Rent costs skyrocket across Georgia with no relief in sight
ATLANTA – About one third of Americans live in rental housing – a percentage that has remained largely unchanged for many years. And while we have all heard about soaring home purchase prices, the cost of renting has literally skyrocketed during the pandemic
Since COVID-19 first raised its ugly head in February 2020, the average selling price of a 3-bedroom, 2-bathroom house in Georgia has jumped 34%, reflecting a huge demand coupled with a serious supply shortage.
Over that same time period, the Centers for Disease Control and Prevention issued an agency order banning most evictions, and millions of renters simply stopped paying rent. They were secure in the knowledge that they could not be evicted.
This set in motion four factors that have fueled a steep rise in rental units especially in Georgia:
First, about half the rental units in the United States were owned by mom-and-pop landlords owning 10 or fewer units. In most of these cases, the owners had made the purchases in anticipation of their own retirement, and counted on the income from rents to pay for daily expenses.
It all went wrong when tenants quit paying rent, but landlords still had to pay for taxes, insurance, repairs, and in some cases, utilities, even when no rent was coming in.
Many small investors made the decision to sell and take advantage of the high prices brought on by the shortage of houses for sale.
Meanwhile, the whiz kids on Wall Street decided that if mom and pop could be landlords, then the Wall Street executives could give their investors an even better return, and they began buying up almost everything that hit the market, bidding up prices and paying all cash to entice sellers.
Just as an example, Texas-based Invitation Homes boasts ownership of over 12,000 homes in metro Atlanta alone.
Wall Street ownership of rental homes has driven both sales prices and monthly rents higher as hands-off investors seek to benefit from higher returns for their cash.
The arrival of the COVID pandemic also saw a nationwide effort to shut down almost all non-essential businesses, and a widespread closing of offices occurred. At the same time, internet communications platform ZOOM exploded onto the world scene, enabling literally millions to begin working virtually from home.
While it remains to be seen how many formerly office workers will, in fact, return to their cubicles, it is safe to say that the world of work will never be entirely the same.
Who needs an office, when you have a basement and an internet connection?
And finally, and perhaps most powerfully, millennials moved out, got married and started having babies.
In 2019, the generation born between 1980 and the year 2000 became the largest and most populous generation in American history, finally surpassing the Baby Boomers, who were beginning to retire in increasing numbers.
These millennials began moving out of their parent’s basement, getting married, and having babies. Each of these life events often leads to a home purchase, but the combination of all three has made this generation the largest purchaser of real estate in history.
The bottom line is that rental rates for homes and apartments in Georgia have risen significantly, and, from where FOX 5’s real estate expert John Adams stands, there is no relief in sight. We have too few houses and too many wanting to buy. Those who can not buy are forced to rent. This rent will stay high for some time to come.
The rental market, in Georgia as well as the rest of America, is simply a reflection of the prices we see in the home-buying marketplace.
We are currently right in the middle of a supply and demand problem when it comes to housing. The price increases we have seen over the past couple of years are not sustainable. But I see no signs of a price decline in the next few years. That prediction applies to both home sales prices to rental rates as well.