The single family home and condo market here in Atlanta has slowed.
There… I said it! However the doom and gloom that all of the national media and local newspapers are constantly reporting on are starting to get to me with their blatant misrepresentation of the truth.
They certainly aren’t flat out lying, they are just bending the truth as they love to do.
They certainly aren’t putting these stories on the cover of their papers:
- Atlanta leads fight to lure young and restless
- Atlanta Ranks 10th in the country post Bubble
- In fact the only thing that may be cooling is the housing bubble, check out Brad Nix’s coverage of Mark Cubans Bubble tracking tool
- Atlanta to add 2 Million residents by 2030
- Slow and Steady wins the race
So anyway… Here is a great example in Today’s cover story of the AJC:
Georgia foreclosures jump 99%; rate is nation’s 3rd highest
Homeowners feel pain as climbing adjustable mortgage rates bite back
In the article they paint a gloomy picture stating certain facts and omitting others. Lets face it, the average reader or even real estate professional typically doesn’t fully understand the foreclosure process. I would like to say that the AJC doesn’t understand it either…but my guess is they do.
My point:
The article states in the headline and the body of text that “Foreclosures in Georgia are up a stunning 99 percent in the past year. The state now has the nation’s third-highest rate of foreclosures: One in every 449 households. In October, that meant 6,895 properties were in the foreclosure process.” See the missing number? This is like where is waldo… 
Since I worked in the foreclosure business for some time buying at auction, selling, negotiating workout arrangements with lenders, taking properties Subject-to and the thing we were always trying to figure out was this missing piece of info. Still can’t guess? Well its simple… it is the actual number of homes actually sold at auction “foreclosed” if you will. See this article clearly states that the homes entering foreclosure was up but it never states that X number of houses were foreclosed in 2005 and this is how many so far this year. I suspect because like the research nuts that we are… they couldn’t find this out either. I looked back at many of their Doom and Gloom stories dating way back and cant seem to find the exact year by year statistics.
I would love to hear their response to this clear and obvious omission just to sell some newspapers.
The AJC Response:
Mr. Stevens, Thanks so much for the message.
Have you sent me other emails (’I'm still waiting’)? This is the first message from you that I am aware of. If you have sent other messages that were snagged by our spam filter — or that I lost in a barrage of other communiqués — please accept my apologies. I do try to respond to readers. About the actual number of homes lost, you raise a good point. That ‘missing number’ would be nice to have in the article. Here’s why it is not there: Because there is no central database that tracks that number. The deeds that indicate a transfer of ownership are filed in court, but there is, as best as I can tell, no one who puts them all together. I do hope we can do some more research and come up with something more definitive. I wish we had done so already, but it will take a fair amount of time — and keep in mind that when we do get to research this, we are not likely to get a precise number. That said, I don’t think we have tried to tell people that all properties in the foreclosure process end up with the homeowner chucked out. We said, ‘hundreds’ of homeowners would lose their homes. Think about the six thousand-plus homes that were listed last month. Attorneys who are involved in this have given me a range of estimates, from about twenty percent to nearly half. Let’s say it is at the low end of that
— let’s say it is even fewer. Let’s say that a mere fifteen percent of homes that are advertised as being in the foreclosure process go all the way through: That would be roughly nine hundred homeowners (out of the six thousand) losing their title. I do hope that at some point we can get closer to the precise number. But in the meantime, what we used — ‘hundreds’ — seems like a conservative estimate. As to whether the question of whether we should ignore or downplay this story, I think a ninety-nine percent increase in foreclosure filings seems significant. As to the larger question of whether we are making too much of trouble in real estate, I think the stories we have done are fair — especially in a context of rising inventories, falling sales numbers and stagnating prices. Meanwhile a large reservoir of homeowners with modest incomes are holders of mortgage products — adjustable rate mortgages (ARMs), option ARMs and interest-only mortgages — that set them up for problems. Which means that this trend *might* get much worse. You may disagree. Thanks again for writing.
My Response:
Well… when you claim in a headline that Foreclosures are up 99% Then admit that:
“About the actual number of homes lost, you raise a good point. That ‘missing number’ would be nice to have in the article. Here’s why it is not there: Because there is no central database that tracks that number. The deeds that indicate a transfer of ownership are filed in court, but there is, as best as I can tell, no one who puts them all together.”
I knew you didn’t have this missing number the second I read the Headline… that is why I wrote my post…The article headline should read:
Homes going into Foreclosure are up 99%
In my opinion there is a big difference
December 6th, 2006 at 2:54 pm
Great Post. In fact, I believe that slow down you mentioned to start this post may have been somewhat influenced by all of the negative press about the Housing Bubble.
Atlanta has never had a bubble, because we have never had drastic appreciation. It has almost been a perfect real estate market for over 15 years. Slow and steady growth with moderate appreciation. Atlanta has led the country in new housing permits for the last 13 years. Yet now we see a slow down? Who wouldn’t be a bit scared to by a home or condo if every time you pick up a paper or watch the news their are stories of the BIG BAD NATIONAL HOUSING BUBBLE.
Real Estate is a local market driven industry and is rarely affected by national trends. This time, the media may have helped cause the slow down in Atlanta.
But let it be known that Atlanta still has appreciation and homes are still selling. We are not in a downturn, just a slow period that should rebound nicely in 2007 (provided the media doesn’t scare the buyers even more - isn’t all news going to this scare tactic?).
I feel better now that I have said my peace.
December 6th, 2006 at 2:59 pm
Exactly Brad!
The whole thing is just kinda wacky! Without a huge run up in prices like in places like Phoenix, Las Vegas, Miami… Atlanta really hasn’t experienced this.
December 6th, 2006 at 4:06 pm
Very interesting! I look forward to hearing Michael’s response.
December 7th, 2006 at 10:12 am
My take on it is that the media what this to happen. It’s news to them. They seem to want home owners to go into mass hysteria and panic selling off their homes so they can report on it. Look at how long they have been singing this same song. On a side note they have been doing the same thing with the Iraq war as well “Civil War”. As if they want these kinds of things to happen.
Smart people need to just listen to multiple sources of news and come up with their own conclusion.
December 11th, 2006 at 6:28 am
I am glad that the “housing Bubble?” is out of the news. The press is the biggest cause of the softening of the Atlanta real estate market. There are certain sub markets with in Atlanta that have an over supply problem. Some areas have over an 18 month supply of new SFR’s. Hopefully this slowdown will shake out the amature spec builders. (Bored Housewives in partnership with their home renovators) But in general well built and conceived projects are selling at a fairly constant rate. The oversupply is pushing margins a few points less than last year. Look for a reduction of supply in the beginning of 2007, and a strengthening of the market in 2008.
December 11th, 2006 at 4:17 pm
Jeff,
I couldn’t agree more. There certainly has been a bit of an increase in “johnny come lately” Builder/developers/agents out there in the past 2-3 years.
Keep up the good work building such quality product. I love the house you built off of Jett Road,
http://www.idcproperties.com/inc_icon_pastprojects_details.php?prop_id=29
It is always nice to see people going the way of quality and well thought out design.
January 11th, 2007 at 5:31 pm
Giles,
Thanks for laying the smack down on these haters. The thing that they don’t tell our average sheep of a consumer is that real estate is quite different than traditional Dow or NASDAQ equities.
If I sell my shares of Google, I can park my cash in a savings account or any other of investment of my choice. Thus a stock can see huge amounts of shares for sale at the same time driving down the price.
If I sell my home, I have to either buy a home to replace my existing home or take a rental unit which also takes housing inventory off the market. This means there is some protection to huge amounts of inventory on the market. The people who really get stung by a housing slowdown are dumb people who buy more than they can afford or condo flippers (no not the dolphin).
The rest of the units will be absorbed by the eminent rental market boom which typically follows a housing boom. Chances are the dummies that bought more house than they can afford, or the flippers who overextended themselves will be renting the very same units absorbed by the rental boom.
January 11th, 2007 at 5:39 pm
Good point G’
I need to get you posting to my blog more often!
Giles
January 11th, 2007 at 10:41 pm
It has almost been a perfect real estate market for over 15 years.
The statement isn’t entirely true, the market has been “perfect” since 1995. The Atlanta market had seven year prior period in which inflation-adjusted prices fell (1988 - 1995) nearly 14%. You can get more details about the Atlanta market, including Atlanta forecasts and recent market history here