Urban Monk Blues

Oh, look.  The New York Times ran an article about my hometown of Atlanta, Georgia  yesterday.  Let's see what they had to say, shall we?

A sprawling Southern metropolis, Atlanta has become one of the biggest laggards in the economic recovery. 

Oh, dear.  Apparently, prices for single-family homes like mine were down close to 12 percent last November, compared to a year earlier.  By contrast, prices of single-family homes in 20 metropolitan areas across the country were 3.7 percent lower in November than a year earlier, with average prices now at their 2003 levels. In Atlanta, home prices are now below their 2000 levels. 

So why Atlanta?  Well, it seems that in the '90s and 2000s, the city decided to make growth for growth's sake its major industry.  The region was attracting a large number of people from across the nation, drawn by the promise of plentiful jobs, warm weather, and affordable living.  Approximately 100,000 people moved here in 2006, and that influx of prospective new home buyers was expected to continue or even to grow.  So new subdivisions were constructed in ever-more-distant exurbs, and the suburbs and city were crammed with new homes, condos and apartments.  Construction cranes were everywhere, and with cheap, immigrant labor and low lending rates, developers couldn't afford not to build. 

However, the number of new residents moving here plunged to just 17,000 by 2009, the latest census figures available, and when you lose 80,000 people a year coming to a market dependent on construction and real estate, that’s going to be some problems.  From February 2008 to August 2011, Atlanta lost 60,000 jobs in construction and real estate, about 25 percent of all job losses during that period. In comparison, construction and real estate accounted for only 15 percent of total jobs lost across the rest of the nation.  Unemployment here is now at 9.2 percent, slightly higher than the national rate. 

Housing prices plummeted, and the Georgia countryside is now dotted with large luxury homes that never sold and is inundated with foreclosed properties. Atlanta has the most government-owned foreclosed properties for sale of any large city, with foreclosed homes represented 24 percent of all sales in Atlanta during the third quarter of last year, compared with a national rate of 12 percent.  Worse, the city still has a nearly 12-month supply of foreclosed homes, about 70 percent of which are sitting on the books of servicers and lenders, still waiting to go on sale.  Release of just a fraction of those properties can push prices even further down, and the market won’t reach bottom until the backlog has cleared.

Personally, I'm doing much better than the regional trend here, as my home, although single-family, is tucked into an urban neighborhood and not out in the sprawling overdeveloped suburbs where prices have dropped the most.  The urban infrastructure, such as highways and rail, combined with natural features like streams and greenspace, have created unintended barriers to in-town sprawl, and developers were not able to squeeze McMansions in between every lot around me.   

The most recent  (December 2011) on-line estimate I've seen for my house puts the price at about 6 percent less than what I paid back in 2004.  Now, while I, like most homebuyers, had expected the value to accrue, given the state of the economy, both nationally and regionally, I'm not too upset with a mere 6 percent loss in appraised value.  And if I can ride out this post-recession economy and prices start to turn around again, I might actually start to see some increase in value.  There's no point in buying high and selling low.  

Such are the marketplace worries of the home dweller.  Urban monk blues.  Everything is impermanent, and  there's no ultimate profit in worrying about fortune and wealth.