Atlanta’s Unemployment rate is still high 7.9% but our housing absorption in “A” locations is “RED HOT”…….
“The job market has gotten a lot better but now we don’t have enough houses to meet buyer demand,” said Eugene James, Regional Director for Metrostudy, a national housing intelligence and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
According to the Georgia DOL, the Atlanta region created 55,200 net new positions year over year ending March 31, 2013, up 2.4%. Private sector jobs did even better creating 61,300 positions, up 3.1%.
Most job sectors were up, including construction jobs (up 2.8%) and finance jobs (up 1.4%), “This is the first time in years since such a healthy increase has been seen in these sectors and reflects what we all have been experiencing in the housing sector” said James.
In March Atlanta’s unemployment rate was still high, at 7.9% while the March National rate decreased to 7.6% but net employment is up by 128,000 jobs from three years ago and “for those who lost their jobs it should be a bit easier to find a replacement job” said James.
Another pleasant surprise was finding out that the Georgia Department of Labor revised previously release figures upwards by quite a bit (revisions are done at least once each year). For instance December 2012 was changed from 33,200 net new jobs up to 54,600. “Perhaps the healthy job growth has contributed to the strong demand in housing” said James.
According to Metrostudys’ proprietary “boots on the ground” 1Q13 field survey results, new home starts increased 60% annually. “In some cases up to 80% of the homes currently under construction have already been pre-sold,” said James. First quarter quarterly starts were up by 68% and quarterly closings were up by 41% year over year. “We expect to see strong trends like these for the rest of the year and into next”.
Another reason housing starts are up by so much (positive job growth being a one major reason) is that inventories are at record lows. Finished housing inventory (homes 100% completely built and ready to be moved into) continued to decline by another 30% below last year levels. Only 2,431 houses are in the finished inventory category and are spread out over 22 different counties. “Fifteen years ago finished inventory was more than double where it stands today and the population had 1.3 million fewer people in the region. “No wonder home buyers are having such difficulty trying to find homes that are built and ready to move into,” said James. Many consumers who sold their existing home and had intentions of purchasing a new home immediately are having to rent for a short period of time while they wait for their new home to be built.
One issue that could cool down the new construction boom is the short supply of finished lots on the ground in the “A” locations. “Sure we have more lots in Atlanta than any other place on Earth, but current demand for housing is very low in these areas which contain more than half of the finished and buildable lots and typically are located in exurban portions on Atlanta. But one day home prices will get so high that the days of “drive until you qualify” (for a mortgage loan) will push demand back into these exurban areas as well,” said James.