Newton County’s housing market is continuing its slow ascent in 2013, as sales prices rose significantly in July and more home builders expressed tentative interest in the area.
While total home sales have been down the past two months – not uncommon during the summer, according to real-estate officials – average sales prices continued their sharp rise, increasing from $100,419 in June to $118,529 in July, which is likely due in part to lessening foreclosure activity.
Meanwhile, the market for new construction is taking small steps, being driven almost entirely by buyers paying for construction, though Conyers-based Castle Homes, which is building one of those homes for a customer, is considering building a few speculative homes.
Kicking the tires
"The house that we’re building right now is presale, but we do see that people’s interest is starting to pick up. Newton County is starting to garner more interest," said Castle Homes President Floyd Lance. "What we’re hearing from Realtors is that they have customers at certain price points in Newton County that they cannot fill right now, and it’s my opinion there’s enough demand in the Newton County area."
Lance said his company is considering partnering with an investor to build some speculative homes – those with no predetermined buyers – but said they’re "talking about stepping cautiously.
"People are starting to ask and kick the tires (on building in Newton County)," Lance said Friday.
The unmet demand is mostly in the $150,000 to $250,000 range, for homes from 1,600 to 2,800 square feet, Lance said.
Much of metro Atlanta, including Henry County, is starting to build back up, Lance said, which signals hope when combined with the arrival of more employees to pharmaceutical giant Baxter International’s plant on the Newton/Walton county border.
However, Lance said Newton County is still an unproven market given the huge inventory of lots, appraisal values that remain low, and local banks that are working with builders but remain hesitant.
"Our opinion is this market will gradually start increasing, and we may start a few homes to test our theory," Lance said.
Smoothing out the process
While Newton County has a lot of developed lots ready for construction, Lance said it’s not always easy to build on those lots. A developed lot that is no longer owned by the original developer – nearly all of Newton County’s lots – requires a new builder to get approval from the state to build, which can take 60 to 90 days and cost $1,000 in engineering fees, Lance said. Lance said the state can change the law, but said he believes it’s also possible for the county to change the provision, which he said would promote more home building.
The county has already added other restrictions – including zoning overlay districts – which Lance said aren’t bad, but do increase requirements on builders. County Chairman Keith Ellis said the county is trying to prepare itself for new building, and is putting in processes to make sure sewer and water lines, many of which have sat unused since they were put in five or more years ago, still function.
Many planned subdivisions also had roads put in, but because the subdivisions were never completed, the roads never had a second coat of pavement and aren’t ready for significant traffic. The county is trying to make sure all necessary steps are completed – including small things like replacing manhole covers– if building starts up in vacant or half-completed subdivisions, Ellis said.
The county currently doesn’t have anyone who can process some land disturbance permits and has to send those out of the county, Ellis said, noting the county may work to train a staff member to handle the permits.
The current market
Newton County saw $11.73 million in home transactions in July, the highest this year, because of rising sales prices.
Bill Blair, president of the East Metro Board of Realtors, said the prices are fueled by fewer foreclosures and an overall market improvement.
"This is a not a one-time thing, either; I think you’ll see maybe even a similar increase this month," Blair said Friday. The number of new foreclosures making it to the market for public purchase continues to be a trickle, according to statistics from the Georgia Multiple Listing Service, which tracks the vast majority of home sales. There were only six new foreclosures that came on the market in July, compared with 43 last July.
"They (foreclosures) have been consistently down all year, which makes a tremendous difference. They were coming on the market and selling for $25,000 to $40,000, significantly under $100,000. There are not that many left out there anymore," Blair said.
Part of the reason is investment firms have been snatching up foreclosures en masse as they’re officially announced on the judicial center steps, according to Blair and other agents. Another positive trend is that the average number of days a house is on the market also dropped, to 91 days in July, though it’s hard to tell if that’s a one-time outlier, Blair said. However, houses continue to get multiple bids from buyers, a sign of a more active market.
"I think it will continue to be a fast-moving market to some extent, because in Newton County in particular, the houses that are going to be sold are re-sales, because there’s nothing being built," Blair said. "The inventory is not going to improve significantly, because people are still going to be grabbing what they get."
As far as active listings, Newton County had 570 in July, fairly consistent in 2013, though numbers have steadily dropped over time. There were 2,356 active listings in July 2008 (average price $137,407), 1,554 listings in July 2009 ($107,957), 1,115 listings in July 2010 ($67,656) and 805 listings in July 2012 ($83,730).
The question now is when builders will stop kicking the tires and start jumping in.