Forklift driver Craig Dollar and his wife Kimberly, an Atlanta Public Schools teacher, have dreamed of buying an affordable home in Atlanta for their family since 2006. But saving enough is a challenge in a metro area where rent prices have risen three times faster than wages since 2019 and the median home price has skyrocketed in recent years.
Kimberly Dollar, 42, said the family’s search became more serious earlier this year when she realized rent prices for larger apartments in their west Atlanta neighborhood can be more expensive than a monthly mortgage payment.
“I went to an apartment complex and the rent was $2,350,” Kimberly Dollar told Capital B Atlanta last Saturday afternoon. “I said, ‘who the [heck] fittin’ to pay $2,350 and not be sure if they’re gonna be there for a long time?’”
The Dollars were among more than 700 people who participated in Invest Atlanta’s Homeownership Month Open House Tour in southwest Atlanta last week, where they learned about the agency’s $20,000 down payment assistance program for qualifying applicants and more affordable Atlanta Land Trust properties — with potentially less stringent financing options — available for sale in the city’s southwest neighborhoods.
Black would-be buyers made up the overwhelming majority of those in attendance.
June is National Homeownership Month, the time when government officials highlight programs designed to help more people achieve the American Dream of owning their own home. Those efforts might mean more here than in other metro areas because of changes to the local housing market that disadvantage buyers.
In Atlanta in 2024, buying your first home doesn’t just mean learning how to hire an agent, shop for a mortgage, and make an offer. It also means navigating a housing shortage exacerbated by private equity companies sucking up the supply of available homes faster than anywhere else in the country. It means paying interest rates nearly double what they were less than five years ago on homes that have skyrocketed in price.
It’s all made coaching prospective buyers like the ones at the Invest Atlanta seminar that much harder. Elevated home prices and lack of affordable housing are “huge problems” that contribute to buyers’ overall pessimism, said Anita Allgood, Invest Atlanta’s vice president of single family & homeownership services.
“Education about homeownership and financial literacy and awareness is also a huge challenge,” Allgood said. “The reality is that real estate is always booming.”
Getting priced out
Through the early 2000s, Atlanta had a national reputation as an affordable city with a growing and prosperous Black middle class. Today, it’s a lot harder for those same people to afford to buy here.
The median price for an Atlanta home reached $421,000 this spring, up nearly 7% from where it was a year prior, according to Redfin, which tracks home sales.
Home prices across Georgia have jumped for the last four years, according to the Georgia Association of Realtors, which says the typical homebuyer is paying more to get less.
“Price surge is increasing on average about 4-5% year over year,” GAR spokesperson Brandie Miner said. “[Home prices are] not going down and no one expects them to go down anytime soon.”
That’s compounded by the spike in interest rates following the COVID-19 pandemic. The average rate on a 30-year fixed mortgage was 6.99% as of June 6, according to Freddie Mac. By comparison, the average rate never climbed above 3.99% between the weeks of May 30, 2019, and March 10, 2022.
That means it costs a lot more to buy the same house as it did even three years ago. Monthly principal and interest payments on the median-priced metro Atlanta home would be $2,658 at the current average rate, compared with $1,686 at 3%, a common rate during the pandemic. That’s assuming a buyer saved the roughly $21,000 needed for a 5% down payment on the median-priced home, and it doesn’t include the hundreds of additional dollars needed every month to pay for property taxes or insurance.
Private equity firms
Competing with private equity firms and other investors making all-cash offers for homes in Atlanta has also been a challenge for homebuyers like West End resident Kenneth Porter, who attended last Saturday’s Invest Atlanta event.
The 35-year-old film and television industry key assistant location manager said he nearly gave up buying a home in his West End neighborhood last year after having an investor with deep pockets swoop in and outbid him for a fixer-upper.
Georgia, compared to other states, faces the most risk in the nation from Wall Street housing investments causing real estate market disruption, rent increases, and unsafe conditions, according to a Private Equity Stakeholder Project watchdog group analysis released in April.
A Georgia Tech study published in March found Atlanta’s neighborhoods lost $1.25 billion in equity to corporate homebuyers over a 12-year span beginning in 2010. The bulk of the lost equity, $681 million, came from the city’s majority-Black neighborhoods, the study authors found. Porter says he was edged out by one such deal.
“I just got a phone call one day saying, ‘Hey, somebody literally just knocked on my door and offered me an all-cash offer over asking [price],’ and ‘my hands were tied,’” he said, recalling the conversation he had with the owner of the home he was looking to buy.
“I couldn’t blame him,” Porter said of the home seller, “but at the same time, it was just super discouraging.”
Stuck in the middle (class)
Attendees at last Saturday’s Invest Atlanta event met with eager agents, realtors, and mortgage lenders who set up booths in an adjacent parking lot and advised buyers on what they needed to know to get a mortgage. Ramphis Velasquez, a community lending manager with Prosperity Home Mortgage, said some applicants are surprised to learn they can qualify for a Federal Housing Administration (FHA) mortgage loan with a credit score as low as 580. Other typical requirements include a debt-to-income ratio of 43% and a down payment that’s 3.5% of the home price.
“I’m seeing a lot of eyes open wide when I start letting them know what they thought … is actually not the case,” Velasquez said.
But for some, no amount of homebuyer education solves the problem of making too much to qualify for help while struggling to save.
Down payment assistance programs may help Black families on the lower end of the socioeconomic ladder, but not middle-income families like Davida Huntley and her husband Raymun.
The Huntleys estimate their combined household income to be around $180,000 annually, too high for them to qualify for many aid programs. But their high cost of rent also makes it more difficult to save up enough money for a typical down payment, they said.
“Making that amount of money, you still need assistance because you don’t come to the table with $50,000 down for the type of home that you’re looking for,” Davida Huntley said.
Despite the obstacles, the Dollars are still committed to finding a home and had some good advice for others like them.
“Stay diligent. Don’t give up. Build your support circle,” Kimberly Dollar said.
