May 2010: Cover Story Preview
A New Real(i)ty
There's no crystal ball, but one thing is certain: Change awaits.
By Amanda Heckert
Last year my fiance and I walked into a craftsman-style two-story in
Oakhurst, just south of downtown Decatur. “This is the one,” said my now
husband, as our footsteps echoed on the hardwoods. “I can feel it in my
gut.” It was our first day searching. This was the third house we had
My husband was right, though; no matter how many homes we scouted, the
memory of the robin’s-egg-blue refuge in Oakhurst tugged at us. Two
months later, palms slightly sweaty, we signed on the dotted line (about
fifty times). It was ours. Like numerous others (including the buyers
whose new homes are highlighted on page 62), we could not resist leaving
rental life behind and taking advantage of that $8,000 first-time
homebuyer tax credit and insanely low mortgage rates—as well as a home
that would have cost more a few years ago.
Everything, from the price and incentives to our timing and job
security, seemed just right. But no one has a crystal ball. We could
only guess then that the market had further to fall. In fact, our home
might have cost us even less now; Atlanta home prices are down 4 percent
from a year ago, as of February.
The market is still unpredictable; home values are on the upswing in
some spots, slumping in others (see page 66 for your neighborhood). But
the following pages will make navigating the real estate scene a little
easier. Because one thing is certain: When the market does stabilize,
get ready for a new reality.
“There won’t be as much mass sprawl, and new construction will be around
city centers like Roswell, Smyrna, Atlanta—where the jobs already are,”
says Shea Zimmerman, president of the Atlanta Board of Realtors. “Those
homes are going to look different, too. We had an explosion of
McMansions in the metro market. We’re not going to see that. We’ll see
homes that are more modest; builders will have to be sensitive to what
the buyer is looking for and not what they want to build.”
Population trends support these predictions. The ten-county metro area
gained only 24,700 people in 2009, the fewest since the fifties.
Outlying counties such as Cherokee and Rockdale have seen growth
sputter. Meanwhile, the city of Atlanta’s population is now 480,700, the
highest it’s been since the 1970s. But there will be limitations to
infill development as well. Let’s remember the great McMansion debate of
2007, when the Atlanta City Council regulated the popular practice of
knocking down older residences in established neighborhoods to put up
Building or buying, it’s not enough for you to think you’re ready.
Someone holding the money has to agree. Our lender, Wells Fargo,
scrutinized us from every angle—our spending habits, our credit history,
our 401(k)s and IRAs. Why didn’t everyone take the time to do this? I
Indeed, thanks to risky lending and poor oversight, thirty-seven Georgia
banks have failed, the most of any state. As the banks tanked, a
vicious cycle began. Without sufficient funding, new construction
vanished, taking with it many of the 128,000 jobs the industry
supported. And as our carpenters and contractors joined the rest of the
jobless Georgians, bills and mortgages began to go unpaid. Last year,
lenders sent foreclosure notices to more than 117,000 homes in metro
Atlanta, a 47 percent jump from the year before. Many who have continued
to pay their mortgages face an uncertain future themselves: Almost a
half-million metro homes are “underwater”—meaning the owner owes more on
the mortgage than the home is worth—or close to it.
There are hints that a turnaround is not too far away. Thanks to
Atlanta’s glut of condos, only 600 new units were put up for sale here
last year, the fewest in a decade. And according to Eugene James,
director of the Atlanta market for housing information firm Metrostudy,
total housing inventory is down 66 percent from three years ago—and
fewer homes on the market means hope for home values. “When demand
outpaces supply,” says James, “prices will start to go back up.” Hot
spots where James has seen builders begin new projects already? North
Fulton and south Forsyth counties. “And that’s to replenish,” he says.
For the past three years home sales have surpassed the number of new
homes being built.
I’ve seen the market begin to take baby steps firsthand. For months,
several homes on my street were for sale with no takers. In the past few
weeks, all but one have sold. And whoever owns the abandoned shack
three houses down from mine began renovating it into a beautiful
bungalow last month. That doesn’t mean fears of layoffs and sinking home
values don’t dance through my head some nights. But we didn’t buy our
house to make money. We bought it because after years in Atlanta, we
were tired of bobbing like buoys, lease to lease. We wanted roots. We
wanted a home. And most importantly, we could afford it. It’s our little
acre of the American dream.