Housing: An unmet need

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.

6 comments Add your comment

zeke

June 13th, 2013
8:59 am

Sprawl IS NOT BAD! What is bad is piling people on top of each other in cities and so called urban areas! All that causes is more crime, more murders, more assaults, more robberies, more rapes and sexual assaults. Sure we in the suburbs and rural areas also have crime, BUT, WE ARE MUCH MORE SAFE THAN THOSE IN CITIES AND HOUSING PROJECTS AND AREAS WHERE PEOPLE LIVE ON TOP OF EACH OTHER!! Now you morons want to force us to take on these criminals by forcing marta into our areas to allow those who commit crimes easy access to us! NO! NOT! NEVER!

Dusty

June 12th, 2013
7:36 pm

I really don’t understand the “un-met” need for housing in Atlanta. Every time I go out and around I see houses for sale, some middle class, some mansions, and a few I’d call “working class”. The real estate people seem to be very busy with sales. Many of the banks are advertising their fine mortgage rates. A few foreclosures are still available. There is transportation within two miles for most of these homes.. So where is the shortage?

If you want an absolutely new house, I can’t believe there isn’t a contractor who is ready and willing to build one for you. Perhaps the shortage is contractors making money hand over fist like the lost boom that went kaboomI

If you want to buy a house, call your real estate dealer and tell her. You will soon be deciding between several attractive places. .

Shamehia

June 11th, 2013
7:30 pm

“Meanwhile, walkable communities do not exist in sufficient quantity.”

True that, out here in my burbs sidewalks are a rarity. If you are foolish enough to walk on the shoulder of the roadway you’re apt to become a pedestrian fatality. We are totally car oriented, no car = SOL. If the ARC could convince local governments to pass ordinances requiring every new single and multi family development to build sidewalks that would be a huge step in the right direction.

Bernie

June 11th, 2013
7:19 pm

A Overwhelming Majority of those same Homes Frank K. Norton Jr referenced were Built by the Hands and Sweat of the many Undocumented Hispanic and Latino workers of Georgia and throughout This Great Nation. Now they are Through building the Beautiful Homes and Very Fine Communities. Many Georgians and other Americans this very minute so comfortably enjoy and adore. These same Georgians and Americans are NOW railing against their very presence in the communities and Cities of America

Such Horrible and Shameful Behavior from so called God Fearing, Jesus Loving Christians Of Georgia and America. Jesus too! would say this is also Shameful, Disgusting Behavior and truly Not followers of his Word and Deeds.

Clyde

June 11th, 2013
7:10 pm

I think that walkable communities are the future as far as the urban setting goes. Since moving into the downtown area of Atlanta a couple of years ago and deciding to sell my vehicle and give up driving also a few years ago, I find that life is a lot less stressful. If I need a car for say a weekend, there are always rental options. Within the city everything is within a few blocks. Ok, I admit that it did take some planning for this, but so much better in my case. Public transit is available although it would be nice I think to expand it more to the outlying communities & to have all the regional transit systems merge to make easier for those who ride. That will alone will go a long way to helping people decide weather or not to live in a urban walkable area that is also totally very transit friendly to the entire region.

SAWB

June 11th, 2013
2:38 pm

I’m not sure everyone wishes to live in “walkable, transit-oriented urban communities”, but I do think the attraction of moving further and further out is waning. An area ripe for expansion is that of infill housing where older homes in desirable neighborhoods are replaced with modern homes. Also, there are still undeveloped lots in many areas which can be developed to provide housing. However, municipalities need to assure this is done in a way that provides value for the property owner, satisfaction for the buyer and maintains the stability of the existing neighborhood.