Atlanta intown building bonanza backfires
December 23, 2008 at 10:23 am by Thomas Wheatley in NewsD.L. Bennett of the AJC has an article that addresses what many of us have assumed — the intown building boom is hitting the skids. The rush to build homes to welcome the influx of new residents was broadsided by the foreclosure and credit and resulted in shuttered-up houses and dwindling property values.
Says Ben at Terminal Station:
The combination of factors hitting these areas is brutal. First, all the subprime mortgages that got people into these homes in the first place reset and foreclosures follow. Housing prices plummet, and you might think there would be a wave of people who could get into some infill homes for a great price. However, tighter credit standards are going to prevent people from getting loans, and the cratering economy will further depress things. So these homes will just sit empty for who knows how long.
The city has received $12 million to buy foreclosures, but it will barely make a dent in the problem. I don’t really know what sort of policy solutions are available. There needs to be an infusion of capital somewhere to buy these houses and get them occupied. I know some folks who are buying up cheap houses (~$30k), renovating them, and renting them to people with Section 8 vouchers. The problem is that this is not a recipe for revitalization. Instead, it can become a recipe for concentrated poverty and can prevent new residents from wanting to move in. I’m not enthusiastic about an infusion of capital of this sort, but it is probably the only sort of private capital available.
December 23rd, 2008 at 11:28 am
I really like that you quoted a blog post and included the piece where I linked back to one of your articles. It is a festivus miracle of circular promotion and linkage!
December 23rd, 2008 at 12:07 pm
Viva the echo chamber, mi amigo!
December 23rd, 2008 at 1:00 pm
Let’s not underestimate another cause — Falling gas prices. When my wife and I were looking for homes earlier this year, we noticed that intown sales and resales was still pretty brisk.
BUt with plummetting gas prices, people are rethinking Woodstock, Norcross and other points outward again.
And least that’s my unprofessional analysis.
December 23rd, 2008 at 5:24 pm
Sellout — for what it’s worth, when I wrote a real estate column for Atlanta Peach (RIP) I would always ask people about fuel prices and the intown housing boom (also, apparently RIP).
The “expert” opinions I solicited always cited intown amenities and suburban traffic as reasons people moved in. They never cited fuel prices. Of course, these same experts by-and-large denied that there was a housing glut in Atlanta.
Fuel prices probably have some effect, but I would guess that the accelerated decline of the local intown market in 2008 is a function of tightening credit and the overall recession.
A stat worth watching for intowners — Atlanta Regional Commission predicts a massive influx of people to Atlanta proper over the next 25 years. Off the top of my head, I think they say 150,000 new people (to a city with roughly 500,000 today).
They’re not all gonna want to live in 1 bedroom high-rise apts in Midtown. Some will want houses with yards. ‘Hoods with nice old bungalows (Capitol View, Sylvan Hills) should do well.
(Full disclosure: I own a house in Capitol View).