Is Our Housing Market Finally Bouncing Back?
That's a good question!
As economists define it, the American economy was in recession only from December 2007 to June 2009. Unfortunately for Atlanta, the finale of the national recession wasn’t even the end of the first half of the worst local housing depression since, well, the Great Depression.
The Atlanta housing market’s collapse started more slowly than it did in bubblicious real estate markets like Las Vegas, Phoenix, and South Florida—places where it seemed the entire economy was based on “if you build it, they will buy” speculative housing construction. But slow and steady wins the race—even races to the bottom. When cities like Phoenix and Miami seemed to hit a floor a couple of years ago, Atlanta kept falling. By 2011 home values in Atlanta were dropping faster than they were in any other large metro area in the nation, as measured by the Standard & Poor’s Case-Shiller Home Price Index.
The reasons for Atlanta’s housing misery are as obvious as they are impossible for any single homeowner to resolve. Metro Atlanta’s unemployment rate used to be lower than the national average. Since the recession, unemployment has been sharply higher than the national average. The number of people moving to Atlanta has slowed. The area has an abundance of foreclosed, abandoned, and otherwise empty dwellings.
Then there’s the water—not the kind Sonny Perdue used to pray for, but the metaphorical water under which roughly half of metro Atlanta mortgage holders find themselves. Even if underwater homeowners want to move, many cannot. This all adds up to a situation in which there’s too much supply and not enough demand.
Like someone being treated for a complicated life-threatening injury, local homeowners—and local media—now treat the absence of terrible news as great news. In 2012 the doctor walked up to our hospital bed and said, “Great news. It looks like we’ve stopped the bleeding.”
Actually, we did better than stop the bleeding. Prices have started inching up this year, albeit at a slower pace than in most other cities. The area’s foreclosure rate dropped by half since 2011. And the average number of days it takes to sell a house dropped by 40 percent, according to Prudential Georgia Realty Advisor.
It’s a buyer’s market now. “We’ve hit the floor on single-family housing values,” says David Gutting, managing director of multi-family investment sales at Jones Lang LaSalle. He says the recession hasn’t slowed the rush of young people into Atlanta’s urban core; it’s just pushed them into rental units. The dearth of new construction at the same time intown occupancy is surging means rents are soaring. According to Trulia, it’s now up to 57 percent more expensive to rent in Atlanta than it is to buy a comparable home. When rental rates soar, sale prices usually follow. They won’t in every Atlanta neighborhood, but overall our collective line graph is pointing up for a change.
Gutting believes the major negatives dragging the market down have done all the damage they can do. Short of an unexpected spike in interest rates, he thinks Atlanta is finally on the mend.
“It’s my opinion housing values can only improve from here,” says Gutting.
This article originally appeared in our December 2012 issue.