Housing outlook better, but still mixed

By Michelle E. Shaw

The Atlanta Journal-Constitution

Metro Atlanta’s housing market isn’t all doom and gloom, according to two local real estate data experts.

The number of first-time buyers has risen over the past several months, boosting the number back to historical levels for the market, said Steve Palm, president of SmartNumbers, and John Hunt, his counterpart at ViaSearch.

They spoke Wednesday at the semiannual Atlanta Housing Market Summit, hosted by the two firms.

Hunt said the Atlanta market, before home prices skyrocketed, was fueled by first-time buyers during the boom years. Their numbers dropped sharply when the economy dived and housing tanked. A resurgence of the trend means the market is stabilizing, Hunt said.

The bad news is, Hunt and others at the event agreed: We’re not out of the woods.

“We’re going to see some more challenges and more failures,” said Dan Forsman, chief executive of Prudential Georgia Realty, an event sponsor. “We don’t see a magical recovery ahead but we do think the worst is behind us.”

Hunt said that with the increase in first-time buyers came lower home prices and smaller homes, which made the product affordable.

Home prices are at 2003 levels and lot prices are akin to what developers paid in 2002, he said. New homes tend to be smaller, with less-expensive standard finishes -- as once was the norm in a starter home.

“You’ve got to pick the right product, place and price,” he said. “Right now the competition for new home builders includes resale homes, not just the builder down the street.”

Speculative building remains depressed, he said.

“We don’t know why, but Atlanta is a spec market, plain and simple,” Hunt said. “But that’s not what we saw last year.”

New home sales historically claimed nearly 50 percent of closings, but last year the segment accounted for 20 percent, he said.

And sale prices are at historic lows, Palm said.

“Almost 40 percent of all homes selling in 2010 are under $100,000,” he said. “This is amazing.”

Palm said existing home sales will hold up the market until conditions change.

“New homes led us in to the housing depression and resales will lead us out,” he said. “Is this light at the end of the tunnel? Yes, things are improving.”