For Home Builders, Atlanta Is America's Gold-Medal Winner
FOR home builder Rick Porter, 1995 may go down as a banner year; a visit to one of his subdivisions north of Atlanta explains why.
On a cul-de-sac lined with tan and gray two-story homes, workers cut drywall, install windows, and put up frames of houses bought before they're even near completion.
"We're basically selling more houses than we can build," says Mr. Porter, president of Richport Properties Inc., whose homes are priced in the $100,000 to $120,000 range. "We're selling 30 percent to 35 percent above our typical average sales right now."
Porter's story is echoed by other builders in this Southern city - the hottest market in the country for the construction of single-family homes.
In the first nine months of the year, Atlanta was the only city in the top 25 markets with an increase in single-family building permits. The area boosted its permits from 25,400 during January to September 1994 to about 26,900 over the same period this year, an increase of 6 percent, according to the National Association of Home Builders in Washington.
"Atlanta is on a phenomenal roll in home building," says Brian Bragg, editor of US Housing Markets, a publication of the Dallas-based Lomas Mortgage USA.
Atlanta's placement as a top market is nothing new. During the past 10 years the city has ranked first or among the top 10 in number of home sales. What's surprising is the continued momentum. Atlanta continues to grow while most of the nation has experienced a slowdown this year in single-family home building after a strong 1994.
Propelling Atlanta's boom is job growth and Olympic-related building. Over the past several years, the city's job growth has hovered at 85,000 a year, and economists predict it will add almost 100,000 new jobs in 1996.
Phoenix-Mesa, the No. 2 housing market in the country, has had a 3.5 decrease in permits, falling from 22,380 to 21,600 during the first nine months of this year. Other top markets - Chicago, Washington, and Las Vegas - have seen declines from 6 percent to 16 percent.
It has been an increase in multifamily permits that has offset the decline and boosted the total number of building permits in most cities. "1995's not going to be a rip-snorting year like we had in 1994, but it will still go down as a fairly solid year," says Jay Shackford, spokesman at the National Home Builders Association.
Nationwide, sales of both new and existing homes have fallen by about 5 percent since last year, according to the National Association of Realtors in Washington.
The down trend in activity this year is due in part to fewer corporations relocating employees, worker concerns about job security, and a decline in the number of first-time homebuyers, says Laurie Moore-Moore, co-editor of Real Trends, a Dallas-based newsletter that follows the real estate industry.
When interest rates first dropped several years ago, first-time buyers entered the market in droves. By 1995, many of those buyers had already bought homes. Thus, Ms. Moore-Moore predicts 1996 will be flat or decline slightly further, even though the Federal Reserve has just nudged down interest rates a quarter point.
"The housing market is a little less sensitive to interest rates than it has been in other cycles simply because there's not pent-up demand like we've had in the past," she says.
While California and much of the Northeast have watched the market flatten or tick downward, pockets in the Rocky Mountain States, the Midwest, and the South are bucking sluggish sales.
In Atlanta, demand for new and existing homes - mainly in the $100,000 to $200,000 range; the more expensive markets have been softer - continues to keep realtors like Terry Morris busy. "We've got this huge engine pushing demand for housing right now," says Mr. Morris, executive vice president of Northside Realty.
Morris expects next year to be strong for housing sales. "Then we'll take a breather in 1997," after the Olympics ends.
How Atlanta will fare past the Olympics is a concern for many in the real estate business. "There's clearly some anxiety on the horizon because of the length of the strength," Porter says. "There can be only so much demand."