The Home Builders Association of Midwest Georgia received what was generally considered good news when it received its annual economic forecast from officials of SunTrust Bank.

Speaking to the group at a recent membership meeting were Bob Chapin, senior vice president, and Neil Wedewer, executive vice president, of SunTrust’s Real Estate Finance Group, with much of the market data they used provided by Metrostudy.

The talk, which covered a wide range of economic issues, left the general conclusion that event if mortgage rates go up some and housing starts decrease a few percentage points, as anticipated, this area will still experience the third best housing year in history. This conclusion was supported by data provided by several national housing economists.

Beginning with the subject of employment, Chapin noted that the Metropolitan Atlanta area is seeing jobs return to this market. The Atlanta area was No. 12 nationally last year in job growth, adding some 42,000 jobs.

“Last year was the first time in several years that the Atlanta employment picture showed growth that was positive in all categories,” he said. However, this data is not reflective of the recent widely-publicized facility closings in this area. He also noted that Atlanta still continues to lead the nation in building permit activity.

Turning to mortgage interest rates, he noted that as rates continued down in recent years, home sales went up. However, he said that because of Hurricane Katrina and rising oil prices, consumer confidence was down. “It’s now going back up,” he reported.

Other information provided by Chapin included:
• The rate of U. S. home ownership has increased at a steady rate over the past 10-year period with the most dramatic rise in the Under 25 and the 25 to 29-Year Old segments, which Chapin said almost doubled.

• In the 10-county area served by the Midwest Georgia association (Butts, Coweta, Fayette, Heard, Jasper, Lamar, Meriwether, Pike, Spalding and Upson), and adding in neighboring counties Clayton and Henry, all of these counties have shown positive population growth since 1990, and projections from the State Office of Planning and Budget show that this will continue. At this time, Henry County is leading the way with Coweta second.

• Insofar as these same counties are concerned, housing growth has climbed steadily upward, with Henry and Coweta again topping the list. Employment growth for the area has also increased in all categories except manufacturing, which Chapin said has been “a drag in this area.” Manufacturing growth in this area went down by 12.3 percent between 1990 and 2004. The most dramatic increase was in the education and health services category, which went up by 402.9 percent.

• The Atlanta housing market in 2005 was the best housing market in history. Housing supply in the area was “under control but increasing”, and in the fourth quarter of 2005, closings matched starts. The housing market in the Metro South area continues to strengthen with 37 percent of the Atlanta closings last year happening south of Interstate 20. Fayette County has a 12-month supply of homesites, one of the best figures in the Metropolitan area, while in South Fulton, closings are starting to catch up with lot supply. In many cases where there is an over supply of homesites, investors have contributed to this situation. Overall, there is a concern with the increase in lot supply in most areas for the short term.

• Of the 30 top selling communities in the Metropolitan area, nine are in the Metro South area. These include Heron Bay (Henry and Spalding Counties) at No. 3, SummerGrove (Coweta County) at No. 4, Oakley Township (South Fulton County) at No. 7, Eagle’s Landing (Henry County) at No. 8, Union Crossing (South Fulton County) at No. 19, Cedar Grove (South Fulton County) at No 22, Brittany Park (South Fulton County) at No. 23, Pine Grove (Henry County) at No. 24, and the Enclave at Grant Park townhomes (South Fulton County) at No. 28.

• The year 2005 was also a good one for the resale market.

Wedewer gave a brief overview of the commercial real estate picture. “Atlanta was built on transportation, and the Southside is very important to transportation,” he said.
There has been huge growth in industrial projects, he reported, noting that Henry County serves as the gateway to the city.
He also mentioned that near Newnan, Pattillo Construction is starting to develop seven million sq. ft. of industrial space. “The Southside has lots of flat property, which is good for industrial use,” he said. “This will create lots of jobs.”
Wedewer listed medical and retail as other segments of business which are expanding in the Southside.

Wrapping up the report, Chapin said that while traffic and sales in the 4th quarter of 2005 were slower than in the final quarter of 2004, “we saw slight improvement in January 2006.
He also cautioned that the market will not cover mistakes. “Builders are making sure that their deals make sense. Deals are being made because they make sense, and not because the market is good.” It could be termed as a “tapping of the brakes”.

In general, he pointed out, housing supply is currently in balance (but finished and vacant inventory is on the rise), and mortgage rates are still affordable. Still, there are some “wild cards”, including mortgage production restriction; base and plant closings and company job reductions; the national economy; consumer issues such as energy and gas prices, interest rates, and credit card payment changes; investors/speculators; and China and the rest of the world’s impact on the marketplace.
SunTrust also served as sponsor of the meeting, and 2-10 Home Buyers Warranty is the 2005-2006 membership meeting underwriter.

More information about the Home Builders Association of Midwest Georgia can be obtained by calling Sandy Boda, executive officer, at 770-716-7109.

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