Well, the worm has certainly turned. I’m not sure what that metaphor really means, but as we all know, things have slowed down in the housing market. Atlanta certainly has fared better than other areas of the country, but talk to any realtor or builder, it ain’t what it used to be. Talking to the NAR (National Association of Realtors) or watching the Fed (Federal Reserve Bank) we can distill the Atlanta situation down to a few salient points.

Macro:

Our Economic Outlook:
First, the Fed isn’t fearing inflation right now so they are standing pat, giving great steam to the Dow which always makes those of us with 401k’s feel richer. Their stance is also allowing interest rates to stabilize. Mortgage rates are actually easing back just a bit. Their expectation is for a soft landing for our economy and for those of us that live or die by the health of the housing industry, the worst is supposed to be behind us. Maybe those with adjustable mortgages have gotten a brief reprieve. We’ll see.

Micro (Atlanta):

Homebuilders. Needless to say, many builders in the Atlanta market are shedding jobs, shutting off new starts and trying desperately to pare back inventory, with increases in co-op commissions, free TV’s, price reductions and selling off available lots. Some larger builders have pulled out altogether. To say it is a buyers market is, well, an incredible understatement. Long term, builders need not worry, however. Atlanta is still considered one of the top ten growth areas in the United States. Net job creation still remains healthy and all of the old Chamber pep talk language still applies: low median house prices; no natural boundries to impede growth; southern climate (except maybe this past month); major transportation hub; a strong arts community and so on. Some positives from this slowdown will be the natural “weeding out” of weak companies that happens in tough times.