Bill Cook was talking to a homeowner about buying her house when he heard sounds that have long been missing from the Bartow County landscape.
Nail guns were banging and chop saws buzzing as workers put up a new house nearby.
“It’s been so long since I’ve heard that I was shocked,” he said.
Cook and his wife Kim have been very busy in the last decade, buying homes — many of them foreclosures — and turning them into rental properties. Lately they are working harder to find foreclosed homes, as the numbers of foreclosure notices issued have plummeted to 2002 levels. And while the return of new home construction is nudging the region’s real estate market back toward balance, it is not there yet.
Kennesaw firm Equity Depot counted 18,672 foreclosure notices in 13 metro Atlanta counties through August. That’s just 18 more than in the same period of 2002, when metro Atlanta was growing fast. Compare that to 2010 when the housing crisis was roiling — there were 18,499 notices in just January and February combined.
A notice means a foreclosure is coming due for auction on the county courthouse steps. Many properties put under notice do not get sold, however, as lenders can postpone or withdraw the proceedings. Still, foreclosure notices are a symptom of weakness in the economy and housing market, and metro Atlanta’s temperature definitely has broken.
The steady decline in foreclosures over the past year, combined with tight inventory, has pushed sale prices higher.
“The stage should be set for a very strong housing market with equilibrium on supply and demand. But we are just not there,” said John Hunt, of Atlanta real estate analysis firm SmartNumbers.
One issue is low inventory. Home building is still recovering, and homeowners are more reluctant to put their houses on the market and move for various reasons, including that their values are still too low.
Hunt said there is a 4.5 month supply of houses on the market, whereas a healthy balance is a 6 to 7 month supply. Building is picking up steam, but it takes 18 to 24 months for developers to go from finding property to finishing homes.
Prices are climbing as the foreclosures have been cleared from the market, which should help.
SmartNumbers data shows resale prices for single family homes averaged $247,752 in June, up just a bit from $242,707 in June of 2007, just before the housing crisis set in and values plunged.
Todd Emerson, a broker with Harry Norman Realtors and president of the Atlanta Board of Realtors, says he is beginning to see homeowners let go of their fears and put homes up for sale. As values rise, fewer homeowners are underwater — owing more on their homes than they are worth — and can think again about upsizing, downsizing or relocating.
In hot areas, some owners are putting homes for sale and pushing their prices up by asking more than realtors recommend, a sign of growing confidence, Emerson said. Another sign of confidence: real-estate licensing schools are starting to fill up again.
Cook, the investor shopping recently in Bartow, cited other signs of a more normal pattern. The big investment houses that used to buy foreclosures off the courthouse steps are gone, knowing the deals are gone too. And the weekend seminars by people who say they can make you rich by flipping houses are showing up again.
“But I think we are on a good path right now. Mortgage rates are still low,” he said.
An uptick in rates, which many predict will come next year, would moderate the rise in home prices and perhaps bring the market closer to equilibrium. But still there are lots of variables in play, such as tougher lending standards and changed buyer attitudes, which make predicting what comes next difficult.
“My crystal ball is broken,” Cook said.
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