PICTURE THIS: YOU'RE DRIVING DOWN U.S. Interstate 85, southwest of Atlanta. A string of new housing developments straddle the freeway on both sides. Hop onto U.S. Interstate 20 going eastbound and you'll see the same scenario. A similar vision appears when you drive up Interstate 75 heading northwest. Dozens of new communities stretch alongside major freeways, many close to metro Atlanta with more popping up in the outskirts. Welcome to the Atlanta home building market.

It's easy to see why Atlanta is ranked the nation's No. 1 housing market. The booming metropolis sports very healthy figures: 56,031 housing permits in 2004 and a stable economy. The city also is expected to add more than 42,000 jobs this year, which should fuel an even stronger demand for housing. Low interest rates continue to add heat to the fire. Plus, Atlanta is so highly diversified; you could probably find all different types of product lines in communities located only a few miles away.

Why is Atlanta such a builder's market? There are no geographical hindrances such as an ocean, mountains, or hills to limit growth. Atlanta is flat terrain.

“The area has virtually no barriers to entry and plenty of room to grow on the outskirts of the city,” says John Burns, president of Irvine, Calif.-based John Burns Real Estate Consulting. “Land ownership is highly fragmented and relatively inexpensive to buy, which provides opportunities for builders of all sizes.”

Unlike most markets, Atlanta still has plenty of land left for grabs, both in urban areas and in the city's outlying region. Randall Moore, vice president of Bowen Family Homes, a regional builder with operations in Atlanta, Charlotte, N.C., Orlando, Fla., and Dallas and Austin, Texas, has seen much growth in the city's north, south, and northeast areas. But he's also seeing upticks in Atlanta's south and western regions.

Still, the direction of growth seems to be in the city's suburban areas, according to a housing report conducted by Burns' real estate consulting firm. Builders are hitting the outer fringes of Atlanta for bigger parcels of land where they can hammer out larger homes at more affordable prices.

Even though land can be bought in many areas of Atlanta, it's the location that really counts. “It is an important market for large builders to keep a high volume and reduce their risk by staying geographically diversified,” Burns says.

While Atlanta appears to be a housing oasis, not everything is as it seems. Atlanta is a huge housing mecca, but if you really dig under the surface, not all that glistens is gold. True, Atlanta is a steady housing market. And sure, Atlanta has room to grow and plenty of land opportunities. All of these factors make it easier for builders when they're parcel hunting. But the biggest draw about Atlanta is that it doesn't take much to become a builder in the market. All you really need are some financial resources and a little land know-how. That's why Atlanta is home to about 2,000 small and large builders. The region has the largest home building association in the U.S. —the Greater Atlanta Home Builders Association—with about 3,900 members.

“There are no limitations to be a builder here in Atlanta,” says Chuck Fuhr, Atlanta division president for Ryland Homes.

That's enough to make any builder salivate. Who wouldn't want to stake claim in the nation's hottest housing market?

Learn more about markets featured in this article: Atlanta, GA.