Local officials are working hard to attract Baxter executives and employees to live in Newton County, but there's a dilemma. The county doesn't appear to have enough moderate-to-large, high-quality homes available on the market and officials aren't sure if more can become available.
Construction of new homes on any significant scale won't be realistic for a few years still, according to numerous housing officials, which is why local real estate agents and the Covington-Newton County Chamber of Commerce are urging homeowners who want to sell to make sure their homes are listed. Even so, they may not get the asking price they want.
Based on expected salaries, the majority of Baxter employees will likely be looking for homes in the $225,000-$350,000 range, according to real estate agent Bill Blair, who is also the president of the East Metro Board of Realtors.
Blair said a person can comfortably afford to live - and receive a mortgage - in a home priced at three to three and a half times his or her salary. The previously stated average salary for Baxter employees was $60,000, but many households today have two incomes, which allows for more home-buying power.
Newton County has a total of 1,373 residential properties valued between $225,000 and $350,000 currently, according to a quick analysis conducted by Ernie Smith with the county's Geographic Information Systems department.
Out of those properties, 49 of those were listed on the Multiple Listing Service as of Monday, according to Blair.
The vast majority of all homes sold are posted through the Multiple Listing Service, so if a home is not listed it's unlikely to be found by prospective buyers from outside the county.
"A relocation firm won't know whose buddy is interested in selling and who's not," said Chamber President Hunter Hall.
The chamber has been leading the charge to get homes listed so that it doesn't just look like real estate agents are looking for commissions.
"We've been aware of the shortage for a long time, and the chamber board thought the chamber needed to be the one to get the word out," Hall said.
The chamber is hosting a forum at 7 p.m., Dec. 11 at The Center for Community Preservation and Planning that is for the public, real estate agents, bankers and anyone else interested in learning more about how many employees Baxter is planning on hiring and when those employees may be moving to the area.
"If banks own homes, they need to get them fixed up," Hall said.
However, homeowners who want to sell may find themselves in a dilemma, because they're still not getting the prices they want. Though there are stories of bidding wars for some properties, but in general, properties are not even selling at full asking price.
According to Blair, there have been 40 home sales so far in the $225,000-$349,000 range this year. The average sales price was 96.2 percent of the listed price. The only home range where buyers were getting more than they initially asked for was in the $400,000-$449,000 range, where buyers paid 110.9 percent of asking price, but there were only four sales, so it's hard to tell if that's meaningful.
Even if a person lists their home at $400,000 and gets a $400,000 offer, the home still has to appraise for that much before the bank will offer a mortgage to cover the full amount. Otherwise, not only will a buyer have to bring a down payment, they'll also have to pay for the difference between the buying price and the appraisal out of pocket. Blair said very few buyers can afford to do that.
Local appraiser Paige Alexander said she's not really seeing appraisals increase, but she is seeing them stabilize.
"Even owners of nicer homes that haven't been foreclosed are scared they can't get a decent price on them," she said. "It's a standstill. No one knows what to do. Do you a hold (onto your house) or not?"
The silver lining is that even if an underwater seller (one who owes more on his home than its worth on the market) can't pay off their mortgage with the sale, they'll be able to get a good deal on a new home. Of course, very few sellers can afford to do that as well.
By traditional standards, Newton County has a record low supply of houses. As of Monday, the county had only 188 homes for sale, according to Blair, which works out to 3.3 months of supply. That would normally signal a round of aggressive new construction; however, prices remain so depressed that new homes still can't even be sold for cost.
Local builder Bob Goucher estimated that on average, a newly built home can be sold for about 60 percent of its cost. Nobody is going to build new homes at a loss. Alexander agreed noting that appraisals for new construction are done based on the floor plans, and that many homes still cost more to build than they could sell for.
While national home construction companies could likely build and sell standardized homes at cost, those types of homes likely wouldn't appeal to more upscale buyers, Goucher said.
New home construction has actually continued to decline since the economic collapse. According to the county planning department, there were 36 new residential permits issued in 2010, 25 in 2011 and 10 so far in 2012.
Genevieve Compton, executive officer of the Newton County Home Builders Association, said builders want to build, but there's just no market for speculative homes even with the promise of Baxter's arrival. Plus, there's no guarantee that employees won't locate elsewhere, as there's evidence they're willing to live within a 30-mile radius, Compton said.
And other counties are trying their best to recruit Baxter employees as well. Walton County has 83 homes for sale in the $225,000-$349,000 range, while Morgan County has 40, Rockdale has 50, Oconee has 56 and Henry County has 109 homes. Officials will just have to see how the market shakes out.
Baxter said it did not have any comment on housing at this time, but spokeswoman Jen Gremmels said the company had hired 30 employees for the Covington plant to date.