Atlanta’s homebuilding market
is experiencing a resurgence.
By Kelly Skinner
Chinese philosopher Lao
Tzu is credited with this famous quotation: “The journey of a thousand
miles begins with a single step.” These wise words serve as a simple reminder
when considering the state of Atlanta’s homebuilding industry. For the
past two years, housing markets across the United States have been hit with
slumping home prices, foreclosures and sluggish sales, halting the construction
of new homes and neighborhoods. The path back to healthier times has felt like
a far-off destination.
Thankfully, however, things are beginning to look up for the metro area’s
market. The first few steps have been taken toward more growth and the construction
of more beautiful homes for the Peach City and its outlying suburbs.
“The tax credit was a big help in terms of motivating buyers. The industry
is starting to see an upward trend with things starting to head in the right
direction, though there is still a long way to go,” says David Ellis,
executive vice president of the Atlanta Homebuilders Association. “Atlanta
has always been a city where the jobs push the market. We’re seeing a
resurgence in growth. There’s plenty of affordable land, which keeps homes
more affordable. Then there’s a lot that has to do with consumer confidence.
Builders are being really creative with the current situation, and many are
working directly with banks to help with assets and to make sure homes are both
decent and affordable,” says Ellis.
Housing starts were up substantially in the first-quarter of 2010, increasing
to 1,517 units or 42 percent above last year’s first quarter figure of
1,068. “Once you peel back the banana skin, glimmers of hope start to
emerge,” says Eugene James, Metrostudy’s director for the Atlanta
division. According to a report by Metrostudy, a primary and secondary housing
market research group, 14,000 new jobs were created in the market in 2010. “With
new jobs comes stronger consumer confidence, leading to more spending and eventually
to more home purchases, which will lead to even more job creation,” says
James.
Right now, housing inventory is down by 40 percent from last year, with 2,488
homes sold in the first quarter of 2010 as opposed to 3,399 homes sold in the
first quarter of 2009. This means that closings are ahead of starts and the
region has rid itself of an oversupply of homes, which is both good and bad.
James expects the trend to continue throughout 2010, which could lead to an
undersupply of new-construction homes. For consumers this is great news. Prices
for single-family homes and townhomes are down by 10 percent.
But this isn’t to say that Atlanta-area builders have stopped constructing
new homes. Many are busy with multiple projects, particularly when it comes
to entry-level homes and 50-plus active adult housing communities. Cresswind,
a new community on Lake Lanier, is a prime example of the surge in 50-plus housing.
This resort-style community offers both two- and three-bedroom ranch-style homes,
and when completed, will boast 734 homes within 214 acres of green space. With
multiple homes in the works, eight houses sold and a three-level clubhouse (with
a ballroom, billiards, a rooftop bar and multiple fitness classrooms) scheduled
to break ground October 2010, the Kolter Group, a private investment group responsible
for the community, couldn’t be happier. A Florida-based company, Kolter
picked up this large-scale project, once known as Seasons on Lanier, when the
previous builder, Levitt and Sons, LLC, went out of business.
“In the last eight months or so, Kolter has made an aggressive move toward
active adult lifestyle communities,” says Robert Rademacher, vice president
of Kolter Signature Homes. With $9 billion in assets and previous adult community
success stories under its belt, Kolter’s involvement makes Cresswind all
the more promising. “The Club House is the essential part of the community,”
says Rademacher. “It is literally the heart and soul of what the community
is all about. It’s amazing the commitment that Kolter has put in right
now. People want to see these amenities up and running as soon as possible and
Kolter is doing everything in its power to make that happen by hiring the right
architects and builders.”
Rademacher’s involvement at Cresswind has shown him that the trend in
50-plus housing just makes sense. Every day 5,000 people turn 55. That represents
7 million active adults over the next 15 years. This age group has the greatest
amount of disposable income out of any age group, and it is still the biggest,
most affluent demographic in the U.S. “We think that the active adult
market is going to be the leading group for homebuilding moving forward—there’s
far more of them and a far greater demand than what is currently being met,”
says Rademacher.
Traton Homes has taken a different approach with its building projects. Instead
of focusing on 50-plus homes, the company has set its sights on communities
with fewer home sites. “We are currently building in 11 new home communities
in Cobb, Cherokee, North Fulton, Paulding and South Fulton counties, and will
be opening more new communities this summer,” says Kimberly Garwood, marketing
manager for Traton Homes. Though the firm’s target demographic and style
of homes hasn’t changed much, the demands for location have. “More
and more buyers are looking for locations ‘closer-in’ today,”
she says. That said, Traton’s strongest results have come from its projects
in Cobb, North Fulton and within the Perimeter.
“Just like every other builder, Traton has been affected by the economic
downturn. There are fewer buyers out there so it is more important now than
ever that we as builders focus on what homebuyers really want,” says Garwood.
”We are making sure that we are able to offer a good quality product with
features that matter most to our customers at a price that is highly competitive
in today’s market. Three-car garages are very popular and there continues
to be a demand for both basement and traditional slab homes. We continue to
develop new product to make sure we meet our customers’ needs.”
As trends in the market fluctuate, builders are approaching new modes of thinking
as well as focusing on crafting greener homes closer to the city center. “In
a time when the market is slow, from an outside perspective, it seems like it
might be a good idea to have eco-friendly homes available when people have money
again,” says Ellis.
Today’s biggest housing markets are the same as they were five years ago,
with Atlanta in the mix with other major players, like Seattle and Dallas. “The
demographics are really showing job growth, so there is going to be a need for
new homes. There are going to be things for builders to do in the future and
the long-term prospects for housing are really good,” says Ellis. “Housing
in Atlanta has always been considered an affordable commodity. There’s
no reason for low prices to change once the market evens out again.”