Author Topic: Bubble reforming in Atlanta?  (Read 6534 times)

freeat57

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Bubble reforming in Atlanta?
« on: March 04, 2016, 03:01:39 PM »
Is there a new real estate bubble forming in the Atlanta housing market?  I started planning my relocation to Atlanta a little over two years ago.  I'm ready to pull the trigger now.  (It took a while to disentangle from my old job.)  In the time that I have been watching prices on houses and condos in urban Atlanta, they have risen rapidly.  It is now not unusual to see listings where people are trying to sell properties for 20 to 40% more that they paid for them a year ago. 
I absolutely do NOT look at a primary residence as an investment.  I want to buy a place to live long term and have low monthly expenses.  That being said, I also do not want to pay way more than a property is really worth.  Better to have that money invested!!

VAR

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Re: Bubble reforming in Atlanta?
« Reply #1 on: March 06, 2016, 05:13:41 AM »
Something's going on - I've experience the exact same thing. I was intending to buy when I got here but after a year the prices have gone up and any decent house has gone up far more than the sketchy ones.
I guess with financing getting easier all the borderline people for the past few years are going for it? apartment rent is pretty high here for what you get so buying can make sense for more people  ---for now.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #2 on: March 06, 2016, 04:04:46 PM »
Thanks for the comments.  The market in Atlanta seems a little out of line with some other southern cities.  Prices in popular areas are almost back to early 2007 levels, from which they fell dramatically.  What area of town do you recommend?  I will not be working full time and want to live a nearly car-less existence.  I love to walk/bike to everything.  Being near MARTA rail would be nice.  My attention has been focused on the Midtown to Decatur corridor along MARTA.  Do you have any other suggestions?
 Unfortunately, the only advice I have is from wealthy relatives up in Johns Creek and from the hipster son of a friend of mine.  Neither source is quite right for a 57 year old former professor.

VAR

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Re: Bubble reforming in Atlanta?
« Reply #3 on: March 07, 2016, 05:14:48 AM »
Decatur is wonderful (and you pay for that). Look up the beltline-Some areas are sketchy but the beltline is bringing some revitalization.
Atlanta is really a terrible city for walkable/bikable. People do it for sure but ATL is so sprawled there's no good solution.

I actually like Avondale. It's past decatur and some parts are EXTREMELY sketchy. But I have lifelong love of the Dekalb farmer's market and daydream about be able to go there daily.

Another thought is that there's a paved bike path that runs from Stone mountain into decatur and beyond?? (not sure where it stops). So in theory you could look around main street stone mountain. BUUUTTT - crime. and you'd be isolated in a little island of stone mt.

oh - and chamble. Chamblee has a lot of little shops and things for basic necessities and there's a marta station.

I don't know if you realize but Marta is also not great. The trains are ok-sih, if all you want to go is go downtown and back. but the bus system is stretched, very long travel times, long waits between buses.
You can take the train to the airport but it takes a good long while.

if your budget can hack it decatur is pretty cool. do some research into teh taxes and utilities etc. the taxes in city of decatur are notorious for being $$

SMCx3

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Re: Bubble reforming in Atlanta?
« Reply #4 on: March 07, 2016, 05:42:44 AM »
Location, location, location.

You want to bike and have public transportation which can be accomplished in Atlanta.  Just note this means you are going to be in closer proximity to downtown Atlanta.  The closer to downtown the higher the prices and demand.  Many locals are moving back to the city to avoid traffic. 

If you do not need to be located directly in the city, many of the suburbs are still a great bang for the buck.  Check out Peachtree City.

El_Viajero

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Re: Bubble reforming in Atlanta?
« Reply #5 on: March 07, 2016, 03:46:20 PM »
Peachtree City has something like 70+ miles of bike/walking/golf cart paths that will take you literally everywhere around town. That said, it's not very diverse. It's very white and there are lots of McMansions. There's no public transport into Atlanta, and the commute is about 30-40 minutes, depending on traffic. People there are generally (yeah, I'm generalizing) very anti-public transport. I grew up there, albeit before the McMansions and hoity toitiness got out of control.

I've also lived in Atlanta proper, and I rode my bike around the VA Highland, Midtown, and Old 4th Ward areas regularly. I didn't think of cycling there as very scary at the time, but I'm honestly glad I don't have to do it anymore. I now live in a much more bike-friendly place.

And yeah, everyone is telling me that real estate has gotten crazy there again. I liked living in ATL in my 20s, but I don't know if I'd move back there now. MARTA is an unfairly maligned system, by the way. If you live near a train station, it's fantastic. It's just the buses that are slow.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #6 on: March 09, 2016, 10:01:49 AM »
Decatur is wonderful (and you pay for that). Look up the beltline-Some areas are sketchy but the beltline is bringing some revitalization.
Atlanta is really a terrible city for walkable/bikable. People do it for sure but ATL is so sprawled there's no good solution.

I actually like Avondale. It's past decatur and some parts are EXTREMELY sketchy. But I have lifelong love of the Dekalb farmer's market and daydream about be able to go there daily.

Another thought is that there's a paved bike path that runs from Stone mountain into decatur and beyond?? (not sure where it stops). So in theory you could look around main street stone mountain. BUUUTTT - crime. and you'd be isolated in a little island of stone mt.

oh - and chamble. Chamblee has a lot of little shops and things for basic necessities and there's a marta station.

I don't know if you realize but Marta is also not great. The trains are ok-sih, if all you want to go is go downtown and back. but the bus system is stretched, very long travel times, long waits between buses.
You can take the train to the airport but it takes a good long while.

if your budget can hack it decatur is pretty cool. do some research into teh taxes and utilities etc. the taxes in city of decatur are notorious for being $$

Hey, thanks for the informative answer and for directing my attention to DeKalb Farmer's Market.  I looked it up and it looks like the kind of place I could call home!  I'll definitely have to check the North Decatur area.  It looks like there are some affordable places there.  My biggest concern with ATL right now (and the reason for my post) Is whether the prices are unreasonably inflated right now.  While I plan to stay for a long time, I do not want to be in the situation of losing 50% of my money if I have to sell in a couple of years due to unforeseen circumstances. 

chubbybunny

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Re: Bubble reforming in Atlanta?
« Reply #7 on: March 09, 2016, 10:12:41 AM »
The midtown condo market is not the same as the suburb housing market.  I would look at them separately.  Condos are much more popular for speculation, so you will see more fluctuation there.  I live in a small town about 45 minutes from Atlanta, and our housing prices are very stable.  If I were looking to relocate to an urban area and wished to rely on public transportation, Atlanta would not be on my list!  I might be biased, though, since I avoid traveling there as much as possible.  HOWEVER, I will make an exception for Dekalb market!  The price for spices is worth the drive for me (a few times a year).   

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #8 on: March 09, 2016, 10:23:19 AM »
Peachtree City has something like 70+ miles of bike/walking/golf cart paths that will take you literally everywhere around town. That said, it's not very diverse. It's very white and there are lots of McMansions. There's no public transport into Atlanta, and the commute is about 30-40 minutes, depending on traffic. People there are generally (yeah, I'm generalizing) very anti-public transport. I grew up there, albeit before the McMansions and hoity toitiness got out of control.

I've also lived in Atlanta proper, and I rode my bike around the VA Highland, Midtown, and Old 4th Ward areas regularly. I didn't think of cycling there as very scary at the time, but I'm honestly glad I don't have to do it anymore. I now live in a much more bike-friendly place.

And yeah, everyone is telling me that real estate has gotten crazy there again. I liked living in ATL in my 20s, but I don't know if I'd move back there now. MARTA is an unfairly maligned system, by the way. If you live near a train station, it's fantastic. It's just the buses that are slow.

 
Thanks El Viajero!  I do need to research the beltline more.  It appears to be a work in progress with plans to link many neighborhoods.  I do want to be fairly close to downtown (3-5 miles).  I bike for transportation and do not do long distance road trips.  But, I would be very happy to worry about my car petrifying from disuse!  I would love to regain the lifestyle I had when I lived in Sweden, minus the near arctic winters! 
Peachtree city would not be my style.  I just can't live in a white privileged enclave.  I love ethnic and cultural diversity.  ATL looks good to me because I want to be in a larger urban area that has a lot of cultural options, live without using my car much, and have access to a great airport for easy getaways.

VAR

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Re: Bubble reforming in Atlanta?
« Reply #9 on: March 09, 2016, 06:12:53 PM »
I guess my semi-rhetorical question is why you want to 3-5 miles from "downtown"
and then which downtown are you talking about anyway??
Atlanta is....splotchy....there are actually several separate "downtown" areas that aren't really connected by anything but traffic/highways.
There's almost nothing I want to do in Atlanta downtown.  I'm guessing you're thinking about midtown. ....actual downtown is mostly a bunch of corporate businesses in their high rises. There are a lot of different cultural things but  they are spread all over everywhere in "town" (the metro atl area, which stretches probably 2 hours of driving east to west and at least an hour on the north south axis.

if you developed friendships with people outside of your "splotch" on the map it can be very frustrating. It's pretty common here to drive an hour to go do a quick visit with a friend. I went to the symphony with friends in Marietta ...which was over an hour drive away from where I am but nobody but me thought it was less desirable due to the drive. I doubt ATL is even vaguely reminiscent of Sweden's lifestyle.

I've lived in a number of states/towns/cities... Atlanta's overall "culture" is very business/money oriented.  I've had for real/not a joke conversations with coworkers about "what kind of car do you drive??" and "what neighborhood do you live in?" and people will totally write you off based on that answer. I've never lived anywhere else where this is openly done/accepted.

All that to say - some people love living here and everything about the "fast paced business lifestyle" and I've known a lot of people who think all the "wonderful shopping" in Atlanta is what makes it really special.  (personally I hear "keeping up with the jones's lifestyle, it's not really my thing). Flip side - it's a large city, so if you look there's actually all types of people here somewhere.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #10 on: March 10, 2016, 12:26:57 PM »
I guess my semi-rhetorical question is why you want to 3-5 miles from "downtown"
and then which downtown are you talking about anyway??
Atlanta is....splotchy....there are actually several separate "downtown" areas that aren't really connected by anything but traffic/highways.


Thanks for the reality check.  Here's my thinking.... I lived in Indianapolis "inside the loop" for several years and it was really convenient.  I could walk/bike to groceries, bank, hardware, pharmacy, library, restaurants, and had access to a long network of bike paths and designated bike routes on city streets.  If you  do the measurement, the perimeter loop around ATL is slightly larger than the 465 loop around INDY, so that gives me some perspective.  From my convenient city neighborhood, I could get most places within Indy in a reasonable time using surface streets.  I worked downtown and had a 10-15 min commute.  Many of my coworkers, by contrast, lived in the fancy northern suburbs outside the loop (think Sandy Springs, Johns Creek  and Marietta) and wondered why I "lived in the slums".  They had a 45-60 min commute which turned into a nightmarish 1.5 to 2 hours or more in bad weather.  I loved my neighborhood and just listened to their gripes about traffic and high prices with a Mona Lisa smile on my face.....

I am hoping that being about 3 miles or so from the center of ALT would come close to what I had in Indy, without the winter weather.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #11 on: March 10, 2016, 12:31:08 PM »
Thank you everyone for the input.  I'd like to refocus the comments to my main question.  Should I view the current metro ATL residential market as "normal and healthy", or as "danger, danger!"?  I do not want to be a sucker who buys at the top of a bubble.  Thanks!

Jack

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Re: Bubble reforming in Atlanta?
« Reply #12 on: March 10, 2016, 03:43:04 PM »
It's weird that I didn't see this thread in the "Recent Unread Posts" list; thanks for asking me about it freeat57!

Anyway, regarding whether Atlanta real estate is in a bubble:

First of all, I've stopped paying attention to what's going on outside I-285. Real estate is such a local issue that talking about the "metro Atlanta" market doesn't make much sense. In fact, even just talking about the "intown Atlanta" market is hard, because even adjacent neighborhoods sometimes have very little in common.

I'd say that at least a large fraction of the price appreciation in Midtown and the surrounding neighborhoods is real. The quality of the housing stock is improving (i.e., new homes are being built, and old homes are being renovated, to become more fancy). There is a demographic shift where living in town is becoming more popular, especially among the under-35 crowd. And the advent of the Beltline and associated mixed-user/transit-oriented development is a very large factor driving up desirability (I'm still kicking myself for not buying a house closer to it six years ago).

That said, it's hard to recognize a bubble from the inside. This new-build house in Reynoldstown, which I pass on my bike on my way to work, was listed for sale for fully $200K more than I would have guessed, or what I think it's "worth." (Sure, it's nice and modern and right on the Beltline, but still -- $700k? In Reynoldstown?!) I'm also looking at listings for houses in my neighborhood, which are approaching $150K for bare land / tear-downs and $500K for new builds. That seems a bit high, too, so maybe there is a bubble starting to inflate.

I've also been reading that, because so many builders went out of business in the recession, housing inventory is unusually low right now. That might be contributing to the prices, too. But I wouldn't count that as a bubble; rather, I'd expect building to catch up and reduce appreciation rather than cause an actual drop in prices.

The bottom line is that I don't think housing in in-town neighborhoods is necessarily in a bubble yet (or at least, not a severe one) but I certainly wouldn't call it a deal either.

Now, what to do about it?

If I were moving to Atlanta now, I'd be looking at buying a house along the parts of the Beltline which haven't fully gentrified yet. In particular, I'd be strongly considering West End, Adair Park, Capital View and Capital View Manor. (Of those choices, West End is the closest to ideal because it is in close proximity not only to the Beltline, but also MARTA and a Kroger grocery store.) For the adventurous person who wants higher potential speculative return, I'd even suggest English Avenue/Vine City -- but you'd have to accept that living there will suck for (I'm guessing) another 5-10 years.

I think there are still some reasonable prices for fixer-uppers on the east side (Edgewood, Kirkwood, East Atlanta, etc.) but they're few and far in between. Maybe if you used "investor tactics" and stuck up one of those illegal "we buy houses" signs...

Also, I do not recommend buying in southern unincorporated Dekalb, unless you're pretty sure the place you're buying will get annexed by Atlanta or Decatur. I would not want to get stuck in "Greenhaven!" Stone Mountain is not a great idea either: although the Stone Mountain PATH Trail runs all the way to downtown Atlanta (except for a few small on-street gaps in Decatur and Clarkston), that's more than a 15-mile ride. Outside of the Atlanta or Decatur city limits, the only other places I'd consider living in would be Brookhaven/Chamblee/Doraville, along the MARTA line.

VAR

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Re: Bubble reforming in Atlanta?
« Reply #13 on: March 10, 2016, 04:58:31 PM »
Agreed!

I would say that rather than housing stock being low...I'd say that nicer houses are low. There's a fair number of gawd awful 70s houses (or similar). that have never been updated.

Compared to the wages you get in ATL I think the housing is relatively high. I made a lot more on the West coast and housing is similar in price here as where I lived there. So it's a bum deal to be here making less $$.
Some of that can be mitigated by bringing your $$ in the down payment.
It doesn't seem especially bubbly. Maybe just that houses aren't such a good deal in 2016 as they were in 2014. Could be a different story though in 17-18.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #14 on: March 11, 2016, 10:07:05 AM »
Now, what to do about it?

Thanks for the highly educational post Jack! My plan is to do a few AirBnB rentals in different neighborhoods over the next few months and do my boots on the ground due diligence.  It should be fun!

YBFree

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Re: Bubble reforming in Atlanta?
« Reply #15 on: March 24, 2016, 11:23:17 AM »
I agree with previous posters that the Atlanta market is too complicated for a blanket bubble label.  I think certain areas, mainly "in-town" are overpriced BUT overall Atlanta is a wonderful city full of affordable options that are walkable/bikable.  Where to focus depends on your "scene" and what sort of vibe you want.

Decatur sounds like a great fit given your response to the farmer's market and wanting to be able to bike places.  Depending on your tolerance for developing areas, there are still also some deals in downtown East Point, Chamblee, the Lindbergh area of Buckhead (right on MARTA).  You might also like Inman Park or Old 4th Ward, but those areas are generally overpriced.

Describe a bit more about the type of housing stock you prefer (condo, craftsman, traditional, townhouse?) and the type of vibe you want and we can better steer you.  Another option is to literally just get on MARTA and hop off on various stops and walk around to see which ones feel like a fit for you and are in your budget.  Good luck either way.  I've lived all over the world and ATL is tops for me - I adore living here and I'm sure you will too.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #16 on: March 24, 2016, 04:03:55 PM »
I agree with previous posters that the Atlanta market is too complicated for a blanket bubble label.  I think certain areas, mainly "in-town" are overpriced BUT overall Atlanta is a wonderful city full of affordable options that are walkable/bikable.  Where to focus depends on your "scene" and what sort of vibe you want.

Decatur sounds like a great fit given your response to the farmer's market and wanting to be able to bike places.  Depending on your tolerance for developing areas, there are still also some deals in downtown East Point, Chamblee, the Lindbergh area of Buckhead (right on MARTA).  You might also like Inman Park or Old 4th Ward, but those areas are generally overpriced.

Describe a bit more about the type of housing stock you prefer (condo, craftsman, traditional, townhouse?) and the type of vibe you want and we can better steer you.  Another option is to literally just get on MARTA and hop off on various stops and walk around to see which ones feel like a fit for you and are in your budget.  Good luck either way.  I've lived all over the world and ATL is tops for me - I adore living here and I'm sure you will too.

Hello YB!  Thanks for the reply!  The reason I used the "bubble" term is that I was concerned about prices rising so fast, especially Midtown and the places along the MARTA train line east of there.  I see from the price history that prices fell close to 50% after the last bubble popped and now, since late 2014 have pretty much gone back up to where they were.  Seems suspicious to me, but I have mainly lived in places which do not have such large swings in value.  I don't know how to gage what "normal" is for ATL.  In a couple of other cities I have watched (Florida), the prices have not rebounded so robustly.

About me: 57, single white guy, PhD in a hard science, love ethnic food (I cook mainly Indian and Thai), like to walk/bike for errands, jog for exercise, drink coffee on my deck or balcony, have access to green space. If I need a household item, I'm more likely to check a thrift store first.  I have been known to pick up broken furniture/appliances from the trash and repair them, LOL.  Would much rather go to a local coffee house or bakery than to a bar, go to bed early and sleep with the windows open.

What I want: Since I am now retired, I want a place I can leave for weeks, or months and not have to get anyone to check on anything and not have to worry about anything.  Probably a condo with restricted access, I guess. I could not care less about how prestigious my neighborhood is.  I want to pay cash for my residence and have the lowest possible monthly costs (HOA, tax, utilities).  It would be great to be within a mile or less of a MARTA train station, but that seems to make to prices higher.

iknowiyam

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Re: Bubble reforming in Atlanta?
« Reply #17 on: March 28, 2016, 04:26:45 PM »
Thank you everyone for the input.  I'd like to refocus the comments to my main question.  Should I view the current metro ATL residential market as "normal and healthy", or as "danger, danger!"?  I do not want to be a sucker who buys at the top of a bubble.  Thanks!
The bubble is not as bad as it was then. There is a little one, but not a super-danger-zone IMO. If you have some specific neighborhoods in mind, post theme here; Atlanta is big and comparing neighborhoods is easier than making generalizations. Here are some neighborhoods/towns you may want to consider ITP (especially if you don't care about school districts:

East Atlanta Village
Ormewood
Kirkwood

Also, I don't know why people are criticizing the train. It is awesome if you live near it, although there aren't many lines. Awesome airport access, goes to several desirable areas. I have used it up to 2x/wk, and it was way better than any driving option. The buses do leave a lot of room for improvement.

Crime will vary by neighborhood and is not really as bad most places as some worry/say. Everyone I personally know who has been attacked or mugged was in Buckhead at the time, which is a very expensive area. $$$ does not mean safety.

chubbybunny

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Re: Bubble reforming in Atlanta?
« Reply #18 on: March 29, 2016, 09:15:43 AM »
If you really aren't worried about the schools or crime, then why would you want to buy anywhere there might be a bubble?  I like to go to a goodwill in Atlanta (Westend), and there are some really cute condos that were built near it.  It's not the best neighborhood, but I'm still surprised how cheap they are.  The marta station is right down the street too. 

http://www.realtor.com/realestateandhomes-detail/898-Oak-St-SW-Unit-1123_Atlanta_GA_30310_M65764-13662?ex=GA609807134

Jack

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Re: Bubble reforming in Atlanta?
« Reply #19 on: March 29, 2016, 12:19:11 PM »
Here are some neighborhoods/towns you may want to consider ITP (especially if you don't care about school districts:

East Atlanta Village
Ormewood
Kirkwood

They're not bad even if you do care about schools, since they're all within at least the second-tier attendance zones for Drew Charter and Atlanta Neighborhood Charter School. (Although, if schools are a top concern, pick East Lake to be in the priority attendance zone for Drew.)

If you really aren't worried about the schools or crime, then why would you want to buy anywhere there might be a bubble?  I like to go to a goodwill in Atlanta (Westend), and there are some really cute condos that were built near it.  It's not the best neighborhood, but I'm still surprised how cheap they are.  The marta station is right down the street too. 

http://www.realtor.com/realestateandhomes-detail/898-Oak-St-SW-Unit-1123_Atlanta_GA_30310_M65764-13662?ex=GA609807134

In terms of ROI/speculative investment, West End is a good choice (along with Adair Park, Capital View Manor and other southwest Atlanta Beltline neighborhoods). However, since prices there are so low -- and because I'm HOA-averse -- I'd recommend going for a single-family house rather than a condo in those neighborhoods.

freeat57

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Re: Bubble reforming in Atlanta?
« Reply #20 on: March 30, 2016, 08:41:57 AM »

In terms of ROI/speculative investment, West End is a good choice (along with Adair Park, Capital View Manor and other southwest Atlanta Beltline neighborhoods). However, since prices there are so low -- and because I'm HOA-averse -- I'd recommend going for a single-family house rather than a condo in those neighborhoods.

Thanks again for the great info.  However, since one of the highest items on my wish list is "no worries, lock and leave it security", I think that rules a single family house out.  I don't really view my primary residence as an investment, I just don't want to lose a huge chunk of my equity if I need to sell in a few years.  It looks like people in Atlanta who had to sell in 2008-1012 lost 40% or more if they purchased in 2005 or '06.  That's pretty sobering.

Jack

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Re: Bubble reforming in Atlanta?
« Reply #21 on: March 30, 2016, 11:52:29 AM »
In terms of ROI/speculative investment, West End is a good choice (along with Adair Park, Capital View Manor and other southwest Atlanta Beltline neighborhoods). However, since prices there are so low -- and because I'm HOA-averse -- I'd recommend going for a single-family house rather than a condo in those neighborhoods.

Thanks again for the great info.  However, since one of the highest items on my wish list is "no worries, lock and leave it security", I think that rules a single family house out.  I don't really view my primary residence as an investment, I just don't want to lose a huge chunk of my equity if I need to sell in a few years.  It looks like people in Atlanta who had to sell in 2008-1012 lost 40% or more if they purchased in 2005 or '06.  That's pretty sobering.

I can agree that a condo makes sense in your situation, but I'd be even more worried about an HOA in a low-value area than I would be in a high-value one. Remember, the HOA's solvency depends on your neighbors' finances, and I'd expect that people who can afford a more expensive condo are less likely to default on their dues (or special assessments).

Moreover, the point you bring up about price drops in 2008 is a good one. One pattern you should be aware of is that although 40% is an average, it wasn't a constant everywhere in the city. More expensive neighborhoods dropped less; lower-end neighborhoods dropped more. Homes in parts of southwest Atlanta lost closer to 90% of their value, while homes in places like Morningside only dropped a little.

For both of those reasons, if you want a condo specifically, I'd suggest Midtown, Downtown (north of Five Points), or Decatur.