Thomas Oliver: Housing will never be what it was

By Thomas Oliver

The Atlanta Journal-Constitution

Real estate isn’t going to lead us out of the Great Recession, despite the long-held notion that if housing got us into this mess, housing would get us out.

Not going to happen.

You can discuss politics. You can debate policy. But you might as well argue with a brick wall as to fight the math. And the numbers are killers.

Listen to Mark Vitner, senior economist at Wells Fargo Securities:

“Atlanta had led the nation in single-family housing starts every year from 1995 to 2005. When the bubble burst, building activity fell just as hard as it did in Florida or California.

“Single-family permits plummeted more than 90 percent since 2006 and multi-family permits are down nearly 95 percent from their peak levels in mid 2005. Housing prices also tumbled, with prices falling 19.3 percent from their peak levels in the metro Atlanta area.”

Even the most optimistic housing projections, with double digit increases in new permits, are anemic by Atlanta standards.

Georgia State University’s economic forecast shows permits growing 6.6 percent this year and 15.4 percent next year, or 5,713 single and multi-family units in 2010 and 6,594 in 2011.

That means in the second year of this so-called recovery, we’ll be building at one-tenth the pace we did before the world ended.

Even more optimistic projections from Smart Numbers still won’t get us anywhere near our once-upon-a-time.

John Hunt says we might see as much as a 50 percent increase this year. That would push permits over 8,000 units.

In the years 2002 to 2006, we averaged 68,000 permits.

All of this has decimated the building trade. The Greater Atlanta Home Builders Association has seen its membership roll of builders drop 63 percent in three years.

The good news?

Prices, for the most part, have stabilized.

Better news: Inventories are being reduced.

Hunt says we are back to 2005 levels, with about a 10-month supply of houses for sale, when 6 ½ to 7 ½ months is normal.

More good news from Smart Numbers: Lot prices are being driven back to 2002 levels, before the speculators drove them up and destroyed the balance between new and resale prices. Now those lots are being taken back by banks and/or sold at discounts.

But not all is blue skies.

Buying and paying for houses is dependent on jobs. And as unemployment remains unacceptably high, foreclosures will continue.

Smart Numbers tracks actual “deeded” foreclosures in the metro Atlanta area. From a high of 4,045 homes recorded foreclosed on in February a year ago, we still foreclosed on 1,973 homes in October, the lastest month available.

More are coming, as delinquent mortgage payments have increased every quarter for two years.

John Wieland, of John Wieland Homes, says, “Everything depends on jobs. Atlanta needs to get its job engine cranked back up.”

Indeed, but our leaders need to look elsewhere than to the past. We can’t expect real estate, and all the ancillary jobs that were attached to it, to be the jobs creator it was for so long.

Thomas Oliver writes the Sunday business column. He can be reached at toliver.writeright@gmail.com