (more than $750,000) is “not brisk” and some high-priced buildings are seeing sales stall due to long lines for rental permits. Some buildings have wait lists for rental permits that stretch for years which effectively eliminates investors from the marketplace. In some cities like Los Angeles, condo associations are deliberately putting the brakes on investor purchases.
Like the single family detached market, multi-family prices also rose in recent months due to a lack of supply – and maybe even more so. A scarcity of new condo projects – which pass on lower per unit land costs to the consumer than town homes – led multi-family sales growth to trail that of detached. The few multi-family projects planned or are underway mostly cater to the luxury market, not first-time home buyers or most downsizing empty-nesters all of whom want to be in the middle of the city (Buckhead Village, the Westside, and Midtown are the top selling condo markets).
The challenge for developers in bringing affordable mid- and high-rise condos to market are stingy lenders and skyrocketing construction costs. Lenders over the last decade were only lending money for multi-family if the project was apartments – particularly in Buckhead. There was a promising sign late last year when a new Buckhead Village apartment tower converted to condos as construction began and with prices starting in the $500ks.
The need for more affordable condo alternatives and/or apartment conversions would help the single-family market long-term by providing a basis for a move-up market two to five year in the future. At the very least, the rising tide of the condo market is speeding up that timeline for many homeowners.
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Beacham & Company, REALTORS® is Atlanta’s top-selling luxury real estate office. The firm was founded by Glennis Beacham, one of Atlanta’s most celebrated real estate agents and the only agent in Georgia to sell nearly $2 billion in real estate. The firm has 100 agents who average $7 million in sales per agent, more than any other Atlanta real estate firm. In 2017, the firm achieved record sales for the 11th consecutive year and remained the top-selling office in the city for single family listings sold for more than $1 million. The firm was also donated nearly $1,000 per agent to local charities over the course of the year.