Buy Or Rent In Atlanta?

This latest update gives you what you need to know to answer the question “should I buy or rent in Atlanta”.

Escalating mortgage interest rates, persistent core inflation and lack of supply have driven prices up for both renters and buyers.

That said, there are good opportunities in certain neighborhoods for buyers and evidence indicates that for those with more visibility it’s actually better to buy than rent.

We’ll take a look at current market rates, then we’ll explore the pros and cons of buying vs. renting in Atlanta.

Current Atlanta Market Rates

For renters:

The good news is Atlanta rents have declined in the past 12 months…

Here are the median average rent rates and year-over-year increases per Zumper as of September, 2023:

• Studios average Atlanta rent is $1,552 down $73/ -4%
• 1 bedroom average Atlanta rent is $1,700 down $75/ -4%
• 2 bedroom average Atlanta rent is $2,250 down $30/ -1%
• 3 bedroom average Atlanta rent is $2,270 same as last year
• 4 bedroom average Atlanta rent is $2,395 down $200/ -8%

Remember these are just the averages. Rents in many Intown Atlanta neighborhoods will not show these declines. However, this gives you a snapshot. Ask us how the numbers look in the neighborhoods you’re considering.

For buyers:

The bad news is list prices are still increasing in Atlanta’s Intown neighborhoods…

Here are the average sale prices year-over-year for all property types in the City of Atlanta as of the end of August 2023 per the Atlanta FMLS:

• 1 bedroom or less average Atlanta sale price is $288,440 up 11.5%
• 2 bedroom average Atlanta sale price is $407,000 up 7.5%
• 3 bedroom average Atlanta sale price is $514,751 up 3.9%
• 4 bedroom or more average Atlanta sale price is $916,628 up 6.3%

Our observations that may assist you:

• As predicted in last year’s version of this article, rising mortgage rates (now 7+%) have reduced the number of qualified buyers in the market
• Many owners with +/- 3% mortgage rates have “golden handcuffs” and are on the sidelines waiting to step-up to larger homes. The result is fewer homes for sale.
• Bidding wars are still happening for well-located properties in pristine condition. In neighborhoods like Virginia Highland and Morningside, bidding wars still happen even for fixer-uppers.

Yes, but should you buy or rent in Atlanta this year?

Our tips:

“If you plan on staying longer than 2-3 years, buying makes more sense than renting, even with current very competitive conditions.

With mortgage rates hovering at about 7%, it may be difficult but remember, you ‘date the rate and marry the property’. In other words, you can always refinance should rates come down so if you find a house you love go for it.

Moreover, our take is that should mortgage rates decline into the 5-6% range, demand will shoot up causing a fresh wave of extreme bidding wars for the limited inventory of homes available, especially in town.

That said, if you don’t know if you’ll be staying in Atlanta for more than 2-3 years, renting is still your best option.”

Next let’s discuss the five best reasons to buy. And then get into the five best reasons to rent.

Five Reasons To Buy Rather Than Rent In Atlanta

1. To Beat Inflation

Rents tend to go up with inflation. Owning a home is a great hedge against future inflation.

Despite this year’s decline in rent rates, over the past few years rents in Atlanta have been on the rise. And renters are at the mercy of the market and their landlord. A 3-5% yearly increase can quickly add up.

As an example, a $2,000 per month rent increases to $3,100 after 15 years. On the other hand, home buyers lock in a reasonable mortgage today (or by refinancing if/ when rates decline) and enjoy the peace of mind of knowing what their payments will be for many years to come.

2. To Improve Savings

Forced savings translates into a good investment.

Historically home ownership has been a good investment. Of course it’s not without risk.

It goes without saying that you don’t want to become over extended. Be conservative and you can still buy on a huge margin. In some cases with just 5% to 20% down. That’s a deal not found in other investment venues like the stock market.

Resource: Atlanta Home Search

3. To Build Equity

Historically buying a home has been an elevator to generating personal wealth.

Home buyers quickly learn to love equity. No more “throwing money away on rent”.

When deciding whether to buy or rent in Atlanta this might be the main factor. Of course this is not always true, it depends on the time frame.

Every month part of your monthly mortgage payment goes to paying down the principal of the loan. So normally when the home is sold years later, the owner receives part of the investment back. Namely the principal paid plus money from any market appreciation.

Compare that to rent which is a 100% expense.

4. To Save On Taxes

Tax incentives for most home buyers in Atlanta remain significant.

The new tax plan reduces the tax benefits of owning a home for some but not most.

Especially effected are those in highly taxed, expensive markets like California and New York. Mortgage interest and property taxes remain tax deductible for many Intown Atlanta home buyers. Rent is of course not deductible.

In the long run, home owners can often make money on the sale of their home and take the profits tax free.

The home must be your primary residence and the tax free profits are limited but at this point it’s still a strong incentive.

5. For More Freedom

Enjoying more freedom is perhaps the best reason for buying!

Don’t like the awful bathroom or ugly kitchen? Renovate!

Owners are free to make significant changes they want in their home. Renters must just live with how it looks.

There is really something special about the feeling of owning your home. It comes down to feeling free. And we Americans like freedom.

Owning gives us more control to do what we like.

So if you’re asking should I buy or rent in Atlanta, remember to consider the intangible benefit of feeling free. If you are thinking of buying, you might want to explore these resources:

• Best Questions To Ask When Buying An Atlanta Home
• Mortgage Calculator

Five Reasons To Rent Rather Than Buy In Atlanta

Next, let’s get into the reasons to rent rather than buy in Atlanta.

Rent for career and financial flexibility, to save a down payment, avoid repair bills, real estate taxes and market risk.

1. For Flexibility

The biggest and best reason to rent is for the flexibility it allows. And these days there are plenty of other reasons you might want to remain flexible.

For example, career flexibility. You’re in a new job and want to see how it goes before committing to home ownership.

Or you’re only planning to stay in Atlanta for a couple of years.

Our tip is to ask yourself if your horizon is three years or more. If you don’t have reasonable visibility (in you job, relationships or life in general) beyond three years then rent.

You’ll be glad to have the flexibility when you want to make a change.

Plus, if you were to buy then have to sell in the first few years, it’s unlikely your home will have appreciate enough to offset the significant transaction costs of selling.

Or maybe the flexibility you seek is financial. Maybe you have other places you’d rather invest your money.

2. To Save A Down Payment

If you don’t quite have the down payment to buy a house then renting and saving a down payment makes sense. It’s called delayed gratification. A novel concept right?

3. To Avoid Maintenance Costs

If you don’t want to deal with all the hassles of home ownership then renting is the way to go. When the furnace goes out, the landlord fixes it. Gutters need cleaning, call the landlord.

4. To Avoid Real Estate Taxes

Real estate taxes in Intown Atlanta’s neighborhoods can be high. For example, a 3 bed / 2 bath bungalow can come with real estate taxes of more than $10,000 a year. If you’d rather not be committed to pay those taxes, renting might be best.

5. To Avoid Market Risk

If you think home prices will decline you may want to rent to avoid market risk.

Of course, nobody has a crystal ball. But locking in a rent rate for a few years can help you avoid the risk of buying and having your home price decline.

Should You Buy Or Rent In Atlanta?

Still not sure if you should buy or rent in Atlanta? Let’s run the numbers together.

Thanks For Reading!

We hope these tips have helped you decide whether to buy or rent in Atlanta.

Questions? Contact us!