The Urban Land Institute (ULI), a nonprofit research organization, ranked Atlanta the fifth real estate market to watch in 2016, but Realtors fear that soaring housing costs may lead to a housing bubble.

Market Insights

Atlanta’s real estate market hit bottom in 2012 but rolled over and up by the end of that year. It has been a seller's market ever since then, with a 6.5% increase in sales in 2015 versus 2014, and houses averaging 4.8 months on the market. At the same time, tightened consumer and lending regulations, such as the Integrated Disclosure Rule of 2015, leads lenders to screen borrowers more stringently and to grant loans to fewer applicants. This hinders construction, since construction workers need loans for material, plots and remodeling.

Housing costs have also increased as a direct result of urban renovations. Advertising agencies, entertainment brands and small high-tech firms are opening doors to attract Atlanta's predominant mid-30s population. At the same time, developers and investors have transformed the abandoned railroad tracks of the Beltline into livable green space and spunky projects. All of the construction and refurbishments have increased the value of certain regions, stoking housing demand and price.

It is a seller's market rather than a buyer's market. Think of musical chairs: There are many chasers but few chairs. The chairs refer to property. Inventory is down, and prices are up, with a year-over-year (YOY) increase of 12.1%. In other words, a buyer would have paid $115,000 for a median one-bedroom house in 2012. The buyer would have paid $154,250 for that same house in 2015 and $172,900 for the home a year later. Average wages fail to keep pace with home prices, so many prospective home buyers find themselves priced out of the market.

Sellers will likely remain in control and increase their prices. Other residents will rent, and home costs will increase. Analysts predict that with a possible Fed and interest rate increase, things may change. There are already signs of some leveling.

Property and Transfer Tax

Atlanta's tax rate has declined by 8.9% since 2012. Proceeds go to the city, schools, Fulton County and the state. Property taxes fund one-third of the city's general fund budget. In common with Georgia as a whole, Atlanta pays relatively low taxes. The median real estate tax payment in Georgia is $1,425 per year, about $600 less than the national average. Atlanta's average property tax rate, as of May 2016, was 0.94%.

Property transfer tax refers to tax paid by the buyer, the seller or by both parties when property transfers from one party to another. Transfer tax depends on the property's sale price. In Atlanta, the seller pays the government $1 for the first $1,000 of property value and 10 cents for each additional $100. Most buyers agree to cover the transfer bill.

Most Expensive Neighborhoods

The most expensive Atlanta neighborhoods include Poncey-Highland, Inman Park and Home Park. On the other end of the spectrum, cheapest Atlanta neighborhoods include Adams Park, Cascade Heights and Oakland City. As of May 2016, the average rent for a one-bedroom apartment in Poncey-Highland was $1,879, while in Adams Park the average one-bedroom apartment was $719, according to RentJungle.com.

Top Real Estate Websites

Beacham & Company serves Atlanta's upper-end market, providing informative market updates and detailed market lists. Harry Norman competes with conservative mansions in Metro Atlanta, North Georgia and along Georgia's coast. Nest Atlanta, at atlhomesearch.com, provides free reports and extensive neighborhood and community information for people buying, leasing or selling homes. Its market trends towards the upper-middle class but covers other spectrums, too. GeorgiaMLS.com is a multiple listing service that covers the entire range of prices and class. "A Is For Atlanta" aims to be the area's most rollicking real estate resource. It includes yards, decks and simple one-bedroom cabin-style homes.

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