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Atlanta’s Housing Market: CRASH

Posted by Larry Doyle on May 30, 2012 7:41 AM |

As I pondered what to write this morning, I thought about addressing the 15% pullback in the price of gold over the last three months. What was happening to this supposedly safe haven? Despite this pullback, gold is still up 135% over the last 5 years. Time to look for a more interesting topic.

Let’s turn our gaze to the southeast and address what can only be described as the CRASH of the Atlanta housing market.

While nationwide home prices were down 1.9% over the last 12 months, our home owning friends in Atlanta experienced close to an 18% cliff dive in home values during the same time period.

In what can only be compared to a black diamond slope, here is the last 5 year graph of the Atlanta housing market:

Case-Shiller HPI: Atlanta, GA Chart

Case-Shiller HPI: Atlanta, GA data by YCharts

The Wall Street Journal brings further attention to this CRASH in writing this morning, Unemployment, Glut of Inventory Contribute to Atlanta’s 17.7% Drop,

Some Atlanta Realtors say they have seen signs recently that sales are picking up. They also point out that the Case-Shiller data lags behind actual market trends by several months. “Their numbers are more in line with what we were seeing a few months ago,” said Mitch Kaminer, president of the Atlanta Board of Realtors and a broker with Re/Max Paramount Properties in Atlanta. “It’s been the best spring season in five years.”

How many brokers have ever told you differently?

Other Atlanta market-watchers and real-estate agents say the price declines are driven by several factors, including many foreclosures, a glut of housing inventory left over from the real-estate boom and high unemployment.

Georgia was a sub-prime mortgage origination hotbed. But not a lot of fraud, though, right? Stop it. Let the Atlanta housing market be the legacy of those Washington who filled their own pockets and advanced their own agendas while shirking their responsibilities to properly regulate our nation’s mortgage market. We can start this long list with the name Alan Greenspan.

“You’d think we’d be getting through this by now. But you’re not going to start moving this property until people have jobs,” said Michael Bell, a professor of public policy at Georgia State University and the former chief financial officer of DeKalb County, which includes a portion of Atlanta and the city’s northeastern suburbs.

Atlanta’s unemployment rate has hovered above 11% for much of the past year, even as the national jobless rate has fallen to 8.1%, according to the Georgia Department of Labor.

The state leads the nation in bank failures, with 78 lending institutions closed since mid-2008, many because of profligate lending to home builders during the real-estate boom. The result has been hundreds of thousands of vacant or half-finished lots and tens of thousands of homes lost to foreclosure in the suburbs. RealtyTrac, an Irvine, Calif., provider of foreclosure data, reported this month that Atlanta’s rate of foreclosure sales—typically when buyers lose their homes to their lender or at a courthouse auction—has remained steady at about 8,000 a month for the past two years.

“Atlanta’s going to take longer [to recover]. It was just horribly overbuilt,” said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 brands.

Bank of America has the largest presence in the southeast. Where do you think the bank has all of the mortgage exposure in the greater Atlanta region marked on their books?

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

 

  • coe

    it’s a far cry from the resurgence of Atlanta as the “it” city of the south some 30yrs ago – still can picture the cover of Time magazine trumpeting the town with great fanfare…remember the great expectations of “Underground atlanta”, the buzz around the hosting of the Olympic Games, the uber-development in tony areas like Buckhead..it’s no surprise to me that the southeast in general, and Georgia in particular, led the nation in bank failures…seemed as though every mortgage hustler on the planet converged on this area to push toxic pick-a-pay/sub-prime/liar loan product on unsophisticated and under qualified borrowers…toss in those banks working out of MOUs and C&Ds and you will quickly see why it will take some time to turn things around – your commentary points to the inventory overhang and, of course, the awful shroud of unemployment…the only bank with any heft left in Atlanta is Suntrust, and that bank was not immune to regulatory pressures itself…and to think that the busiest airport in the land (maybe Ohare is right there as well) came within a whisker of being located in suburban Birmingham, AL – in itself domiciled in a county bankrupted by the financial crisis…the south will rise again, or so we are led to believe, but it may not be led by a recovery in Atlanta

    • fred

      In our lifetimes, will America again be able to compete on a relative cost of labor basis in a global economy? Maybe not.

      Realistically, going forward

      • fred

        (I was cut off before I was finished)

        Realistically, going forward it will probably be the skill of America’s labor force that determines our competitiveness.

        In the past, Atlanta (and the rest of the south) was able to compete regionally based on the cost of labor only when compared to the north which had a higher cost of living.

        It’s the relentless of that “giant sucking sound”. Globally our standard of living is too high given our labor skill level. Deleveraging, retraining and deflation (the price of both goods and labor) may provide the answer.






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