subject: Atlanta Real Estate Market - Is the Worst Really Over? [print this page] Atlanta Real Estate Market - Is the Worst Really Over?
There seems to be some contention on the internet as to the condition of the Atlanta real estate market. Some believe that the worst has come and gone, while others claim that a shadow inventory of unsold foreclosures, as well as option arm mortgages that have yet to recast will negatively influence the Atlanta real estate market for years to come. This article seeks to explore the present and future of the Atlanta real estate market in detail.
The unemployment rate was reported to be 9.8% in November 2009 in Atlanta alone, and 10.3% in the state of Georgia. However the unemployment rate is not equal to those of all walks of life. For example, The New York Times reported in their article, "The Jobless Rate for People Like You," that the unemployment rate for all men and women with a college degree or higher was 4.5%. While manufacturing positions in the Atlanta area may have been lost forever, the presence of several great colleges and universities in the area will prepare the next generation of employees for the next wave of jobs. Georgia received a scant 24,681 stimulus jobs, according to CNNMoney.com, so it is doubtful that the stimulus will make any real dent in the high unemployment throughout the state.
No doubt the high unemployment rate in Georgia contributed to the 8.6% foreclosure rate, which in term caused the massive bank failure throughout the state-25 banks failed in 2009 in Georgia alone, according to CNNMoney.com. The question is: are the people who bought in certain neighborhoods and suburbs "safer" than others in terms of preserving their home value? After all, just as the unemployment rate does not ring true for people of every education background, so the neighborhoods in Atlanta cannot possibly all be equal when it comes to selling a home.
But perhaps the most frightening aspect of the real estate market throughout the U.S. today has to do with option arm mortgages. Option adjustable rate mortgages, or option arm mortgages, are mortgages where those taking out the loan pay only a portion of the interest for several years. The remaining interest compounds on the principle, and when the new principle reaches a certain ceiling, the entire mortgages recasts, and the person holding the loan is stuck with a payment that accurately reflects both the principle and the interest. Studies have shown that as many as 88% of option arm mortgages have yet to recast and reach their balloon payment.
However, on a more positive note the Housing Opportunity Index in Atlanta ended at 79.2% in 2009. The Housing Opportunity Index, or HOI, was developed by Wells Fargo and the National Association of Home Builders to reflect the affordability of the mortgages that are being made in certain parts of the country. The HOI factors in that a family can only spend so much of their income on a home, and it takes into consideration the median income for the region where the mortgage is being made. Today the HOI is higher than it has ever been since it was begun in 1991. So while the economy may continue to sink, we shall recover strongly and be the wiser for our experiences. While manufacturing jobs are of the past, and the housing market may never recover to the point of wild speculation that it had before the recession, information-based and creative positions will take their place. The workforce will be educated to meet the demands of the new economy, and predatory lending should be sharply curtailed in all future endeavors.
