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Everyone’s Questions About Real Estate & the Economy - 2009-08-02
Last week I had the privilege of visiting with the Douglas County Chamber of Commerce, listening to their concerns and answering as best I could their many questions about our real estate market and the economy in general.  While feeling the recession like everyone else, these entrepreneurs and business executives from west metro Atlanta are determined not only weather the current storm, but to emerge stronger on the other side. Their questions covered these topics:

Q: How is the real estate market doing in metro Atlanta, and when can we expect to see some visible signs of improvement?

A: The market is hurting. We have a glut of homes for sale, both new and resale, all over the metro area, and buyers are taking their own sweet time in deciding whether or not they want to take the plunge. From a purchaser's perspective, interest rates are low and sellers are quite willing to negotiate. But lenders have seriously tightened their approval requirements, and unless you have a large cash downpayment or perfect credit (or both), it may be difficult to obtain the financing you seek.

To complicate matters, many neighborhoods in metro Atlanta are littered with vacant bank-owned homes. Some are actively being marketed, some are just sitting empty, many are eyesores and almost all are deteriorating quickly and dragging down property values.  And just to pour salt on the wound, lenders have ordered appraisers to include distress sales of foreclosed homes to their list of comparable sales, even though they are not indicative of typical buyer behavior. Until the inventory of bank owned homes declines, our market can not fully recover.

Q: When will things start to improve?

A: For this question, I prefer to yield to Federal Reserve Chair Bernanke, who said recently that he saw "signs of stabilization" in the housing industry, and that he believed that the recession would be over by the end of this year. I reminded the group that Mr. Bernanke is a man of few words, and that those few words are often intentionally vague.

As for the Atlanta real estate market, some agents I am talking to tell me that houses inside the perimeter are generally selling faster and for more money than similar homes outside 404 land. Additionally, local bankers are cautioning that the commercial real estate market may have some crying to do before this recession is over.

I reminded the group of two important facts:

* We are not in a depression, and any comparison to the 1930's is extravagant exaggeration; and

* These things tend to come and go in cycles, and we are likely nearing the end of this recession. Anyone offering a more specific prediction is only guessing.

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