Surplus of Available Georgia Homes Not a Bad Sign, Experts Say

There are more homes on the market in the Atlanta housing market than ever before.

But according to one expert, that is not necessarily bad news.

“2005 and the first half of 2006 was an exceptional time [in residential Georgia real estate],” said Roger Tutterow, professor of economics at Mercer University. “It’s not unusual to expect some pullback.”

According to the National Association of Realtors (NAR), sales of previously occupied homes will total 6.29 million nationally, down 2.9 percent from 2006.

ZipRealty Inc., a national real estate brokerage firm in the California housing market, noted the number of homes listed for sale in 18 major metropolitan areas was up 7 percent at the end of April 2007 - significantly higher than the average 4.5 percent March-to-April monthly jump over the past two decades.

The dropoff is expected to be more severe when it comes to new-home sales, which are likely to fall 18 percent in 2007, the NAR said. First-time home loan borrowers are simply afraid to enter the market.

“It’s mostly new homes that are dragging [Atlanta’s] numbers down,” said Dac Carver, director of marketing and new-home services with Metro Brokers/GMAC Real Estate.

Although all metro counties have experienced an uptick in a month’s supply of inventory (the number of homes on the market), some areas are feeling the effect more than others. According to Carver, the best places to be a seller are Cobb and Gwinnett, as Georgia mortgage demand is strong there. One of the harder places to move a house right now is in South Fulton.”There is significant inventory in high-end homes there in the last year or so,” Carver said.

But there is a caveat.

“So much of real estate has to do with your own personal situation and it depends on where you buy,” noted Carver. “There are people making money now in real estate - even in this market. It’s about being in the right place at the right time.”

Boswell Woods Real Estate, a partnership between real estate agents Beth Boswell and Bob Woods that operates under Keller Williams Realty Premiere Atlanta, expects May to be the group’s best month to date. It’s scheduled to close on a total of seven properties (one new home, one lot and five resales) from Suwanee to East Atlanta.

“Real estate is about location,” Boswell said. “It’s neighborhood, school district and price point specific.”

Last year, operating as individual mortgage brokers, Woods and Boswell closed on $30 million worth of real estate. The group’s 2007 goal is $50 million. The soft market will take its toll, and the most susceptible folks, noted Tutterow, will be the speculative builders.”They came into the development game late in the cycle and have more exposure than other builders,” he said.

Without deep pockets, they may not be able to ride out the downturn. There’s also a glut of high-rise condos on the market.

“Those buildings that are unique - location, specific amenities - will do better than those that are easily replicable,” Tutterow said.

The tightening of financial markets in the wake of the fallout from predatory, bad credit mortgage lending practices is also having an effect. Additionally, foreclosures in Georgia were up more than 11 percent from January 2006 to January 2007. Although Atlanta hasn’t been and won’t be as hard-hit as California and coastal Florida in terms of speculative buying, “flipping” isn’t as popular now as it had been in recent years.

As speculative buyers drop out of the market, home inventory figures move up slightly. But this may not be a bad thing.

“We need to get out of that mentality of flipping a property every two years and graduating to the next one,” Tutterow said.

He expects metro Atlanta’s home inventory to peak sometime later this year. He also expects the area’s housing market to be back to historical averages in 2008.

“Atlanta’s housing market is still very good,” said Kevin Levent, president and CEO of Metro Brokers, who noted that Atlanta’s strong appeal continues to attract businesses, thereby creating jobs and drawing residents. “Atlanta has been a really good housing market for a long time. There’s nothing to suggest that’s going to change.”