Atlanta Real Estate Recovery

Post 3 of 3 in the Atlanta Real Estate Recovery series (energy, housing, credit).

Roger Tutterow Ph.D. and Dean of Economics at Mercer University gave his opinion to Sally’s Roundtable on the Recession of 08’ as it relates to Atlanta Real Estate.

Credit Markets

As far back as July 2007, Wall Street began to question the true value of Mortgage Backed Securities. Interesting how it really became a household word in recent months. Either way, banks are continuing to search for ways to loan money to the masses. The original bailout for Fannie Mae and Freddie Mac was probably the smartest move that Washington could have made. In essence, it allows lenders the ability to continue to bundle loans together and sell them to a company that is backed by the full faith and credit of the US government.

Banks, mortgage brokers, etc are in the business to originate loans. Most do not have a true mechanism to keep them in house and actually hold for 30 years. Therefore, without the ability to bundle and sell, loans would not be written.

Good News!

We are at or past the bottom of the Real Estate curve in GA. Home prices have stabilized and inventories are flattening. With the ability to actually borrow money at still all time low rates, the expectation is that the best deals will sell first which would include Pristine foreclosures, New deeply discounted homes from builders, and resales where the owner can take a loss to get a better deal on a more expensive home.

As an aside, I was working with a retired buyer couple from Florida and during the conversation we were comparing markets between Orlando and Woodstock. Since they are so similar (right!) they had the expectation that they would be able to move here, buy a home for about 60 cents on the dollar, and retire, again. The reality was that it was not going to happen unless they wanted a real fixer upper. In Woodstock, a $300,000 home is still affordable to many individuals and this price point recognizes the high end of activity in the area. In this case, I suggested we look at foreclosed builder homes or homes between $500k and $800k if they truly wanted to get a 30% discount. In the end, some people will let expectations driven by their local market or worse, driven by the national news, get in the way of truly a great buy. So what do we have to look forward to?

In 6 months or so, those with little to no equity will see a more stabilized and active market. Today, there is no place to go but up and do not let the Evening News Talking Heads tell you differently. Our problems are nothing like so many others. Real Estate is Local and it is not as bad as others would think.

Related posts:

1. Atlanta Real Estate Recovery
2. Atlanta Real Estate Recovery