3Q2009 Quarterly Review of Metro Atlanta just released!

By: Brad Horner

The Coldwell Banker NRT Development Advisors’ 3Q 2009 edition of The Development Advisor, the company’s quarterly review of the metropolitan Atlanta residential market, has just been released. This report utilizes data based on transactions that closed in 3Q09 and compares it to that of 3Q08 as well as 1Q09 and 2Q09. We have compiled much of our information 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.

 Overall,  3Q09 performance demonstrated a continuance of the trends we witnessed during 2Q09, demonstrating  significant improvement over 4Q08 and 1Q09. During the third quarter, several key indicators suggested the beginnings of a possible stabilization in the market, while other data revealed a market still very much under pronounced stress. Absorption levels increased for condo/townhome product, but decreased for single family homes. Resale price increased slightly, while price for new construction showed a continued decline. The pressures of high unemployment, difficulty in obtaining a mortgage, foreclosures, and short sales continued to play a significant role in sustained market volatility.

On the positive side, the $8,000 first time home buyer tax credit, historically low interest rates, and the second highest affordability index on record have combined to encourage homebuyers to move from the sidelines and take advantage of home ownership. The extension of the tax credit and the introduction of a credit for current homeowners should bolster sales volume through the winter months and into 2010, though sustained levels of foreclosure activity will likely keep a lid on any significant increases in average sales price.

 For the 15-county metro area, 3Q09 total absorption was down 10% compared to 3Q08. However, quarter over quarter results showed a general continuation of 2Q09 market performance. Compared to 3Q08, resale absorption was down by 6% while new construction declines exceeded 26%.

 When compared to 3Q08, the fall in average sales price continued to be more pronounced in resale transactions versus new construction, primarily due to short sale and foreclosure transactions.  However, new construction will likely close the gap in the months ahead, as aggressive pricing strategies implemented by developers and banks during the second and third quarter begin to show up in closing data.

 With building permit issuance at continued historic lows, 3Q09 combined multi and single-family inventory levels remained well below 2008 levels.  Reported new construction inventory levels were 43% below 3Q08 figures, and ended 8% below 2Q09 levels. While 3Q09 resale inventory decreased 15% since 3Q08, levels increased by approximately 4% over 2Q09.   Sustained high levels of unemployment will necessitate close monitoring of foreclosure activity throughout the balance of 2009 and into 2010, as this presents the greatest challenge to normalizing supply levels.

We hope you will find this  edition of The Development Advisor informative and useful.   The challenges of the current market are complex and require a multi-disciplinary approach, making it even more important to work with a sales and marketing partner that  possesses the ability to assess the current environment and anticipate future conditions. We welcome any questions that you may have regarding this report and the Atlanta residential real estate market.