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No 'bubble' in south metro housing

By Michael Davis

While some regions of the U.S. are experiencing what some fear may be a housing "bubble" – home prices skyrocketing in only short periods of time, only to burst and come tumbling back down – housing insiders in the south metro area say home prices here are rising at very reasonable and steady rates.

"We have a healthy appreciation here, but I don't think we have the 'bubble' you hear about," said Sandra McCrary, an assistant broker for Re-Max Advantage based in Stockbridge. "I think that occurs when you don't have land to develop or it's too expensive to develop," she said.

The Atlanta Regional Commission, metro Atlanta's regional planning organization, predicts 2.3 million more people to call the region home by 2030, bringing its population up to around six million. More than 200,000 more will call Henry County home, more than doubling its population, ARC predicts.

But plenty of available land, especially in Henry and further south, means home building should remain steady, at least for the foreseeable future.

"How many people have you ever heard of that retire to the north," Gov. Sonny Perdue told the Henry Council for Quality Growth, a consortium of builders, developers, real estate and other growth industry insiders on Wednesday, attributing the observation to the former commissioner of the state Department of Natural Resources. "I believe the next 20 years are going to be the decades of the south metro area," he added.

Rajeev Dhawan, director of the economic forecasting center at Georgia State University, said that new building starts mean plenty of available housing, which keeps prices from rising artificially.

"Housing bubbles are only a problem for first-time home buyers, not existing homeowners," he said.

"I don't think there is a housing bubble in the Atlanta area," he said. "Prices are not going up because they're building a lot."

Nationally, construction of new homes rose 0.2 percent in May as the housing market continued its boom in response to low mortgage rates, the Commerce Department reported Thursday.

The 0.2 percent increase in construction reflected a 4.7 percent increase in construction of single-family homes, which rose to a rate of 1.704 million units last month. Construction of apartments, however, fell by 19.1 percent to an annual rate of 266,000 units.

But in some parts of the country, especially in areas with denser populations, home prices have risen dramatically, leading some to compare the housing market to the dot-com bubble of the 1990s that suddenly burst, sending stock prices tumbling. In an address to Congress' Joint Economics Committee June 9, Federal Reserve Chairman Alan Greenspan called the housing phenomenon a more of a "froth."

"There do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels," he said.

Part of what has driven home prices up in markets such as Washington D.C. and Las Vegas, is that speculative investors have bought properties looking to turn them around for a profit, said Chris Knight, vice-president of the Knight Group, a development and building firm based in Clayton County.

"We just don't have that problem here," he said.

"It's definitely kind of a buzz in the media ... and there definitely are pockets and it's a real thing, but thankfully, we're not experiencing it."

Greenspan told the Congressional committee in his address that the national economy could "weather" regional housing price declines, and that the nation's banking and mortgage systems are less likely now as in the past to be impaired by "regional house price corrections."

The Associated Press contributed to this report.