Slow Housing Market Poses Problems

Anyone trying to sell real estate inside Atlanta’s city limits knows the once-red-hot market, with a few exceptions, is pretty chilly.

Some experts are so despondent they see the Alpha and the Omega announcing the end of time.

Others think we are in a housing slump that will right itself in a few years.

There are many explanations for the downturn in the housing market.

Atlanta City Councilwoman Yolanda Adrean tossed out one possibility in June when she said on the city’s website: "We are overbuilt on housing."

Whoa. Let’s see, the unemployment rate is up and credit is tight, but does the city have too much housing?

To the Truth-O-Meter!

Adrean said the statement is based on conversations she’s had with friends in the real estate
business and articles she’s read in the local media, including The Atlanta Journal-Constitution.

She said she meant that the demand for office as well as residential properties was lower than the inventory.

"I would love to be wrong," Adrean told PolitiFact.

Bill Adams, president of Adams Realtors, said there are a few specific examples of an oversaturated market within the city. A few neighborhoods in the city, such as Vine City, have been
hit hard by foreclosures and as a result have a glut of housing. Likewise, the Buckhead
condominium market is clearly overbuilt.

But he said that’s not what’s holding back the broader real estate market.

"We’re not like a suburban county that had vast acres of housing built," Adams said. "I think
mostly it’s a result of buyers sitting on the sidelines."

Potential home buyers, many of whom are worried about job security, don’t want to take on
additional debt and instead are waiting until the economy stabilizes, he said. Banks, in some cases, have made it tougher to borrow money. All of it creates a critical mass that spells trouble for the Atlanta housing market.

Housing sales data collected by Adams show the average sale price for some neighborhoods, such as Inman Park, an upscale neighborhood of tree-lined sidewalks and expensive Victorian housing, are higher than last year. But prices continue to decline in other areas.

And last year there was a greater incentive to buy because many people were trying to take advantage of the federal housing tax credit before it expired.

SmartNumbers analyst Steve Palm said the city does have an overabundance of depressed
housing.

The city currently has 6,000 houses for sale under $50,000, Palm said. And in the last year and a half 24,760 houses sold for less than $50,000.

"We have a lot of vacant homes," he said.

Even so, Palm said the city does not have too many houses on the market.

"Our inventory is way down," he said.

Some economists speculate that a lot of people are keeping their properties off the market unless they absolutely have to sell them. That also lowers inventory.

The current housing inventory is about 40 percent lower than 2007 levels, Palm said.

If the number of closings for the metro area -- precise numbers for the city proper are hard to come by -- remained stable and there were no additional houses added to the market, it would take 8.7 months to sell off all the houses in the metro area, he said At the peak of the housing boom it would have taken about 14 months to sell off all available housing in the metro area.

This is partly the result of a slowdown in new housing construction, he said. New construction is down 90 percent from the peak years.

Bill Murray, the managing broker with Prudential Georgia Realty, agrees there is little new housing
and points out that the population of Atlanta is growing, albeit slowly. Census numbers for the city are disputed, but it’s generally agreed the city’s population has increased over the past 10 years.

This would suggest the city’s problem is not an oversupply of housing.

But Murray said an explosion of foreclosures has helped create an inventory larger than demand.

This is why it’s a buyer’s market, he said, so in that sense Adrean has a good point.

This was a tough one for the old Truth-O-Meter. Adrean’s statement does not apply to some
popular intown neighborhoods and new housing starts are few and far between even as the city’s
population continues to inch up, but demand is still low.

The councilwoman is not wrong, but she’s not totally right either.

Her statement is accurate but leaves out important details. That’s our definition of Half True.