Atlanta Real Estate Recovery 'Puzzling'

Lawrence Yun, chief economist for the National Association of Realtors, shared mixed reviews for Atlanta’s real estate market during his keynote address at the organization's 11th Annual Showcase.

Yun addressed several hundred Realtors at the Southeast’s largest real estate trade show, Thursday, at the Cobb Galleria Centre. Compared to other markets, Atlanta hasn’t seen recovery yet, Yun said.

“This is puzzling,” he said. “It is the Southern states that always zoom, I mean really advance much faster than the rest of the country when recovering from a recession. Not this time.”

Yun related this to stagnant new home sales. He explained that homebuilders are reluctant to build because they can’t compete with the deep discounts being offered on foreclosed homes. He also attributed it to banks, which he said aren’t lending money for new construction for fear of crackdown from federal regulators.

Yun also added that while there have been increased home sales, they homes are selling for lower prices, but this isn’t necessarily a bad thing.

“At least the buyers are coming in and this is the first necessary step to recovery,” he said. “You need buyers coming in absorbing inventory. We need many, many more buyers.”

Yun expressed confidence that Atlanta can pull through the recession. He explained that in the past, Atlanta’s steady growth has mainly been from attracting people from out of state to the city. Yun noted that since 1970, the job market in Atlanta has nearly quadrupled.

“So after this bumpy ride, assuming that it goes back to normal—New York City is the most populated city, second used to be Chicago, then it was L.A.,” he said. “I would not be surprised if about 20 years from now, according to population, Atlanta was second.”

Yun also shared his views on the nation’s recovery. His comments were similar to those he made  at the National Association of Realtors Leadership Summit in Chicago.

Yun fears that Washington may hamper recovery if it limits the Mortgage Interest Deduction, a deduction that allows taxpayers to reduce their taxable income by the amount of interest paid on a loan, to primary houses only. If limited by Congress, secondary residences like vacation homes would no longer be eligible for the deduction. Yun explained that this would negatively impact workers in resort towns who rely on tourism.

At Thursday’s event, Yun added that he thinks requiring a Qualified Residential Mortgage with a down payment of 20 percent would slow the recovery. Yun added that some Washington politicians, including Georgia Senator Johnny Isakson, have expressed support for this measure.

After Yun’s keynote speech, the Realtors joined their colleagues on the tradeshow floor. Several hundred vendors displayed their products and services, including Bryan Farmer of the Smyrna-based business Farmer Signs. Farmer’s business has been providing custom signs for real estate agents for 30 years. Farmer has attended every Showcase since they began in 2000 and noted that the economy seems to have had an affect on the number of vendors at this year’s event.

“I can tell that this show is probably, as far as size of the show, is smaller than it has been,” he said. I don’t think that will dictate how many people come through the show, but just the building occupancy is smaller.”