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When we're talking about the ITP boom, it's worth bearing in mind that the city of Atlanta covers only about half the area inside the perimeter. Brookhaven, Chamblee, East Point, Sandy Springs, Oak Grove, College Park, Decatur and other nearby areas seem to be bubbling right along.
A while back I responded to a millennial who complained that boomers had ruined everything and had it easy and houses were so much cheaper back then, the 90s. I looked up a house I had bought back then and the mortgage payments. I took the value of the house today and the payments at the low mortgage rates of 5%.
Despite the higher house price, the monthly payments were less today then what they were back then. Now add that rates are in the twos and the payments are even cheaper than what I figured. So maybe they are more affordable since median family income is higher than it was back then.
And that goes even further when Boomers started really buying houses enmasse in the mid 70s-early 80s, when there were at times double-digit interest rates.
I would argue absolutely yes. People I know in RE tell me professional people (that is, people that can afford to choose where they live) are flooding back OTP and the further out the better. I have a feeling both major downtown projects (Gulch & South Downtown) are dead in the water (though their developers wouldn’t be caught dead admitting it) and between covid and ‘unrest’ the city feels like an entirely different city. The bustling vibrancy and the great positive energy just feel GONE. There is a menace and hostility in the air that is just so unlike anything I’ve ever felt here. People don’t feel safe, and for good reason. Look at crime stats. I’m not commenting on the case whatsoever personally, but many, many APD officers feel both thrown under the bus by the city and not appreciated by residents. Again I’m not saying they should or shouldn’t, just the reality of the situation. So calls will be slower to respond to or be ignored altogether etc. People with bad intentions realize this and they don’t waste time exploiting it. That leads to capital investment. Capital does not invest in a city where people and property feel under threat and unprotected. This is not unique to Atlanta obviously. I think we will have a 70’s style situation, massive flight of professionals (of all ages) from core cities in US metros, totally reversing the trend of the last two decades or so. Core cities will depopulate and decay. Another reason for this here is that the usual unspeakable traffic pre covid is gone and may be so for some time with much remote working schooling even Dr appointments etc remaining. So that commute that was unbearable six months ago isn’t so much anymore and may be this way for the foreseeable future.
This is all really sad to me. I think this is a very special city that felt right on the edge of becoming one of, if not THE best of the ‘tier 2’ US cities (after NY LA Chi). The plans on the board if completed would have totally revitalized downtown and so many others planned as well. Commercial RE people tell me you can almost hear the ‘whoosh’ of capital fleeing the city. They have no faith in the mayor who seems more intent on having her PR person make her a celebrity than effectively managing the city (hey I don’t blame her one bit, celebrity pays better and is a lot more fun than being a mayor) or the council planning department public works etc. The infrastructure and streets are a running joke that’s not funny anymore, and there never seems to be any improvement. Then there’s the economy. It’s been papered over with massive money printing stimulus $4 trillion and counting but we are stuck in a national economy at -5% growth, far worse than 08 recession and worst since Great Depression. I just don’t think people understand what a catastrophic number that is. Unemployment is 15+%. Things are BAD. The stimulus is wearing off and and any ‘recovery’ thus far will quickly be erased.
All that leads me to my depressing conclusion. I absolutely hope I’m wrong. I have money invested I will lose if I am. But with a zombie economy and the social fabric of the city unraveling, it feels inevitable.
I think the short answer to your question is "no". The City of Atlanta has a certain lore that is difficult to replicate. And the people who disparage it often are new, don't live ITP, haven't lived ITP in a long time, or are only familiar with certain key areas. For example, most of the ITP examples in this thread have revolved around Downtown, Midtown, Buckhead, "West Midtown", Candler Park, Inman Park, PCM, etc.
The massive flight of people in the 1970's was primarily due to federally mandated racial integration. This is the primary cause of White Flight in the 60s/70s. Before that, people suffered the actual Great Depression, many mayors both better and worse than KLB, and a long list of social and economic unrest locally, nationally, and globally -- yet most people stayed put.
Even in the 1980s, when Atlanta was disparaged by many as being a bastion of crime and blight, communities like Collier Heights, Beecher Hills, Cascade, Sandtown, etc. thrived. But this was not broadcasted publicly. If you didn't live there or were familiar with these areas, you just didn't know. The bottom really didn't fall out until the black economic base fled to follow whites into the suburbs. Many stayed away because they drank the same "doom and gloom" kool-aid. Meanwhile, into the late 80s and early 90s, there was a resurgence in areas like Inman Park, Candler Park, and even Grant Park. And in the subsequent 30 years, these areas only improved to this very day.
In the early 2000s, when people "rediscovered" O4W, Kirkwood, East Lake, Edgewood, Reynoldstown, etc., there were still many who were told that living ITP, especially near or below I-20 was an extremely dangerous proposition and should be avoided at all cost. Even I was told to avoid Kirkwood until I went myself and saw all the white, middle-class professionals living there and renovating their homes. People were saying the schools were horrible. But then I noticed the children of the aforementioned families attending them.
Even in this thread, many people commented about missing the nightlife, but that is often because that is what they associate with the areas in which they lived (which again, is a certain specific portion of the city).
I would hope that the overt and ardent desire to be away from people of color has subsided in recent generations, so I do not foresee a mass-exodus like Atlanta and many other cities have experienced in the past. I think it just took a while for people to realize that the city is not as bad as many made it out to be... and stayed. Ironically, to this very day, people perceive large portions of the city as "undesirable" now without much real knowledge or experience with those areas. People are talking about paying $500k for a 1200 SFH. But they are only focusing on one of several exclusive areas in the city. Keep in mind, most areas that people covet today were quite undesirable 30, 20, and even 10 years ago.
I believe as newer residents discover that many residential areas of the city are quite nice, comfortable, quaint, quiet, and affordable (even compared to the northern suburbs), they will continue to move in. With all that said, I'm not knocking the cookie-cutter, big-box, car-centric suburban lifestyle. I lived it for many years, but once moving into, living in, learning about, and experiencing many aspects of the city, I for one, don't think I can ever go back OTP.
Last edited by equinox63; 08-28-2020 at 11:20 AM..
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
Reputation: 16679
Quote:
Originally Posted by Gulch
And that goes even further when Boomers started really buying houses enmasse in the mid 70s-early 80s, when there were at times double-digit interest rates.
I had three houses, one I used for the example I mentioned in Roseville ca.
The interest rates were 18% for that home for its cheaper cost back then of 158,000, if 100% financed is $2381.
Today’s value of 401,000 is certainly more expensive, but the payments today would be $987, well less than half.
I don’t know how the poster could say it was cheaper to get a house back then when the same house costs you less than half each month today and that’s with inflated dollars.
A while back I responded to a millennial who complained that boomers had ruined everything and had it easy and houses were so much cheaper back then, the 90s. I looked up a house I had bought back then and the mortgage payments. I took the value of the house today and the payments at the low mortgage rates of 5%.
Despite the higher house price, the monthly payments were less today then what they were back then. Now add that rates are in the twos and the payments are even cheaper than what I figured. So maybe they are more affordable since median family income is higher than it was back then.
Quote:
Originally Posted by Gulch
And that goes even further when Boomers started really buying houses enmasse in the mid 70s-early 80s, when there were at times double-digit interest rates.
Are either of you considering that higher prices mean higher down payments (for the same %). For me, the monthly payment on a house (or condo) isn't the problem. It's the money for even 3% down. Forget 20% down. And from everything I've read, less than 20% means you'll be paying PMI so that's an added cost that you won't get back. And closing costs are generally a % of sale price, right? So that's more money as well.
And please correct me if I'm wrong, but if interest rates went down over time, could homeowners not refinance? How many homeowners 1) even do a full 30 years in the same house, 2)did actually stay at the same place and never refinanced? It looks like mortgage rates were only absurdly high from the late 70s to mid 80s. Still high in the late 80s, but less than the peak.
I think the short answer to your question is "no". The City of Atlanta has a certain lore that is difficult to replicate. And the people who disparage it often are new, don't live ITP, haven't lived ITP in a long time, or are only familiar with certain key areas. For example, most of the ITP examples in this thread have revolved around Downtown, Midtown, Buckhead, "West Midtown", Candler Park, Inman Park, PCM, etc.
The massive flight of people in the 1970's was primarily due to federally mandated racial integration. This is the primary cause of White Flight in the 60s/70s. Before that, people suffered the actual Great Depression, many mayors both better and worse than KLB, and a long list of social and economic unrest locally, nationally, and globally -- yet most people stayed put.
Even in the 1980s, when Atlanta was disparaged by many as being a bastion of crime and blight, communities like Collier Heights, Beecher Hills, Cascade, Sandtown, etc. thrived. But this was not broadcasted publicly. If you didn't live there or were familiar with these areas, you just didn't know. The bottom really didn't fall out until the black economic base fled to follow whites into the suburbs. Many stayed away because they drank the same "doom and gloom" kool-aid. Meanwhile, into the late 80s and early 90s, there was a resurgence in areas like Inman Park, Candler Park, and even Grant Park. And in the subsequent 30 years, these areas only improved to this very day.
In the early 2000s, when people "rediscovered" O4W, Kirkwood, East Lake, Edgewood, Reynoldstown, etc., there were still many who were told that living ITP, especially near or below I-20 was an extremely dangerous proposition and should be avoided at all cost. Even I was told to avoid Kirkwood until I went myself and saw all the white, middle-class professionals living there and renovating their homes. People were saying the schools were horrible. But then I noticed the children of the aforementioned families attending them.
Even in this thread, many people commented about missing the nightlife, but that is often because that is what they associate with the areas in which they lived (which again, is a certain specific portion of the city).
I would hope that the overt and ardent desire to be away from people of color has subsided in recent generations, so I do not foresee a mass-exodus like Atlanta and many other cities have experienced in the past. I think it just took a while for people to realize that the city is not as bad as many made it out to be... and stayed. Ironically, to this very day, people perceive large portions of the city as "undesirable" now without much real knowledge or experience with those areas. People are talking about paying $500k for a 1200 SFH. But they are only focusing on one of several exclusive areas in the city. Keep in mind, most areas that people covet today were quite undesirable 30, 20, and even 10 years ago.
I believe as newer residents discover that many residential areas of the city are quite nice, comfortable, quaint, quiet, and affordable (even compared to the northern suburbs), they will continue to move in. With all that said, I'm not knocking the cookie-cutter, big-box, car-centric suburban lifestyle. I lived it for many years, but once moving into, living in, learning about, and experiencing many aspects of the city, I for one, don't think I can ever go back OTP.
Excellent post, equinox63! Thank you for this much needed dose of reality.
I had three houses, one I used for the example I mentioned in Roseville ca.
The interest rates were 18% for that home for its cheaper cost back then of 158,000, if 100% financed is $2381.
Today’s value of 401,000 is certainly more expensive, but the payments today would be $987, well less than half.
I don’t know how the poster could say it was cheaper to get a house back then when the same house costs you less than half each month today and that’s with inflated dollars.
Quote:
Originally Posted by sedimenjerry
Are either of you considering that higher prices mean higher down payments (for the same %). For me, the monthly payment on a house (or condo) isn't the problem. It's the money for even 3% down. Forget 20% down. And from everything I've read, less than 20% means you'll be paying PMI so that's an added cost that you won't get back. And closing costs are generally a % of sale price, right? So that's more money as well.
And please correct me if I'm wrong, but if interest rates went down over time, could homeowners not refinance? How many homeowners 1) even do a full 30 years in the same house, 2)did actually stay at the same place and never refinanced? It looks like mortgage rates were only absurdly high from the late 70s to mid 80s. Still high in the late 80s, but less than the peak.
Both of you make good arguments.
However, I will also add while some well-off boomers did purchase homes in the 70s and 80s, many of them (such as my mom) actually didn't purchase their homes until 90s and 2000s, when mortgage regulations were far less strict and there was a massive real estate bubble happening. Remember the Ditech and Countrywide commercials where they bragged about getting you approved with no money down or even an income/credit check? Also, remember how rural areas on the edge of metro areas all across the country were being plowed down every day for tens of thousands of new homes?
People who are buying homes today (that weren't old enough to do so in the 90s and 2000s) have to contend with a severely limited supply of housing (bidding wars) *AND* they have to meet far more stricter requirements before a bank will approve them for a mortgage.
Atlanta should gain from what’s happening. People are fleeing these cities that are defunding the police. Riots, crime and high taxes are pushing people out. I have four friends in NYC. Three have permanently left for good.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
Reputation: 16679
Quote:
Originally Posted by sedimenjerry
Are either of you considering that higher prices mean higher down payments (for the same %). For me, the monthly payment on a house (or condo) isn't the problem. It's the money for even 3% down. Forget 20% down. And from everything I've read, less than 20% means you'll be paying PMI so that's an added cost that you won't get back. And closing costs are generally a % of sale price, right? So that's more money as well.
And please correct me if I'm wrong, but if interest rates went down over time, could homeowners not refinance? How many homeowners 1) even do a full 30 years in the same house, 2)did actually stay at the same place and never refinanced? It looks like mortgage rates were only absurdly high from the late 70s to mid 80s. Still high in the late 80s, but less than the peak.
That is a factor. But let's also factor the income back then versus now.
Back then I don't know what the income was in 1990, but doing a little extrapolating income today is 81K in Roseville. Back in 2000 it was $57K
Considering a 20 year span the income increased 24K or $1200 a year. Going back to 1990 which is 10 years let's say it dropped 12K so now income is 45K in 1990
20% Down payment for the Roseville house is 31,600 in 1990. In 2020 it's 80,200.
70% of your yearly salary goes to down payment in 1990 and 99% of it in 2020. Certainly higher.
But now lets look at taking 70% of your 2020 income as a down payment to match what you had to do in 1990.
That would be 56,700. so now we have both 1990 and 2020 putting down the same percentage of income as a down payment. That evens it up, right?
In 1990 at 18% your monthly payment is $2245 or $26,900 per year which is 60% of your median salary. No PMI because 20% down.
In 2020 at 2.5% rate your payment is $1360. PMI because you didn't put down 20% is 143 more. Total monthly payment today is $1,503 which is $18,036 per year or 22.3% of your median salary
In the case of pure dollars spent, even with PMI added today you are spending less than 68% than in 1990. (1503/2245=68%)
Look at 2020 percentage of median income for payments and 2020 has you at 22.3% versus 1990 spending 60%.
Let's also add in the fact that your monthly housing payment in 1990 is so high you may not even get a loan as you DTI may require an income really high.
All things being equal if we use a DTI of 43% in 2020 you are at 27% DTI. You qualify with the median income.
In 1990 the 43% dti allows you $19,350 to be applied to debt. Guess what, you don't get the loan. No house for you. You need to pony up even more for a down payment, let's try 73,500. There now your payments are $1617 an you qualify. But now it took you 145% of your income in 1990 instead of 99%.
Closing costs are fairly consistent except for points which is a percentage. I have 5 mortgages going on right now. All have similar costs for title, doc fees, etc. The big variable is points.
BTW refinancing isn't always an option. Again if you don't qualify you don't get it. I can tell you I didn't qualify for a few refinances. Also consider the cost of refinancing, it isn't cheap
You can choose to believe it cost way more, but take a look at the number and scenarios I posted.
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