Atlanta Home Sales Tumble as Georgia Mortgage Activity Wanes

Sales of new and existing homes in metro Atlanta took a tumble in the first quarter - and, for the first time in 15 years, the Atlanta housing market has its highest level of finished, but vacant, homes.

Existing home sales in the first quarter in metro Atlanta dropped to 15,988, compared with 17,831 during the same quarter in 2006, a 10.3 percent decline, according to data from the Georgia Multiple Listing Service, which tracks mostly existing home sales.

New-home sales fared worse in the first quarter. Closings in the first quarter in metro Atlanta stood at 9,450, compared with 11,963 during the same time last year, a 21 percent decrease, according to Metrostudy Inc., a residential real estate research firm.

Builders are responding by pulling back on the number of new-home starts, said Eugene James, director of Metrostudy’s Atlanta division, as they wait for Georgia mortgage demand to pick bak up.

New-home starts were 9,582 in the first quarter, down from 14,228 in the first quarter of 2006, a 32.7 percent drop, Metrostudy reported.

“As new housing starts continue to decline in response to these market conditions, inventory levels will gradually come into balance and lead to a more stable market,” James said.

Despite the drop in sales, the average Atlanta home price in the first quarter rose to $214,998, compared with $207,862 in first-quarter 2006, an increase of 3.4 percent, according to the listing service.

After a poor first quarter, real estate agents say sales activity is now up.

“January and February were dismal for everybody,” said Randal Lautzenheiser, principal and managing home mortgage broker of Atlanta Intown Real Estate Services LLC, which caters to the intown housing market. “But it was a great March and April, and May is looking like it is going to be a Intown, single-family homes are selling slightly better than condominiums.”

“The market, I think, is going to be strong in the fee simple townhouse market, simply because there is so little product,” he added.

Anything listed at less than $600,000 gets some activity and moves more quickly, Lautzenheiser said, while homes priced higher are generally sitting about six months on the market. That “days on market” may get a little longer as metro Atlanta moves into the prime summer selling season for those seeking home mortgage loans.

The intown condo market also saw a slow first quarter, said Janis Kirtz, president of Morris & Raper Realtors.

“The first three months were not stellar,” she said. “But I think it will all come back. I’m not nervous.”

But Kirtz and Brad Horner, executive vice president of Coldwell Banker The Condo Store, both said they have seen more potential Georgia home loan borrowers seeking out condos in late March and April.

Also, the resale market is doing okay because the price points are often better than new condo product, which is priced based on higher land and construction costs, he said.

The suburban market is also a mixed bag, said Bill Lawson, vice president and managing broker at Harry Norman, Realtors’ Northlake office, which lists many Gwinnett County homes.

“It’s not hot and it’s not depressed,” Lawson said of the housing market in Gwinnett. “We have some listings that are selling as soon as we put them on the market and some just sit there.”

One reason for the slowdown in sales is there are fewer buyers in the market, he said, as bad credit home loan lenders cut back.

Subprime lenders, which make higher risk loans to less qualified buyers, have been credited or blamed for some of the housing boom of the past couple of years. Subprime loans often use adjustable rates and when mortgage rates rose, some buyers were forced to default.

Georgia’s foreclosure rate, which led the nation for four years, stands at eighth in the nation, according to data from Mortgage Asset Research Institute.

Without buyers, inventory in Gwinnett is starting to build, Lawson said. In March, Gwinnett had a 10.2-month inventory of homes for sale, he said, compared with a 5.2-month supply in March 2006.

“The days of easy [Georgia mortgages] are gone,” Lawson said. “Personally, I think that is a good thing. People were getting into homes they could not afford. That hurt our business.”