Hans Stroud was paying so much to rent, he decided he might as well buy a home.
Not only did he get a tax break, the 37-year-old maintenance employee cut his housing costs by more than $100 a month.
“We saved some money and the tax breaks were pretty good for us,” says Stroud. “But it wasn’t just that. With a rental, you have to do what the landlord wants you to. With my own home, I know where my money goes.”
For a growing number of Columbus, Ga., residents, it’s cheaper to buy than rent.
Thank interest rates, which last week hovered near 7.25 percent for a 30-year, conventional mortgage; 6.875 for a 15-year conventional mortgage and 5.5 percent for a one-year adjustable rate mortgage.
At those rates, it’s easy to beat rentals in Columbus.
Meantime, apartment rents are climbing as the inflow of new residents outpaces building.
“Any time you’re sitting in the high 90s (percentile) as far as occupancy goes, rents are going to go up,” says Bill Johnson, owner of the Apartment Blue Book, an apartment guide for Columbus. “If you put your home on the market and it sells in a week, you figure it’s under-priced. If the apartment’s on the market and you lease it in one week, you raise the rent.”
Says University of Georgia economist Jeff Humphries, “We’ve seen some healthy increases in rents because of the rapid migration from other states.”
Indeed, high housing costs contribute to the city’s reputation as having the highest cost of living in the state among 16 key cities.
In cost-of-living indexes, housing costs account for more than 25 percent of an area’s expenses.
According to The American Chamber of Commerce Research Association, Columbus has the second highest housing costs in Georgia. Estimates place the number of apartments in 50 Columbus apartment complexes at more than 8,000. The complexes range in size from 40-unit buildings to up-scale campuses with more than 1,000 apartments, swimming pools, fitness rooms, jacuzzis and racketball courts. That doesn’t count the smaller apartments in duplexes, triplexes, over garages and in older homes that are sprinkled throughout the city.
Prices run the gamut, from a couple hundred a month for an efficiency in an older home, to more than $700. In one complex, residents fork over more than $600 a month for a one-bedroom.
“I guess that says something about our economy and the demand for apartments,” says Johnson. “They’re leasing as fast as they’re coming on line.”
Of shortest supply are one- and three-bedroom apartments, Johnson says.
Relief is on the way, but it’s likely to come at a premium. “There’s a lot of stuff on the drawing board,” says Johnson, “but it’s all in the luxury area.”
At the posh Whisperwood Apartments, developer Flournoy is tacking on 154 new apartments.
Woodruff Property Management Co. is adding between 50 to 60 units onto The Lakes, which has 172 apartments. Other, smaller apartment developers are expected to add more than 100 new units in the next six months.
A cautious Woodruff President Otis Scarborough, leery of overbuilding, gives the market a “firm” rating.
“I think although the market is certainly good, with everything that’s coming on the market we probably ought to stop and take a look to see if it fills the demand,” Scarborough says. “If you overestimate, you can get in trouble.”
Escalating rents and home price appreciation aren’t all bad. For instance, they’re indicators of booming growth outpacing builders. That’s good news for those who already own homes and can sit back and watch their property values appreciate, but not so good for new home buyers eyeing higher prices or apartment dwellers.
On the other hand, Realtors say, buy now and the value of your new home, too, will climb.
Still, it’s a rising mark new residents will have to hit as they move into Columbus in search of jobs that pay above the average annual wage in Columbus of $22,858, the lowest in the state among seven metropolitan areas . At that wage, monthly take-home pay for the average wage earner is about $1,400, if the person is head of household with two deductions.
According to The American Chamber of Commerce Research Association, Columbus housing costs were second only to Atlanta by a few percentage points. Even Atlanta suburbs had lower housing costs than Columbus, which was given a rating of 94.9. Atlanta was rated 96.8, but housing costs in the city’s suburbs were below Columbus. Both cities, however, ranked below the national average.
In ACCRA’s measurements, 100 percent is the national average. Anything below 100 percent is below the price the rest of the nation pays for a home, while anything more than 100 exceeds the national average.
Another measurement of housing affordability gives a more positive take on Columbus housing costs. The National Association of Homebuilders rated 73.1 percent of Columbus homes affordable for the city’s family median income of $35,500 a year. But that was only marginally higher than the percentage of homes deemed affordable in Atlanta, 73 percent on a family median income of $53,100 a year. Both were below the national average, where the median price of a home rose to $123,000.
Cathy Vaughn, executive officer of the Home Builders Association of Columbus, estimates the median price of a home at $90,000. In Atlanta, it’s $120,000.
“In Georgia, it reflects a rising demand, rather than a real shortage or property that could be developed. With the rapid growth the past few years, sometimes the building industry can’t keep up,” says Humphries.
Columbus home builders are running “neck and neck” with new residents, says John Cole, a loan officer with Columbus-based Charter Federal Mortgage Services of Columbus. “At the present time, with the rates where they are, your value is in buying a home.”
