Singles surge into housing market continues

A story published today in the Atlanta Business Chronicle reports that low interest rates, combined with downtown beginning to show signs of life, have meant big business for the Atlanta real estate industry.

As the region's population swells, real estate agents are discovering that their clients are increasingly younger and single.

Matt Moeggenberg, an agent for Metro Brokers/GMAC Real Estate in Cobb County, oversees a 32-unit condo community in Austell. Although the community almost is sold out, Moeggenberg said he sold only two of the units to married couples.

The trend isn't just a local one.

In 1995, 70 percent of home buyers were married, according to a 2004 study by the National Association of Realtors. That figure dropped to 62 percent in 2004.

Meanwhile, between 2001 and 2003, the number of single home buyers increased from 22 percent to 32 percent. Research from SMR Research Corp. suggests that single buyers may eventually outnumber married buyers who finance purchases with a mortgage.

Single homeowners are buying in Atlanta because urban revitalization efforts are finally taking root, making the city more attractive to young singles, said Julian Diaz, interim chairman of the real estate department at Georgia State University.

"There's been renewed interest in the urban experience. That clearly goes in Atlanta. You've got a city life and a 24-hour lifestyle that has become viable here. So you have a lot of developments that cater to that," he said.

Historically low interest rates also are fueling the singles surge.

"The low interest rates really set off some light bulbs in single people," said Radley Reiff, an agent at Metro Brokers who focuses on Buckhead and the Georgia 400 corridor and says 65 percent of his clients are single.

But many of these singles are buying homes with interest-only mortgages, the same mortgages that Federal Reserve Chairman Alan Greenspan said this summer were creating "froth" in the housing market.

Although Diaz doesn't believe the housing market is experiencing a "bubble," he said he thinks a market correction is inevitable in the next few years. When that happens, the singles who bought homes with interest-only mortgages will find themselves in trouble, he said.

"Some of these people shouldn't be qualified for the loans they're getting," Diaz said.

These homeowners will not be the sole contributor to a correction, but Diaz said they could make it worse because the buyers won't have created any equity.

"It reduces our ability to weather any hard times coming ... but when [the housing market] goes down, the problem will be exaggerated and more widespread than it would have been," he said.

Despite the dire predictions, agents said they have begun to focus their marketing efforts on the single demographic.

"Marketing to singles has been a conscious decision for us. We advertise in different places and talk to different people," Moeggenberg said.

With more activities downtown, many single buyers are opting for intown neighborhoods.

But Reiff said he has had a growing number of single clients buying homes outside the Perimeter.

"[Singles] are branching out into the suburbs. I've been doing a lot of sales in places like Alpharetta in neighborhoods that tend to be more family-oriented," he said.

If a single person buys in the suburbs, Moeggenberg said, it is for the extra space.

"If you can afford a $150,000 condo downtown, you're going to get a one-bedroom place that probably won't even have a dining room. But once you've lived here awhile, you can move out and pay the same amount for 1,400 or 1,800 square feet," he said.

Despite the likelihood of rising interest rates and a market correction, real estate agents and analysts don't expect singles to walk away from opportunities to own a home.

"The challenge for a single person is to go from renting to owning. But it's going to be impossible to get someone to go from owning to renting," Reiff said.

The larger question is whether intown communities will be able to entice singles to stay in the neighborhood after they marry or have children, Diaz said.

"This is the problem Atlanta has always had. What happens when these young people grow up? Are they going to stay and make lifelong commitments to the community or are they going to leave and follow better school systems? The jury is still out on that," he said.