The battered real estate market in the north Georgia foothills and mountains will never fully recover to mid-2000s boom levels, but it is evolving as more prudent buyers seek value properties.

That's the conclusion of Frank Norton, a Gainesville real estate and insurance executive who issues an annual report, called Native Intelligence, on the economy of the region north of metro Atlanta. He released the latest edition, based on data from 30 counties and a survey of about 1,500 subscribers to his newsletter, on Thursday.

Norton said indicators including declining inventories of property, low interest rates, and improving job stability, suggest a recovery, but he added that is misleading when it comes to real estate. 

“Real estate as a source of shelter and a source of super wealth accumulation has been forever shaken,” he writes. “Consumers have pulled back, stockpiling piggy banks not closets and have refocused their interest toward value priced consumables, the bare basic necessities, not extravagant luxuries.”

One indicator of that, according to Norton's report, is a gradual rise in second home purchases over the last 18 months. Sales of homes under $500,000 on Lake Lanier have been strong, and so have sales of cabins for under $200,000 in Lumpkin, Rabun, Towns, White and Habersham counties.

A big difference now vs. three years ago is that 90 percent of the homes were bought with cash, according to real estate records.

Second home buyers are “reallocating their asset baskets, cashing in bonds, diverting funds from money markets, divert stock portfolios in order to save in their ‘perceived’ safe haven – second home real estate,” writes Norton.

At the same time, the luxury market remains hugely overstocked, Norton said, citing a 10-year inventory of Lake Lanier homes valued at more than $1 million.

The report says real estate numbers in Forsyth County are the most encouraging of any county in North Georgia. Forsyth issued about 1,200 new home permits in 2010, compared to the neighboring counties of Gwinnett, with about 1,100, and Cherokee, with about 500.

His report says a rising number of investors are buying small parcels of timberland in North Georgia at prices ranging from $1,800 to $5,000 an acre.

Norton said 25.6 percent of North Georgia businesses who responded to the newsletter subscriber survey said they expected to increase hiring in 2011, and 30.1 percent said they expect to expand this year. However, 58.6 percent said they expect to increase production, suggesting firms are doing more with fewer people.