Moderated by Rick Badie
Egbert Perry, chairman of Central Atlanta Progress, writes that innovation and infrastructure improvements are key to building Atlanta’s, and Georgia’s, economy now and in the future. Increasing our mobility is a big part of that work, he says, and will help us create a more competitive region that draws investment and jobs. Meanwhile, Zillow economist Stan Humphries offers insights about the good — yes, good — and not-so-good factors affecting Atlanta’s residential real estate market.
Think big regionally
By Egbert Perry
Our economy is threatened, and we need an infusion of regional analysis and action.
We have daunting infrastructure challenges, notably a need for rapid, efficient transportation systems that connect regional transportation pipelines, integrate the flow of passengers and cargo among cities, and link neighborhoods with the economic spines of the area.
That isn’t visionary thinking; it is necessary thinking. The lack of such thinking turns away new business, and that’s why transportation innovation and commitment are necessary to win the war for jobs.
We are being challenged to think bigger than our own circle of friends, our community and our personal likes, dislikes and prejudices. We must make decisions that are larger than ourselves. As a goal, and assuming that we want our region to be competitive over the long term, we must create transportation infrastructure that offers excellent mobility to a wide range of workers, families, seniors and young people.
One of the few bright spots in this regard involves the planned Georgia Multi-Modal Passenger Terminal. This project will create a hub that will organize many of the various means of transportation, including rail, bus and auto. Its value will be most evident when we build regional high-speed rail, commuter and light rail, and streetcar components.
My company, the Integral Group, along with Cousins Properties and Forest City Enterprises, has been selected by the state and local agencies to be the master developer for the MMPT, which I want to make clear, is not part of the T-SPLOST.
The full potential of the MMPT will be realized when a regional and mega-regional strategy is pursued.
There are many Georgians who can help us find the way. One of the world’s leading experts on the idea of “mega- regions” is Georgia Tech’s Catherine Ross. She and others in her field see four mega-regions in the South: Texas Triangle, Gulf Coast, Florida and Piedmont Atlantic, where Atlanta resides.
Ross last year wrote: “[T]he United States needs public policies and infrastructure planning that can reshape existing and emerging mega-regions into world-level competitive regions, both economically and in terms of mobility systems. Currently, the country is not organized in a way that can lead to effective planning and implementation of new systems within and between mega-regions.”
To create such a strategy requires government, business and civic leadership. There are groups out there that know the value of mega-regions. For example, the Southern Growth Policies Board, based in Research Triangle Park, N.C., is comprised of 13 Southern states whose governors make up the board of directors. Thus, the political network is there. The will to use that network is the challenge.
Our goal should not be competing among areas of Georgia. Nor should our economic foes be Charlotte, Miami, New Orleans and Birmingham. Other regions of America and the world are the real competition. We should chart transportation strategies that strengthen the region.
Egbert Perry is CEO of the Integral Group and chairman of Central Atlanta Progress.
Atlanta still mired in housing mess
By Stan Humphries
As an Atlanta native, I wince each month when Zillow Real Estate Research releases its housing report showing, among other things, Atlanta to be one of the largest metro markets in the country still experiencing large declines in home values (Chicago is another).
While hard-hit markets like Phoenix, Miami and Tampa are finally seeing home value increases after years of decline, Atlanta still finds itself mired in a wrenching housing correction. And while Atlanta isn’t included in the usual list of hard-hit markets like many places in Florida, California, Arizona and Nevada, the home value declines in Atlanta have been much steeper than in the nation overall, declining 39 percent from the peak level in June 2007 while the national Zillow Home Value Index (which doesn’t include foreclosure resales) is down only 25 percent from peak.
In Atlanta, 55 percent of homeowners with a mortgage are in negative equity, significantly more than in the country at large (31 percent). The cumulative amount of negative equity on Atlanta’s underwater mortgages is almost $39 billion.
In Atlanta, the highest levels of negative equity can be found in a crescent-shaped region stretching from Dallas and Hiram in the west; south through Douglasville, Union City, East Point and Forest Park; and then northeast through Redan and Lawrenceville. The fewest underwater homes are found in a corridor from Decatur to Alpharetta cutting through Druid Hills, Buckhead, Sandy Springs, Dunwoody and Roswell.
If there’s any good news on the negative equity front, it’s that about a quarter of those underwater in Atlanta are in relatively shallow water, having mortgages that are less than 120 percent of their home values. The bad news is that almost 40 percent of underwater households have mortgages that are greater than 160 percent of their home values. A staggering 22 percent have mortgage balances that are twice the current value of the house.
Predictably, this high level of negative equity has led to high foreclosure rates. Sales of homes in foreclosure or bank-owned made up almost half of all sales in the first quarter of this year.
In the first quarter, Georgia had the third-highest rate of foreclosure sales in the country. Only 8.3 percent of those in negative equity are currently delinquent on their mortgages, meaning that more than nine out of 10 underwater homeowners continue to pay their mortgages. The real issues caused by negative equity are two-fold. First, it makes households vulnerable to foreclosure, but this vulnerability lies dormant until the household encounters an income disruption such as a job loss, a cutback in working hours, a death or a divorce. When this occurs, this dormant vulnerability is activated and it’s much more likely that the home will fall into foreclosure. Second, negative equity suppresses home sales because homeowners in negative equity find themselves trapped in their existing homes, unable to sell in order to buy another.
In Atlanta, we’ve got to stabilize home prices before worrying about positive appreciation. And that is slowly happening, just at a much slower pace than anybody would like. While home values slipped between March and April, the annualized change in home values, albeit negative, has been improving for nine consecutive months now. To paraphrase one of our city’s more famous characters: “Hang in there, Atlanta. Tomorrow is another day.”
Stan Humphries is chief economist for Zillow Real Estate Research.