ATLANTA MSA OVERVIEW

The Atlanta-Sandy Springs-Marietta, Georgia MSA, or metropolitan statistical area, is defined as a 28-county region. The Atlanta MSA is now the 8th-largest metro area in the country with a 2008 estimated population of nearly 5.4 million. Since 2000, metro Atlanta has grown by more than 1.1 million people — a 27% increase. The counties within the expansive MSA are Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Cobb, Coweta, Dawson, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Haralson, Heard, Henry, Jasper, Lamar, Meriwether, Newton, Paulding, Pickens, Pike, Rockdale, Spalding and Walton. We believe that Cobb, DeKalb, Fulton & Gwinnett form the core of the Atlanta economic engine. This analysis will first look at the larger MSA and then focus on the core counties. 

Demographics

The 2008 population of Atlanta MSA was estimated at 5,376,285. This represents a 34.2% increase from 1998. Growth in the Atlanta area has far outpaced that of the state or the country over this period.

• Atlanta is one of the younger metros in the Southeast, with a median age of about 33 years, roughly two years younger than the national median.
• The metro has a very high share of residents aged 20–34 (those most likely to rent apartments). 
• More than 250,000 senior citizens make their homes in the Greater Atlanta area.
• According to The Metro Atlanta Chamber’s Economic Development Division, since 2000, net migration to the Atlanta MSA has been nearly 600,000 people for an average of nearly 75,000 per year. 

Economic Trends

Metro Atlanta employs approximately 2.4 million people. The top three employment sectors are trade, transportation and utilities, professional and business services and government. The total civilian labor force in the Atlanta MSA for September 2009 was 2,654,228 — of which 2,376,446 were employed and 277,782 were unemployed. According to the Department of Labor, the unemployment rate was 10.5% (noting that the numbers for September are preliminary and have not been adjusted for other factors).  Map 1 shows the Georgia unemployment rate by county for the month of September.

The average weekly wage for the Atlanta MSA in 4th Quarter 2008 was $959.  This would be equivalent to $23.98 per hour or $49,868 per year, assuming a 40-hour week worked the year around. The largest major industry sector was Retail Trade, with 12% of the employment, followed by Health Care and Social Assistance with 10%, and Education Services with 9%.

Overall, the economy in the Atlanta area is a “good news”, “bad news” situation.

Good News:

Atlanta is a headquarters market. According to the Metro Atlanta Chamber, it ranks fourth among all cities nationally in number of Fortune 500 Companies headquarters. The list of 11 Fortune 500 companies headquartered in Atlanta as of 2009 includes The Home Depot, UPS, The Coca-Cola Company and Coca-Cola Enterprises, Delta Airlines, The Southern Company, and SunTrust Banks.

Asbury Automotive Group – the 11th Fortune 500 company to set its headquarters in Atlanta – relocated from New York in 2009.

 Some firms recently announced plans to expand their presence in the Atlanta area:

• NCR, a tech-related firm, is planning to relocate its headquarters from Dayton, OH, to Duluth, bringing  approximately 1,250 new jobs to Gwinnett County.
• Verizon Wireless plans to open a customer service center in Alpharetta that will create an additional 600 jobs for the area.
•  First Data, which is relocating its headquarters to Atlanta from Denver, plans to create up to 1,000 new jobs over the  next three years.

Atlanta's several universities and hospitals should also help sustain job growth in the near term. Emory University, WellStar Health System, and Northside Hospital are some of the metro's major employers.

Bad News:

Unemployment in Georgia has been higher than the national average for 23 consecutive months.

According to the Labor Department, Metro Atlanta has lost 142,800 payroll jobs in the past 12 months — a reduction of 5.8%, or one in every 17 positions. An estimated 277,782 workers in metro Atlanta do not have work and are seeking a job.

Metro Atlanta's jobless rate is third-highest in the state, behind Dalton at 12.4% and Rome at 11.1%. Although many of the major employers do not expect to implement major layoffs, most have hiring and salary freezes, including SunTrust, Turner Broadcasting, UPS, and Coca–Cola. Given the severity of the recession and expectations for continued deterioration, layoffs are not off the table. Some have already taken this step:

• Delta Airlines announced it will cut at least 2,100 jobs this year on top of the 4,000 employees that took buyouts  last year.
• Home Depot announced that 462 jobs would be cut at its headquarters in Cumberland and that it would be closing  all of its Expo business. 
• Rite Aid has closed its distribution center in Newnan (eliminating 297 jobs).
• The Atlanta Journal-Constitution is looking to cut another 245 jobs.

 Housing Market Conditions

Atlanta home prices rose 1% from July to August. That follows a 2.3% rise from June to July in Atlanta. However, home prices in Atlanta dropped 10.6% year-over-year from August 2007 to August 2008. August marked the 28th consecutive month that the number of inventory homes has declined.

The $8,000 first-time homebuyer tax credit has had a positive impact on the housing market’s upward trend in activity and reduction in inventory nationally and ostensibly in the Atlanta market as well. Thus far, between 350,000 and 400,000 homebuyers have been added to the market because of the credit, according to the National Association of Realtors. Congress recently approved The Worker, Homeownership, and Business Assistance Act of 2009, extending the first-time home buyer tax credit deadline to June of 2010 and opening it to a wider group of home buyers by increasing income qualification limits. It also authorized a tax credit of up to $6,500 for qualified repeat home buyers.

The table below shows the latest existing-home sales information for the month of September compared to a year ago. The price drop in the Atlanta market has been among the more precipitous in the past year, and sales activity continues to slow. 

Source: NATIONAL ASSOCIATION OF REALTORS® 
*All data reported herein is unadjusted for seasonality.
**NOTE: There often are differences between this data and locally reported data because of differences in methodology, which many include the geographic coverage area, housing types, and Census benchmarking used in NAR's model.  More importantly, there is a parallel between the percentage chagnes over time that is typically seen even when using different methodologies.

Building permits represent the number of new housing units authorized in a selected geographical area. The building permits data detail single family and multi-family residences and provide a general (although not necessarily complete) indication of the amount of new housing stock added to the housing inventory. According to the U.S. Department of Commerce, in January of this year there were only 359 total new construction permits issued in the Atlanta MSA. There were 614 total building permits issued during the month of August in the Atlanta MSA, the most authorized in any month this year. 

Foreclosures and the Shadow Market

The impact of foreclosures has been significant: After years of leading the nation in new homebuilding and seeing healthy price increases year after year, Atlanta’s market fell proportionally more than most other metro areas when the boom went bust. Foreclosures remain a drag on the market, pouring lower-priced homes into the for-sale category and lowering the values of other homes in the area.

Georgia accounted for 4% of the 937,840 properties with foreclosure filings reported nationwide for the third quarter of 2009 and 4% of the 343,638 properties with foreclosure filings reported in September. The table below shows that Georgia reported 33,385 properties with foreclosure filings in the third quarter of 2009, an increase of nearly 7% from the previous quarter and 25% above the level reported in the third quarter of 2008, according to the latest RealtyTrac® U.S. Foreclosure Market Report.

Five counties account for the bulk of state foreclosure activity for third quarter: Foreclosure activity in five counties accounted for 46%of all activity in the state during the third quarter. Fulton County led all counties, tallying 4,534 properties with foreclosure filings for the quarter. Gwinnett County came in second-highest, reporting 3,722 properties with foreclosure filings; DeKalb County reported 3,195 properties; Cobb County reported 2,459 properties; and Clayton County documented 1,493 foreclosure filings.

ATLANTA FOUR-COUNTY SUB-MARKET OVERVIEW

To provide a more focused understanding of the current market conditions in Atlanta, we have distinctly examined conditions in the four counties that we believe form the core economic driver of the Atlanta MSA: Cobb, DeKalb, Fulton, and Gwinnett.  

Demographics

• The current demographics of the four-county region is 3,304,949 persons and 1,205,876 households.
•  In 2014 area will grow to 3,667,397 persons and 1,327,367 households.  This equates to a projected annual population increase of 2.1% (or 72,490 persons per year) and household growth rate of 1.9% over the five-year period. (See Chart)
• The median age in the core market is 35 years (Age Distribution Table). Only 8.2% of the population is age 65 or older. This concentration is well below the national average of 12.5% (per the 2007 American Community Survey data released in August 2008). 

• Approximately 63%f households are owner-occupied (Tenure Chart); homeownership is increasing (though this may not be accurate given foreclosures).

• The estimated median household income is slightly above $60,300 (Household Income Table and Chart).

The estimated median home value is just under $189,000 (Home Value Table).

        ATLANTA OLDER ADULT HOUSING OVERVIEW AND OUTLOOK

Trends and Overview

According to the U.S. Census Bureau, the United States’ 65-and-older population is projected to more than double by mid-century, from 39 million in 2009 to 89 million in 2050. Given the increase in American life expectancy, places like Atlanta should appeal to retirees who may have to rejoin the workforce or take out a home equity loan in order to finance unforeseen health care costs. Moody's says the Atlanta job market is expected to grow by 13.5% over the next five years, which would make it easier for retirees to go back to work if they had to.

A recent Forbes magazine list, published in October of 2009, ranks metro Atlanta the #1 “recession-proof” places to retire in America. According to Forbes, the city is an attractive retirement destination for those who fall into the "golden years" demographic (Table A).

In compiling the list, Forbes looked at 40 metro areas to see how they stacked up in seven areas:

• Current median home price from Moody's Economy.com;
• Five-year projected home price from Moody's Economy.com;
• Median monthly housing expense from the Census Bureau;
• Cost of living index from the Council for Community and Economic Research;
• Median income for householders over age 65 from the Census Bureau;
• Five-year job growth outlook from Moody's Economy.com; and
• Sunny day statistics from the National Oceanic and Atmospheric Administration (NOAA).

The city ranks 17th in the number of sunny days, 11th in cost of living and 7th in median home price, which Forbes lists as $118,000 (the seventh lowest among the 40 cities considered.

Demographics

According to The Brookings Institution report, "Recent Demographic Trends in Metropolitan America," the Atlanta metro saw its pre-senior population increase by more than one-quarter in the first seven years of this decade (Table B). The report states that areas generally thought of as “younger” metro areas will experience significant senior growth due to the aging of baby boomers.

The report also indicates that similar growth pattern in the pre-senior population at a state level will fuel growth in the 65-and-over population between 2010 and 2020, the decade when boomers fully transition into the senior population. States with strong growth in the pre-senior age cohort in the current decade will have attracted most of their aging boomers well before they reach their senior years, rather than as migrants during the next decade. For example, according to a Brookings Analysis of Census Bureau Population Projections, Georgia’s senior population will increase by 40% between 2010 and 2020 due to the “aging in place” of boomers alone, and only an additional 4% due to the in-migration of people age 65 and older (Map 2).

The Trends in Senior Households Table shows the trends in older adult households in the 4-county region from 1990 to 2014 with estimates and projections developed by Nielsen-Claritas and RPRG:

• In the 4-county Region, there are currently an estimated 363,380 householders 55 and older in 2009. 
• That number is projected to increase to 469,799 householders in 2014. 
• Growth in the 55 and older age cohort is projected to average a very strong compounded 5.0% per annum over the next five year. 
• Growth will be strongest in the “younger old” age cohorts, led by a 8.3% annual increase in the 65 to 74 age cohort and 5.4% increase per annum in the 62 to 64 age cohort.  This is the core of the active adult target market.

 

Supply

Sunbelt and retirement destination markets such as Ft. Lauderdale, Florida, Phoenix, Arizona, and the New Jersey Shore represented the first wave of development of age qualified or active adult housing. In the 2000s, however, non-destination metro markets with aging populations are increasingly supporting age-restricted housing, and industry leaders such as Del Webb and others are targeting Chicago, Washington, D.C., and other cities. The Atlanta market lagged with regard to the development of age-qualified housing through the 1990s and into the 2000s in comparison to other non-retirement destinations such as Washington. This has begun to change, however, as in recent years there has been a proliferation of active adult product and a glut of development in metro Atlanta. 

The Atlanta New Homes Directory notes more than 100 older adult and age-qualified housing communities (this includes continuing care and entrance fee communities in addition to traditional fee-simple active adult communities) actively selling in the Atlanta MSA. These properties — which include individual listings for distinct product lines within one community — are displayed in Map 3 and summarized in Table C (below) along with location, price range, and developer/builder. The inventory displays that the vast majority of this supply is concentrated in the northern suburbs of Atlanta, including the core Cobb and Gwinnett counties, and more outlying Cherokee, Forsyth, and Paulding counties. 

An age-qualified niche product that has emerged and become an attractive development opportunity in other markets across the country is the senior market rate rental community (SMRRC) — essentially an active adult rental model without supportive services. At this time, one such true SMRRC is active in greater Atlanta. Parc Alpharetta was developed by Parc Communities, whose three other communities — Parc at Buckhead, Parc at Duluth, and Parc at Piedmont — are upscale, independent living rental communities featuring a full array of supportive services such as meals and housekeeping. In comparison, Parc Alpharetta features no services and is based on lifestyle similar to for-sale active adult communities.  As of late 2008, Parc Alpharetta rents ranged from approximately $1,000 to $2,100 per month for one and two bedroom floor plans, and averaged in the $1.20s per square foot.  . 

The Atlanta market appears poised to experience a wave of development of this niche product, several developer’s are exploring sites for this product. Additionally, hybrid communities such as The Lodge at Bridge Mill, are beginning to emerge. These communities resemble the SMRRC product but overlay optional or partial supportive service packages. Retirement communities featuring service enriched independent living are more established across Atlanta and well-developed in some sub-markets.   

 Demand and Outlook

Focusing on the active adult rather than service enriched market, overall, the outlook for 55-plus housing in Atlanta is relatively strong and positive, once the economy rebounds and the housing market recovers and stabilizes. At present — and for the immediate future — depressed home values and the inability to sell homes will continue to adversely impact the active adult housing market segment. This is poised to change, however. 

The strong growth projected in the 55 and older cohorts — and in particular in the 62 to 75 year old cohorts — will create strong demand for older adult and age-qualified housing across Atlanta. Taken in conjunction with lifestyle factors and other dynamics that lend themselves to attracting older adults (such as those noted by Forbes), there are strong underlying fundamentals to support age qualified housing in the Atlanta market moving forward. The guess here is that the strong dynamics of the Atlanta market will create development opportunities and will fuel a surge of development activity in the 2010s. Thus opportunities — as well as a plethora of new product (both for-sale and rental) that renders the environment more competitive — will emerge in the Atlanta market in the next decade.  

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Michael Kivov is a Director with Real Property Research Group, Inc. (RPRG), a national real estate market research firm with offices in Columbia, Maryland, and Atlanta, Georgia.  Over the last six years, the firm has completed over 1,000 assignments across various housing products including rental, tax credit and low-income, for-sale, and seniors housing.  Michael directs the firm’s retirement housing practice, and has served as a consultant in the retirement housing industry since 1996, providing clients across the country with market feasibility, financial analysis, product and strategic positioning, development advisory, strategic planning, and acquisition and asset analysis. 

Thomas Mills is an Associate with RPRG.  Thomas performs market research for the firm and specializes in the gathering of demographic, economic, and competitive data in a market. [Return to top]