By: Brad Horner
As you might have seen in Friday’s Atlanta Journal-Constitution article, 3 year supply of condos available in Buckhead, Coldwell Banker NRT Development Advisors recently released the first edition of The Development Advisor, the quarterly review of the metropolitan Atlanta residential market. This report utilizes data based on transactions that closed in 1Q 2009 and compares it to that of 1Q 2008.
Some of the findings were as expected, but some were rather surprising. While positive news on the national front is always welcome, we know that real estate is extremely localized. Although the metropolitan Atlanta market did not see the high levels of appreciation that other markets witnessed over the past few years, Metro Atlanta has still seen a significant decrease in absorption and sales price over the past year. This is primarily due to the nation’s economic recession, Atlanta’s significant unemployment rate, an oversupply of new construction, restrictions placed on lending guidelines and the amount of existing and new home foreclosures.
Findings include:
- In Q1 2009, total closings were down 20% compared to Q1 2008 for the 15-county metro area, with condominiums and townhomes experiencing the largest decline (with absorption down by 34 percent).
- The overall average sales price during Q1 2009 for the 15-county metro area for new construction and resale combined was down from the same period the prior year with single-family homes declining the most by approximately 28%. This decline is primarily due to a significant erosion of sales price in the resale market, attributable to foreclosure activity and continued downward pressure on pricing. Average sales prices for new construction homes, however, have declined by only 8% for condominium / townhome and 11% for single family homes, an indication that there could still be a large amount of over-priced inventory to be absorbed.
- New construction was hardest hit, falling 43% to 1,962 and representing 14.7% of all sales in Q1 2009. This represented a huge decline in sales of new construction, which in Q1 2008 accounted for 20.6% of sales.
- The number of permits issued for single-family homes and condominiums / townhomes has reached an eight-year low in Q1 2009, partially due to difficulty obtaining project financing, over-supply / low demand and high construction costs.
- End of Q1 2009 inventory levels for the 15 county metro area (condominium/townhome and single family combined) decreased by approximately 24% from the same period in 2008, with new construction and resale inventory levels falling by approximately 34% and 21%, respectively.
- New construction foreclosure sales activity in Q1 2009 increased significantly over 1Q 2008. For the first quarter of 2009, foreclosure activity represented 27% of all single family new construction sales, and 27.4% of all condominium/townhome new construction sales, respective increases of 573% and 1,144 percent over the same period last year.
- The number of refinance loans were 319% higher in January 2009 compared to January 2008.
Most of the information in the report was compiled from our proprietary Universal Data Base, a system that pulls data for the entire metropolitan Atlanta market from both FMLS and GAMLS, deleting any duplication. You can view the full report here.
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