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.