I’m Matt Reynolds, and I cover housing for The Atlanta Journal-Constitution. In Atlanta and Georgia, the high cost of buying a home or renting an apartment has never been more sharply in focus, especially as we near this year’s election. Homeownership is now out of reach for millions across the state, with some juggling priorities just to make rent or sacrificing basic needs. You might be wondering if the situation will improve. But whatever happens with the presidential race in November, politicians and policymakers will have to take on the housing crisis in the city, state, and nation.
Credit: Mike Luckovich
Credit: Mike Luckovich
Previously, we broke down Kamala Harris and Donald Trump’s promises on housing, and how we got into a housing crisis in the first place. Today, we’re answering some questions from our readers (they have been edited, rewritten, or combined for clarity).
Is buying a home in Atlanta even affordable anymore, and how do you define affordable housing?
It probably goes without saying that what’s affordable is all relative. As of this writing, the median home price in the Atlanta metro area is $395,000. For many households sitting at or below the median household income of about $86,000, that may be too expensive.
Based on recent mortgage rates, which have been more than 6% on average, a 30-year fixed mortgage for a $395,000 home is about $1,900 a month with a 20%, or $79,000, down payment. That’s just the principal and interest. Homeowners have to consider rising home insurance premiums, homeowners association fees, property taxes, and repairs, which run into hundreds of extra dollars each month.
Compared to cities like New York, Los Angeles, and Washington, D.C., Atlanta is still relatively affordable. But it makes the metro region more appealing to people who are paying high costs for housing in other parts of the country. While city leaders have welcomed the rapid economic growth, they know that as the population grows, people risk being priced out of the neighborhoods. That’s one of the reasons Mayor Andre Dickens wants to build 20,000 affordable homes in the city by 2030.
Current interest rates and home prices are enough to make anyone feel dispirited. But there are still options if buyers are creative, according to metro Atlanta-based realtors the AJC interviewed this year. It might mean making sacrifices on the size or age of the home, location and commute times, or opting for a townhome or condo rather than a single-family home. Buyers will need to factor in the cost of renovations, repairs, and maintenance of older homes, as well as quality of life and local schools, if they have kids.
Sometimes it might make more sense to keep renting, according to financial experts.
Author and money expert Ramit Sethi warns people not to buy a home if it will make them “house poor” — the term for people with housing costs that leave them without enough money for other expenses.
Sethi says all housing costs, including utilities and other related expenses, should not be more than 28% of your gross income, the amount you earn before taxes. According to the U.S. Department of Housing and Urban Development, cost-burdened households are those spending more than 30% of their household income on a mortgage, rent, and associated housing costs.
What has been the impact of interest rates on mortgages?
Late last year, mortgage rates hit highs of 8%, and the average rate as of Oct. 10 is 6.32%, according to mortgage buyer Fannie Mae.
Americans expect rates to fall farther over the next 12 months. That could have some impact on affordability, potentially saving people hundreds of dollars each month. But it is no cure-all. Much more needs to be done on the supply side to make housing more affordable, especially for buyers looking for their first home.
On that note, housing experts say lower interest rates are contributing to the housing shortage. This is because households with a 3% or less interest rate will at least double their rate if they move.
This has created what housing experts call the “lock-in effect,” or golden handcuffs, which means people are staying put rather than moving to a larger home or downsizing. This may mean empty nesters and people who have outgrown their older homes are not selling them to the next generation of homebuyers.
Fannie Mae says mortgage rates are unlikely to drop into the 5% range before 2025. For those holding out, some money experts advise people to purchase when they are financially ready to do so, rather than trying to predict when rates will fall.
This is because lower interest rates could increase demand and prices. Homebuyers can always refinance when rates are lower. But refinancing can cost thousands of dollars. Homebuyers should consider monthly savings and how long they plan to stay in the home to work out when they will recoup refinancing costs, experts say.
As a retired couple moving to Georgia to be near our children and grandchildren, we have found an almost complete lack of small, affordable homes. Does the housing market have any solutions for our situation?
Although not an option for everyone, there are accessory dwelling units, known as granny flats or guesthouses. In the past, zoning and permitting regulations have vexed proponents of an approach allowing homeowners to build detached homes on their land. However, there is a growing acceptance these smaller homes could help ease the housing shortage.
More than a decade ago, Atlanta officials approved a zoning ordinance that increased by almost 40% the areas where accessory dwelling units are allowed, according to an Atlanta Civic Circle explainer on the topic. About 60% of the metro area is zoned for single-family homes. This means homeowners will still face obstacles if they want to build a detached home on their property.
Some have faced opposition from the not-in-my-backyard movement, who may oppose density and new developments in their neighborhoods.
How will climate change impact housing in Georgia? Will insurance premiums go up?
Florida has been referred to as a “canary in the coal mine” when it comes to climate change and the crushing cost of home insurance. Because of the frequency of hurricanes like Helene and Milton, the state is in the midst of a full-blown insurance crisis, with many insurers leaving the state altogether.
The state-backed insurance system is overwhelmed and underfunded. There is a fragile subset of low-quality insurers that lack proper oversight and are vulnerable to bankruptcy when disaster strikes. People either can’t get insurance for their homes or are exposed because their homes are underinsured.
Both the frequency and severity of natural disasters are expected to worsen because of climate change. According to a New York Times analysis of Georgia, in five of the past seven years, insurers have lost money in the state, with more than a dozen disasters costing them billions of dollars.
The comparison shopping website Insurify reports Georgia’s average annual rate for homeowners insurance in 2023 was $2,426, with a projected annual rate of $2,491 in 2024, a 3% change. In Florida, the average annual rate was a staggering $10,996 a year in 2023, with a projected cost of $11,759 in 2024, a 7% change.
Losses are not confined to states with natural disasters. According to credit rating firm Moody’s, nationwide insurers are paying out more for claims than they received in premiums.
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