Moderated by Rick Badie
Atlanta has a reputation for rebuilding and reinventing itself. Today’s guest writers explore what steps builders, lenders and developers must take regarding the region’s real estate market now that the housing industry is showing some signs of recovery.
No. 1 industry is growth
By Frank K. Norton Jr.
Atlanta is all about growth.
Since its founding as Terminus, growth has been Atlanta’s No. 1 industry. Boom or bust, up or down, Atlanta has stretched its arms around its unlimited geographic boundaries and embraced relocating businesses, expansive retail centers and swaths of new neighborhoods. We have either been chastised as the poster child for unrestrained growth or heralded as the champion of progressive economies. Atlanta has had no middle ground.
The powers of Atlanta’s housing industry grasped the opportunities of growth by the tail and for the most part held tight to this serpent through countless cycles, only to rebound time and time again.
Atlanta attracts people — migratory people. That is what it does best, and that fuels housing. Whether the newcomers rent or buy condos, apartments, affordable homes or Buckhead estates, 100 percent of this population needs a roof over its head. That spells an ever-sustainable need for housing products in all price points and in all directions.
Atlanta is a jobs and opportunity mecca for the best and brightest college graduates. We are an affordable migratory point for corporate and midlevel businesses. Our moderate four-season climate, low tax rates and outstanding health care delivery system drive all housing sectors. You have never heard anyone say that they can’t wait to retire to Milwaukee or Buffalo.
We are much more than water towers emblazoned with mantras like “Success Lives Here.” Atlanta has the frontier spirit of entrepreneurship. We have a boundless, optimistic, energetic vision and a Southern progressiveness that is woven into the fabric of every neighborhood, school district and township.
Quality housing stock creates jobs. Our housing affordability attracts a quality workforce, and a quality workforce attracts new business — the cycle of a sustainable and quality lifestyle.
We saw more than 425,000 single-family homes built between 2000 and 2009. Before that, 359,000 were built in the 1990s. Today, First Metro Listing Service data points to fewer than 16,000 homes available, a 3 1/2-month supply. Single-family inventory hovers at zero, with no uptick in sight.
In the Great Recession, our once-vibrant builder sector evaporated with a loss of 80 percent to 85 percent of the workforce, creating cracks in our sustainable housing formula. The Atlanta housing industry has cleaned itself up and then some, but without an influx of capital, the redevelopment of our labor base and a more relaxed lending climate, the industry will remain largely stagnant.
In 2013, a scant 14,000 new homes will be built versus a demand of at least double that. Thankfully, the national guys — Pulte, D.R. Horton and others — are building product with their Wall Street capital. But it is the Atlanta builder entrepreneurship that needs a reincarnation to sustain the region’s voracious housing appetite.
It is time to dust off our pants, refresh our game plans, create a financial builder/developer support system and start the construction engines. Full throttle.
Frank K. Norton Jr. is president of the Norton Agency, a Gainesville-based real estate company.
An unmet housing need
By Jonathan Blackwell
Real estate has caused two of the last three recessions, including the Great Recession from which we are emerging. That’s because real estate, and the infrastructure that supports it, represents more than 35 percent of America’s economic assets. Engaging one of our biggest assets, and the private capital that goes with it, has continually proven to create sustainable economic growth. However, the Great Recession has highlighted a fundamental change in what consumers want from their real estate.
Instead of expanding suburban sprawl, the new boom in cities like Atlanta will address a different demand than its predecessors. It will come with the creation of new walkable, transit-oriented urban communities, and it has the potential to reshape the American landscape and rejuvenate its economy as profoundly as the wave of suburbanization after World War II.
There are some obvious reasons for the growing demand for walkable neighborhoods: ever-worsening traffic congestion, gas prices and the fact many cities have become more attractive places to live thanks to falling crime and the migration of industry away from city centers. But the biggest factor is demographic.
More than half of America’s population consists of two demographic groups: Baby boomers and Generation Y. Gen Y is leaving the nest for high-tech urban jobs at the same time many boomers no longer need large suburban homes. The demographic convergence is pushing construction inward, accelerating the rehabilitation of cities and forcing existing car-dependent suburbs to develop more compact, walkable, transit-friendly neighborhoods.
This rebuilding will spur millions of new construction jobs and, if energy efficiency is encouraged, create new markets for sustainable materials produced by American manufacturers.
Outside of sustainable economic growth, there are other benefits to the redevelopment of America. Sedentary lifestyles in a car-dependant age have led to the expansion of chronic illnesses like obesity, diabetes and heart disease. The strain on the health care system can be mitigated with healthier Americans who get out of their cars as they go about the day.
Imagine taking millions of cars (and their emissions) off the road. Let’s also think about the effect of replacing aged housing with clean, green, energy-efficient housing. The U.S. Green Building Council estimates new, sustainable developments could reduce water consumption by 40 percent, energy use by 50 percent and waste by 70 percent.
Meanwhile, walkable communities do not exist in sufficient quantity. Lack of supply has created one of the biggest hurdles to living in a walkable community — affordability. Because real estate absorbs so much of our wealth, it is essential that we focus on pushing on the door unlocked by our demographics. The two largest population groups, half of our population, want communities the market is not delivering.
Ultimately, the market cannot act in a vacuum if we truly want to redevelop America. Federal transportation policy must continue to be reformed, and metropolitan regions must continue to work together to chart a common vision, if we want to fully capitalize on the next real estate boom.
Jonathan Blackwell is a senior mortgage banker and renovation loan specialist for PrimeLending.