Rising Inventory Doesn’t Suggest Slump in Atlanta Housing Market
Last week, a sign high over Interstate 75 reported for the first time there were more than 100,000 homes for sale in the Atlanta housing market.
Sunday, it read 100,233.
While there are differing opinions on how the number on Metro Brokers/GMAC Real Estate’s five area billboards are calculated — one rival says there may be duplicate listings — real estate and economic experts say the record inventory of homes makes the Atlanta area a buyer’s market, but is NOT a sign of a bursting bubble.
“I’ve been selling real estate in Henry County 20 years and this is the largest inventory I’ve ever seen,” said Dottie Wise, an associate home mortgage broker with Metro Brokers/GMAC. “You’ve got a lot of new homes being constructed, and it’s a mobile society we live in — people are moving in and out,” she said.
Indeed, a construction boom has been partly to blame for the inventory, experts say. According to statistics compiled by the University of Georgia’s Selig Center for Economic Growth, which tracks housing trends, after several years of uptick in housing starts, building permit issues show signs of slowing.
In 2002, for example, Henry County reportedly issued more than 4,000 permits for single family housing. In 2005, however, it issued 3,697.
The trend is a sign that builders were ahead of Atlanta’s growth curve, but not necessarily a sign of a housing downturn and/or major decrease in Geogia mortgage activity, according to Jeff Humphreys, director of economic forecasting at UGA.
“Supply kind of got ahead of demand,” he said, adding that if population projections hold up, the inventory won’t last long. “Builders are pulling back. I think, actually, this is quite an opportunity — the last chance to pick up quite a bit of value.”
The Atlanta Regional Commission, metro Atlanta’s public planning organization, predicts more than 6 million people will call the area home by 2030. Estimates put the current population at around 5 million.
As buyers have seen home prices skyrocket and plummet in some markets around the country, Humphreys says some here suffer from a “confidence crisis” and have been reluctant to buy.
But while nationally, home prices over the last five years have risen by 56 percent, he says, here they have only grown a modest 25 percent or so. Historically stable prices, Humphreys says, mean there won’t likely be a dramatic downturn, which has been seen in areas where speculative buying has artificially inflated prices.
“I would be a little more cautious in buying a condo,” he said. “The value proposition there may not be quite as strong.”
The building boom has meant “older homes are really have trouble moving,” said Nikki Finlay, an associate professor of economics at Clayton State University in Morrow.
Job losses, like the shuttering of Hapeville’s Ford plant, as well as layoffs from Atlanta’s financially troubled Delta Air Lines, she said, have also led to a cooling in some areas, particularly the south side, where many of those workers live.
“There have been some pockets where the market is in trouble,” Finlay said. “The southside has suffered a lot because of layoffs.”
The cooling has led some builders to offer considerable home buying incentives, particularly in high-priced homes in areas where inventories are at a peak. One Henry builder, for example, is offering a $20,000 incentive on a $390,000 home.
In Clayton and Henry, inventories of moderately-priced homes, those in the $200,000 range, are well above the metro average, according to Tisha Gay, director of public relations for Metro Brokers/GMAC.
In Henry, there’s nearly a 10-month supply of homes in the $201,000-225,000 range. In Clayton, it’s nearly 18 months. Metro Atlanta’s average inventory for homes in the same range is about eight months.
“One of the good things is that [the inventory spike] is happening in the spring and summer when there tends to be a lot more buyers in the market,” Gay said. “More importantly, what it means for the [mortgage loan applicant] is that there are a lot more choices out there.”
SOURCE: The Clayton News Daily