A Snapshot of Housing Supply and Affordability Challenges in Atlanta

On October 11, 2023, BPC’s J. Ronald Terwilliger Center for Housing Policy, in partnership with Habitat for Humanity International, hosted a roundtable discussion in Atlanta. The purpose of the roundtable was to better understand and identify local challenges and opportunities for increasing the supply of affordable homes in Greater Atlanta, including the city of Atlanta and its surrounding counties. BPC has held similar discussions with local stakeholders in Boston, MA and Austin, TX.

Representatives from local real estate developers, government, advocacy groups, and community-based organizations in Atlanta participated. To encourage an open dialogue, the roundtable was governed by the Chatham House Rule, meaning the discussion cannot be attributed to specific individuals or organizations.

Below are key takeaways and considerations for policymakers informed by the housing affordability challenges in metro Atlanta.

Background

Atlanta is one of America’s largest and fastest-growing cities. Between 2010 and 2020, the Atlanta metro area gained more than 800,000 new residents, an increase of more than 15%, bringing the total population to more than six million residents. Growth continues: from April 2022 and April 2023, the 11 core counties in the metro region gained nearly 67,000 residents.

Metropolitan Atlanta

Source: Atlanta Regional Commission

In the past year, the fastest rate of growth occurred in the City of Atlanta (2.8%), but each county also registered a population increase. The steady increase in population is being fueled by continued strong employment growth. Metro Atlanta’s job employment base increased 5.4% since the pandemic began in early 2020, the fifth highest in the nation.

Home builders in greater Atlanta, like those in many cities with strong job growth, have struggled to keep pace with a rapidly expanding population. During the 2007-2008 financial crisis, permitting of all private-owned home types plummeted from between 5,000 and 6,000 approvals per month to a few hundred. While the permitting rate has slowly inched back up since then, it is still hovering at just over half the pre-crisis level. In 2021, metro Atlanta was about 105,000 homes short of meeting regional demand.

Increased housing costs, in what was previously considered an affordable metro area, have put pressure on low- and middle-income families. Atlanta experienced some of the fastest-rising rents in the country in recent years. In October 2018, the average monthly rent in metro Atlanta was $1,497 for a one-bedroom apartment, but by October 2023, rent for the same type of apartment had risen to $2,068. The median-earning household in Atlanta would now have to spend more than 50% of its income to afford the median rent.

Meanwhile, homeownership is increasingly out of reach. Between September 2018 and September 2023, the median home list price in the Atlanta metro rose 65%. The Federal Reserve Bank of Atlanta measures the ability of a median-income household to absorb the annual cost of owning a median-priced home in its Home Ownership Affordability Monitor (HOAM) Index. In March 2022, the Atlanta metro fell below the HOAM Index’s affordability threshold for the first time in more than a decade, where it remains as of the index’s last update.

The lack of available homes at affordable prices threatens to displace many residents from their neighborhoods, a sign of increasing economic division in a city that, as of the most recent census data, suffers from some of the worst income inequality of any large metro in the U.S. Recognizing the problem, the Atlanta mayor’s office has implemented a variety of programs to tackle affordable housing issues.

Key Takeaways

1) Investment within Atlanta and surrounding suburbs has stimulated business development and job growth but has negatively impacted housing affordability, in particular for low- and moderate-income households.

Participants noted the Georgia Governor’s Office has focused on economic development and successfully recruited new companies to the state. In fact, Georgia is frequently ranked among the most attractive states nationwide to do business, and metro Atlanta is home to 17 of the state’s 19 Fortune 500 companies. These economic development efforts, while creating jobs, new businesses, and more economic activity, have nonetheless contributed to greater housing demand, straining the existing housing supply and leading to higher housing costs.

Roundtable participants shared that, locally in Atlanta, recent investment in historically underserved communities has led to housing price inflation and displacement. The BeltLine, an expansive urban redevelopment project surrounding Atlanta’s urban core, transformed abandoned railroad infrastructure into miles of parks, trails, and public transit.

Atlanta BeltLine

Source: Invest Atlanta

The BeltLine circles the core of Atlanta’s in-town neighborhoods and enables residents and visitors to explore amenities across the city, including restaurants, shops, art installations and green space. Because of the BeltLine’s massive investment, property values nearby increased, property tax bills inflated, and housing affordability decreased for current and prospective homeowners and renters. According to some experts, it has concentrated demand for housing in those neighborhoods and escalated gentrification. Because single-family rentals make up a significant source of affordable rentals and the overall housing stock in the area, many roundtable participants expressed a need to better support those renting single-family homes.

Participants highlighted ongoing efforts to maintain affordable housing options for low- and moderate-income renters and homeowners but stressed that additional tools are needed. The Atlanta Land Trust, one of an estimated 315 community land trusts (CLTs) across the country, was created in 2009 to maintain affordability in neighborhoods at risk of gentrification and displacement due to development. Another tool Atlanta implemented to ensure that local investment does not displace current residents is inclusionary zoning. Atlanta’s inclusionary zoning ordinances stipulate that multifamily properties constructed within specified districts, including near the BeltLine, must include units affordable to low- and moderate-income residents.

• Key considerations for federal housing policymakers: Can the federal government further clarify how its programs, like Federal Housing Administration mortgage insurance, can support community land trusts and facilitate related lending? Are there ways to help communities acquire land for the purposes of building affordable housing? Can the federal government support efforts to develop new tools to promote affordable, sustainable homeownership? Because infrastructure investment leads to economic opportunity but also impacts housing affordability, could federal funds for infrastructure include additional incentives for maintaining affordability or monitoring of the investment’s impact on housing prices?

2) Long-term homeowners in Atlanta benefit from targeted assistance to help them stay in their homes—but that assistance is oversubscribed.

Participants discussed several challenges facing homeowners in metro Atlanta. In particular, the appreciation of homes has inflated property tax bills for families, escalating the cost of homeownership. To alleviate these tax burdens for some long-term, lower-income homeowners, the BeltLine’s Legacy Resident Retention Program covers the costs of increases in property taxes through the 2030 tax year. Roundtable participants stressed that while programs like these can be funded in the short term by philanthropy, state policy initiatives such as a cap on property tax increases are needed to provide a more sustainable solution.

Low-income homeowners whose properties need rehabilitation turn to Atlanta’s economic development authority, Invest Atlanta, for assistance. Its two owner-occupied rehab programs are popular and oversubscribed. As a result, many roundtable participants noted that homeowners would benefit from additional, more user-friendly federal resources for these activities. For example, they mentioned how federal requirements for HUD’s HOME Program can turn otherwise minor rehabs into expensive and time-consuming endeavors, while HUD’s Community Development Block Grant (CDBG) program could be a better funding source for homeowner preservation activities, if adequate resources were available.

• Key considerations for federal housing policymakers: How can federal programs best support struggling homeowners afford the ongoing costs of homeownership? Is the current mix of programs available to help low-income homeowners repair and rehabilitate their homes sufficiently funded, coordinated, and easy to access? Should Congress direct HUD to update its CDBG allocation formulas—the core variables of which have not been changed since 1978—to better match the geographic distribution of need today?

3) Zoning reform will be an important tool to diversify and expand Atlanta’s housing stock if public opposition can be overcome.

Roundtable participants consistently cited zoning as a key barrier to expanding the supply of housing in the city of Atlanta as well as in its surrounding cities and counties. Despite its population growth, 74% of metro Atlanta’s housing stock is single-family homes. Developers aiming to construct multifamily properties commonly must request variances from local government, which can be difficult to get approved.