In the first part of my blog titled “Is Atlanta Growing Based on Solid Fundamentals? Why I’m Excited,” I described that I am seeing positive differences in the current real estate cycle versus past ones. Since 2010, the metro Atlanta area’s engine has been fueled by real job growth, not speculation like in past cycles. (In case you missed Part I, please click here to read it.)

Every coin has two sides, and as good as this past real estate cycle has been these past several years, I still find myself worrying about macro items that are linked to the broader economy and micro items that hit closer to home.

I’ll start with the macro –

As I drive around Atlanta, I often try to imagine the people who are the end-users of the businesses here. While I certainly don’t know the exact answers, I know we live in an interconnected world where customers may not be living in Atlanta at all. In fact, it is likely they live and work all over the world. Do you know who the customers of your customers are? What happens in other parts of the world can greatly impact our local Atlanta economy. Unfortunately, we often don’t think about macro-level concerns until after the fact and we then wonder, “what happened?”

The facts are:

  • Rate of global growth is declining and this is significant in an interconnected world where your customers (or your customer’s customers) may be located somewhere else on the planet.
  • The consumer makes up a significant part of the economy, yet consumer confidence can be fickle depending on many variables, including the psychology of how we feel.
  • Regardless of political affiliation, it seems the public not only has a lack of confidence in our institutions and government to make effective change, but also we’re living in a very divisive environment. What is the cost we pay? (I’ll come back to this). For example, Atlanta’s large cities and counties always seem to be under the cloud of corruption. What is the ultimate price we pay for that?
  • Financial issues, including the obscure topic of how the Federal Reserve manages its large balance sheet and its implications for interest rates, have a big effect on businesses and consumers here at home.
  • Debt – You probably think I’m talking about the National Debt, but I’m not. I’ll leave that topic for others to tackle who are much better educated on the matter. We now live in society where even slight increases in interest rates can have significant adverse effects. While the United States government can print more money, the general consumer and corporate America cannot. Here are three debt-related categories of interest:
    • Housing Market: Look at what happened to the housing market in the second half of last year. Here in Atlanta as well as many markets across the country, the housing market slowed. In some cases, projects stalled. Interest rates were still extremely low based on historical standards. Yet, slight increases in interest rates seemed to stop the train. I’ll admit that the slowdown in the second half of last year spooked me. Nine of the past 11 recessions, dating back to 1949, were signaled by a weakening in the housing sector. Well, let me be clear, the signals aren’t at all clear. Unlike past cycles, the supply of new housing stock remains tight, and that’s generally good news. However, lending underwriting standards remain very tight for both homebuilders and homebuyers alike, to the extent that for years following the last recession, many people are still unable to purchase a home. Housing affordability is an issue now in most markets.
    • Automobile Debt: Americans are racking up huge levels of debt applying for new car loans. A record number of Americans are now three months behind on their auto loans (more than 7 million at end of last year, the highest total in two decades, according to the Federal Reserve Bank of New York). I find this very scary since most Americans need their car to get to work and I worry about the ripple effects if this level of delinquency continues.
    • Corporate Debt: Corporate debt is at record levels after years of buying back stock. Some people say corporate debt levels are not very concerning compared to corporate profits. However, I wonder how that will play out during a slowdown or correction, and what will the ripple effect will be?

Well you might ask, as an investor, is there anything that concerns me specifically about metro Atlanta? The answer is yes. As I stated above, the current political environment in which we live is extremely polarizing, and it’s not just nationally. I address this topic not as a political operative, but as a concerned resident/business owner who is politically independent and not affiliated with (or likes) either party in its current form. Metro Atlanta has a diverse population and has attracted businesses and individuals from around the country and globe.

I’m concerned that the State of Georgia is continuing to push to legislate more polarizing and contentious social proposals. Honestly, how does this help Georgia? Our previous Governor, Nathan Deal, vetoed socially contentious bills like the Religious Liberty Bill (at the encouragement of the business community). A more recent example is the Georgia legislature passing the Fetal Heartbeat Bill which, if signed by Governor Kemp, would be one of the country’s most extreme abortion laws. This has triggered threats of a Hollywood boycott of Georgia’s film industry, now considered one of the largest in the country outside of California. Will other industries and businesses follow? Legislators are also re-introducing a similar version of the Religious Liberty Bill that our former Governor vetoed. Governor Kemp supported many of these contentious pieces of social legislation during his campaign.

Regardless of the outcome, we must consider the optics for Georgia and its economic hub – metro Atlanta. Is Atlanta going to lose its appeal in attracting new corporate headquarters, entrepreneurs and residents? Are metro Atlanta employers going to have a harder time attracting top talent with this political backdrop? Will the city continue to be a mecca for young people to move to from other parts of the country? The real estate market in Atlanta could very easily be adversely affected by legislative changes like these if the influx of new and talented workers and companies is stifled.

Please understand that I’m not trying to push any personal agenda. I’m simply posing the questions and wondering if this will be good for metro Atlanta and Georgia. I’m personally struggling to see how it could be, and I’m concerned.


As always, please feel free to contact me with your thoughts, ideas or questions. I can be reached at or 404-816-5534.