Newton County's housing market has hit rock bottom, but the future is bright.
Foreclosures are down, home sales are up, available housing is low and Newton County is set to grow in the years to come if people are willing to financially invest in its future.
That was the conclusion of North Georgia real estate guru Frank Norton Jr., the president of The Norton Agency, who studied the area's statistics for the past three months. Norton presented his findings to community leaders at the Newton County Home Builders Association's 2012 and Beyond Road to Recovery event.
"You've got to believe in Newton County and believe in its future. I'm seeing the numbers and they're not bad and have great room for improvement," Norton said in his conclusion. "What we need to do is - all these foreclosures that are happening here are going to be rentals some day - ifyou have a little extra cash, invest in Newton County and fix it up and make good quality housing. We need to be investing in that vacant land in Newton, because it's the lowest it's ever going to be."
Newton County and Georgia as a whole have already worked through most of their foreclosures, Norton said, and now the majority of home sales are between regular sellers and buyers, and don't involve banks or distressed homeowners on the verge of losing their home. He said distressed sales are at 25 percent of sales as of June 2012, down from 35 percent in January.
Norton said that number shows that average Americans are buying average priced (around $175,000) homes and getting back to their lives.
The supply of inventory housing is down across the county from nine and a half months of supply to just more than six months of supply. Meanwhile pending home sales have steadily increased since May 2010 and continue to rise.
Employment is up in metro Atlanta, as the region gained 68,400 jobs during the 2011 calendar year. Norton said Atlanta's home sales could be 20 percent higher in 2012 if the current trends keep up.
All those factors show that the housing market continues to mend. Newton County could use any growth, because housing construction continues to be nearly non-existent. Newton had the third lowest number of houses under construction among the 22 metro Atlanta counties and the lowest supply of new homes in the region at just three and a half of months of supply.
"In a traditional market, at three and a half months of supply lenders would be loaning left and right to build houses here. That's what happened in the last cycle," Norton said. "Lenders are paralyzed and bankers have hunkered down and are not looking at any growth."
Even in terms of vacant existing housing, Newton County has a relatively low supply.
However, where the local market is saturated is vacant lots that are ready to be developed. Newton has 5,198 vacant lots, which would be a 1,112-month supply at the current building rate of nearly five new homes a month, or 56 a year.
"We have way too many (vacant lots), and months of supplies is an incredible number. We have got to get that engine started back," Norton said.
Luckily, the county is on pace to sell 125 new homes in 2012, which means the inventory continues to sold off. Norton said Newton had only 58 new housing units available.
He said he expects Newton County to see 25 percent more home sales than last year.
More than half of those sales are still foreclosures and short sales, but traditional resales and new home sales combined aren't far behind.
Different types of houses
So, the market is improving, sales are up and new homes are already needed and more will be needed in the future. However, Norton said he expects home construction to continue to evolve.
He said he expects simpler houses to be built, with frills and extras coming later.
"I grew up in a house that didn't have sheetrock in the garage and didn't have a garage door. Those were all later. I'm not sure where we got off needing a three-car garage with tongue and grove paneling and custom cabinets, much less the surround sound TV that some people put in those garages," Norton said. "We're going to go back to basic housing. Lots of floor plate, less vaulted rooms and a room above that. We're going to back to unfinished basements, so the handyman can finish that (later)."
Norton said usable square footage will be important, along with the exterior space around the homes.
Norton said mid-level builders, those who build between five and 75 homes a year, have been greatly reduced in the Atlanta market, while the larger national builders are the ones dominating the market. However, the national builders don't want to build in Newton and other counties on the periphery, so Newton will have to rebuild its home building community.
As land costs drop, Norton said land costs will account for 18 to 22 percent of a home's price, which is the same percent as buyers were seeing in the 1980s and 1990s. During the housing boom from 2000 to 2007, land costs accounted for 25 to 43 percent of a home's cost.
Still a cash market
As banks continue to be paralyzed, Norton said 39 percent of home sales nation