Atlanta Real Estate Blog

The following article is a summary from Metrostudy, a respect source on Atlanta’s New Home Market.

Atlanta Business Chronicle – by Lisa R. Schoolcraft Staff Writer

Metro Atlanta’s housing stock is shrinking, with new home starts down to the lowest level in decades.
“The homebuilding industry has severely limited the amount of new inventory introduced to the market, which in turn, has limited the number of unsold new homes,” said Eugene James, director of Metrostudy’s Atlanta division, which recently released first quarter data.
New home inventory has declined substantially, with more homes closed than started every quarter for the last 30 months, James said.
In March 2009, quarterly starts fell 74.8 percent year-over-year.
Housing inventory is currently at a nine-year low, with only 20,657 units under construction or finished and vacant in the 22-county metro Atlanta region.
“At its peak in mid-2006, new-housing inventory in Atlanta exceeded 41,000 units,” James said. “Currently, there is no oversupply of homes, but rather the demand for housing continues to be suppressed for multiple reasons, including lack of consumer confidence, fear of job loss and fear of falling home prices.”
New home closings declined 41.4 percent year-over-year in March.
Some metro Atlanta homebuilders have begun offering peace of mind with price guarantees, James said.
If home prices decline by certain amounts, those homebuilders will refund the difference. Others are offering to pay mortgages or buy back homes if buyers lose their jobs.
While the pullback in housing starts has helped shrink inventory, it’s done nothing to reduce Atlanta’s swollen inventory of developed lots, James said.
Finished lot inventories have leveled off and now stand at 150,004.
“It’s going to take a very long time to go through such a large number of lots,” he said, “but the superior lot locations are already being acquired and some homebuilding is beginning to occur.”
Nationally, unsold new home inventories are beginning to stabilize in many markets, Metrostudy reported.
Builders continue to report the lack of available credit from banks to support new construction, and consumers are squeezed by their own credit issues, the residential real estate research firm said.
Those two factors indicate the industry is nearing stability, but a recovery in sales and construction is unlikely to occur before mid-2010.