A recent round of number crunching brought some good news for home buyers in Atlanta, Georgia. According to an analysis done by the research team at Realtor.com, the Atlanta real estate market has the highest number of smart buys of any U.S. city, as of May 2015.
In this context, “smart buys” are homes that fall below the maximum affordable price for a particular area, taking the median income into account.
Housing Markets Where Buying Beats Renting
The Atlanta-Sandy Springs-Roswell metro area was singled out as one of the best housing markets for home buyers, particularly when compared to renting. From a purely financial perspective, it’s often better to buy a home than rent in the Atlanta area. This is based on findings by the Realtor.com data science team.
The company looked at a variety of factors to determine their rankings. They examined median incomes, house prices, and rental data provided by the Department of Housing and Urban Development (HUD). The team assumed a 30-year fixed mortgage at current interest rates, along with a 20% down payment.
In this analysis, total homeownership costs (including homeowners insurance and taxes) did not exceed 29% of the home buyer’s income. The analysis resulted in a “maximum affordable price” for each individual housing market.
Lastly, the team determined the number of homes available in each market that fell below the maximum affordable price. These were referred to as “smart buys.”
Based on this measurement, the Atlanta real estate market had the highest number of smart buys available to buyers.
Atlanta Real Estate Market Offers Good Deals for Buyers
Jonathan Smoke, the chief economist at Realtor.com, explained why Atlanta is such an affordable housing market for buyers (relative to income). It has a lot to do with geography and the availability of new construction.
“Atlanta has always been more affordable, despite having seen very strong population growth for decades,” Smoke explained. “There’s no natural barrier like an ocean or mountains or desert that limits development–so new construction has kept supply in balance with demand.”
Here are the top-ten metro areas with the highest percentage of buyer bargains:
1. Atlanta-Sandy Springs-Roswell, GA
2. Chicago-Naperville-Elgin, IL-IN-WI
3. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
4. Detroit-Warren-Dearborn, MI
5. Tampa-St. Petersburg-Clearwater, FL
6. St. Louis, MO-IL
7. Pittsburgh, PA
8. Cincinnati, OH-KY-IN
9. Indianapolis-Carmel-Anderson, IN
10. Virginia Beach-Norfolk-Newport News, VA-NC
Of course, there are many other things to consider when deciding whether to rent or buy a home. For instance, the data crunchers at Realtor.com assumed a 20% down payment for their calculations. But these days many home buyers put down less than 20%, which means they have to pay extra for mortgage insurance. This also has to be factored into the buy-versus-rent decision.
Home Prices Still Rising in Atlanta
It’s also worth noting that Atlanta home prices rose considerably over the last couple of years. They are expected to continue rising over the next 12 months, and likely beyond that as well. So the range of “affordable” homes is shrinking for buyers in this area.
According to Zillow, home prices in the Atlanta metro area rose by around 10% over the last 12 months. They expect additional gains of 5% – 6% over the next 12 months (as of May 2015). So while this is clearly one of the more affordable real estate markets for home buyers, it’s also a market on the rise.
Disclaimers: This story contains third-party data and commentary relating to the Atlanta real estate market in 2015. Such information is deemed reliable but not guaranteed. Additionally, the forward-looking statements (predictions) contained in this article do not necessarily reflect the views of the publisher. We make no claims or assertions about the future of this or any other housing market.