Diverse Economy Will Buoy Atlanta Housing Market

The Atlanta housing market will be spared the worst effects of the real estate downturn occurring around the U.S., economists and experts are predicting.

On Wednesday, Sam W. Norwood III, a senior partner with Tatum LLC, an Atlanta-based executive services and consulting firm, said that Atlanta’s diverse economic base makes it more resistant to such problems than other cities dependent on a single aspect of the economy.

According to the Daily Report, he noted that although the housing market is in decline around the country, the national economy grew 3.5 percent last year and may even approach 4 percent this year.

“The economy should be just fine in Atlanta this year,” Norwood said.

He was one of the panelists at a Wednesday breakfast discussion sponsored by the University of Chicago’s Graduate School of Business, Harry Norman Realtors, Bear Stearns and the Metro Atlanta Chamber of Commerce.

Robert Z. Aliber, professor emeritus of International Economics and Finance at the University of Chicago Graduate School of Business, said the national housing market is saturated, with an excess of 1.5-2 million homes on the market. This glut of inventory occurred because from 2003-2006, Americans built about 2 million new homes per year.

Aliber predicted between 1.1 million and 1.2 million housing starts for 2007.

Roger C. Tutterow, an economics professor at Mercer University, said that the softening market is less pronounced in Atlanta than in Las Vegas, where mean existing home prices shot up 52 percent in 2004.

Now the Las Vegas market and markets in California, South Florida and other coastal regions are experiencing a major correction.

As home sales and mortgage loan demand slip, there will be a much larger number of multi-level apartment units constructed this year in Atlanta, David F. Haddow, president of Haddow & Co., a real estate consulting firm, said.

He said during the past four or five years, low mortgage rates and creative financing options opened the door for people to purchase homes instead of renting, causing the demand for apartment space to drop.

But now, with Georgia mortgage costs higher than some people can afford to pay, developers who shied away from apartment complexes are coming back as a result of fears of an overbuilt condo market here.

Nonetheless, Haddow said the condo market is “here to stay.”

“Condos now are an accepted and significant part of the market,” he said.

The last condo boom was from 1983-1986, he said. For the next 10 years, hardly any condos were developed. But during the past 10 years, intown Atlanta witnessed 30,000 condos either built or converted.

In addition to condos and apartment buildings, multifamily-home construction will continue because it’s an affordable way to build housing inside the city. He said townhomes are an affordable alternative for those who may not be able to afford single-family homes on their own lots.

On the commercial real estate side, Haddow said the Atlanta office market experienced a big turnaround during the past three years, with about 3.75 million square feet of office space delivered each year from 2003-2006.

SOURCE: Daily Report Online