Atlanta Rental Prices: A Tale of Two Cities

Neighborhoods in Old Fourth Ward have gone from abandoned to beautiful in a few short years. A beautiful park, apartments, and Ponce City Market exist in a space formerly occupied by warehouses, parking lots, and abandoned buildings. As this space and others have improved, the rents have rose, and several recent articles voice this concern.

My neighborhood in Kirkwood is great and far cheaper than where my sisters live in New York and DC, so I wanted to better understand calls for city hall to take action on affordable rents. I downloaded data on average apartment prices by neighborhood from Zillow to make this visual:

Mouse over the map to get price per square foot for each neighborhood, and the five year price change, adjusted for inflation (CPI). Blank neighborhoods are missing in the Zillow data.

Its true that there are a couple neighborhoods in Buckhead with median rent over $2 per square foot, and Midtown is up to $1.85 per square foot. But half the city can still be rented for less than $1 per square foot. My own neighborhood has a median rental price of $1.19 per square foot.

To better show change over time, the visual below shows current price graphed against the five year percentage change in prices.

The visual is striking. Although a price divide existed between the Southwest and Northeast halves of the city five years ago, almost every neighborhood in the Southwest half of the city has gotten less expensive, and every neighborhood in the Northeast half has gotten more expensive.

I have several take-aways from these graphs.

1. When people complain that the city is getting too expensive, they only mean the most desirable neighborhoods where they want to live. Half the city is very cheap.

2. Price is a good measure of desirable neighborhoods. The divide between nice neighborhoods and bad neighborhoods in Atlanta is growing.

3. Plans for affordable housing should be very careful. Most affordable housing plans actually make housing more expensive. Consider a policy that requires XX% of affordable housing per new development. Less total developments will be built because developments are now less profitable. Then, in the developments that are built, less units will be on the open market. Prices are then higher due to the policy because the housing supply is smaller. Good for the lucky few who win the affordable housing lottery, but bad for everyone else.

4. Atlanta should instead be very generous in encouraging and approving development. Increased housing supply will help keep down prices and allow more people to live where they desire.

5. Increased property tax from development can then help our poor neighborhoods improve. Luxury buildings, scary to some, generate property taxes that can be spent on improving schools, safety, and transit, or on more targeted development plans. Atlanta needs to increase investment in poor neighborhoods as property taxes rise. Luxury buildings also have residents who contribute to the economy and benefit local low-wage earners.

I'll publish another post on home price data from Zillow later this week. There are some differences from the apartment data, and more years. For a notification, use the google plus or e-mail widgets on the right, or follow me on twitter.