CommonFuture

CommonFuture

More call ATL home as homebuilding slumps

By David Pendered

July 14 – There’s no end in sight to spiraling housing costs in the City of Atlanta, judging from new estimates in population growth and Atlanta’s own prediction of a double-digit slump in residential construction.

The city added 5,070 new residents in calendar year 2021, according to a population growth estimate released July 13 by the Atlanta Regional Commission. This means that in just the past two calendar years, the city’s population has grown by a total of 8,300 persons as the city’s population trend line continues to rise.

Two-bedroom apartments are priced in the range of $2,500 a month near this project, a reported 210-unit structure at the intersection of Howell Mill Road and I-75. (Credit: David Pendered)

Each of these individuals is vying for one of the limited number of bedrooms in one of the city’s limited number of dwellings. Some folks may reside together, and some may be infants or adolescents who will live under the roof of a parent or other caregiver. ARC’s estimate doesn’t provide information on age and household composition.

Meantime, Atlanta has predicted a slowdown in residential construction over the next 12 months.

Atlanta predicts a decline of 13.6 percent in the amount of fees collected from permits issued for residences and the installation of plumbing, electrical, and heating/ventilation/air conditioning units. This is the drop in fees to be collected in the next 12 months compared to the past 12 months, according to a comparison of budgets for the two years.

This forecast doesn’t seem to have garnered much attention. It’s cited on page 120 of the budget the Atlanta City Council adopted for the fiscal year that began July 1, Fiscal Year 2023:

  • “The FY2023 Building Permits anticipation reflects a decrease in the
    next fiscal year.”

The 13.6 percent dip that’s forecast is the relation between the fees forecast to be collected in the fiscal year that ended June 30, the sum of $37,995,979, according to page 120 in the FY22 budget book. The projection for the coming year is $32,824,193.  The actual collections for FY22 are still being calculated.

Atlanta’s FY23 budget does not indicate any foundational reasons for the expected decline in revenue collections. Instead, the paragraph cites a fairly optimistic futures report on residential construction in the section titled Building Permits: FY23 Budget Anticipation – $32,824,193:

  • “The FY2023 Building Permits anticipation reflects a decrease in the next fiscal year. The Selig report indicates that, ‘Atlanta’s single-family homebuilding outlook is very good. Job growth, population growth, increasing rents, very low mortgage rates, and a scarcity of listings of existing homes will be the primary drivers of the Atlanta MSA’s [metropolitan statistical area – the 10-county urban core] homebuilding industry. Decreased affordability, shortages of workers, and shortages of some building materials will be headwinds.’” (Emphasis provided.)
Residential building permits in the past two years remain 25 percent below 41-year averages, according to the ARC. (Credit: ARC)

The futures report was provided, as it has been for many years, by Jeffrey Humphreys, director of the Selig Center for Economic Growth in the Terry College of Business at the University of Georgia. The section is located on page 110.

At the time the forecast was written, mortgage were low by historic standards. They since have been rising in response to the Federal Reserve raising a key benchmark rate in an effort to curb inflation.

Atlanta’s anticipated drop in permit fees comes as the region remains in a slump for residential construction. The top line of ARC’s report for the region states that:

  • “Current building permit activity for the 11-county region as such remains lower than pre-Great Recession (and even pre-pandemic) permit levels, and still trails the 1980-2021 average annual level of 33,480.” The ARC reported 27,164 new residential building permits issued in the 11-county region in 2021.
Rental rates start at $2,256 a month for a two-bedroom unit in some new complexes along Howell Mill Road, east of I-75 in Northwest Atlanta. (Credit: David Pendered)