Many industries still make solid investments

Friday May 14, 2010, Atlanta Business Chronicle
By: by Bob Pennington

The sales pace is a bit faster and the prices are a bit lower than last year in the Gainesville-Hall County housing market.

The single-family home market has showed some improvement so far this year, said Kerstin Crawford, president of the Hall County Board of Realtors. This good news is somewhat tempered by the April 30 expiration of the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat buyers, she said, "so in some respects, the market is yet to be really tested."

As of the beginning of May, there were 1,552 homes on the market, Crawford said, ranging in price from $26,000 to $5.45 million. Some 399 homes traded hands during the first four months of 2010, with 257 under contract - in comparison with 354 sold during the same period last year.

The southern and western portions of the county have been the hotbed of Hall home sales activity so far in 2010, she said.

Although the flip side of that good news is that "75 percent of these have been foreclosures, and prices have been just dirt cheap," she said.

Countywide, both listing and sale prices have been lower this year “because of the banks dumping properties,” she said.

The average list price is currently $171,890, with the average sale closing at $158,098; this time in 2009, those figures were $192,000 and $177,800 respectively.

In terms of new-construction, trends in the Gainesville-Hall County residential market mirror those of metro Atlanta, said Eugene James, director of the Atlanta office of research firm Metrostudy.

"It peaked in 2006; at the same time, demand dropped, there were too many houses, and builders cut off their machines to give the market a chance to absorb the inventory," James said.

There were 148 new homes under construction as of the end of the first quarter, according to Metrostudy. This time in 2009, there were 175; 2008, 304; and 699 in 2007. The average price of a newly constructed Hall home is now $285,900.

No new homes have been built since 2007 in Marina Bay, a 399-home luxury gated resort community located on the northern shores of Lake Lanier, said Don Gage, principal of developer Main & Main Development LLC. Available inventory has shrunk from 43 unoccupied homes to one, he said, with sale prices averaging around $550,000 here last year.

"Contrary to general perception, transactions are occurring," he said. On individual-home resale pricing, Gage added that he’s seen as much as a 33 percent discount off of list pricing, "but that is firming up."

The buyer profile at Marina Bay "is not materially different" from that of high-end residential communities like Gwinnett County's Sugarloaf and Country Club of the South in north Fulton County, he said.

But, there are some Hall County nuances thrown in.

Thanks to the presence of Gainesville's Northeast Georgia Medical Center, the specialized-care center for northeast Georgia, Hall County has a large residential base of doctors and other medical professionals, a factor reflected in Marina Bay buyers. Otherwise, the typical purchaser here "is in their mid-40s, buying here for their primary home," Gage said. Empty nesters and retirees make up approximately one-third of the buyers, he added; and about 10 percent of all buyers are seeking a second home.

The buyer profile is a bit broader at Sterling on the Lake, a South Hall-Flowery Branch community, located just east of Interstate 985, where homes range in price from the low-$200,000s to just shy of $500,000. "We’ve got a true cross-section, including empty nesters, young families and first-time home buyers," said Patrick Clark, vice president and general manger of the developer, San Diego-based Newland Communities.

Some 600 homes are sold and occupied at Sterling on the Lake, which began in 2004; the project will ultimately have some 2,000 homes when built out. Potential buyers are coming in larger numbers than in 2009 he said, with "traffic counts up 50 percent over this time last year."

Communities for aging baby boomers and retirees are big business in Hall County, said Frank Norton Jr., co-owner of The Norton Agency, a Gainesville-based real estate services firm.

According to the firm’s 2010 Forecast, this is a strong market in Hall and metro Atlanta in general, "but it is all about price. The baby-boom retiree will surge into the market, but with longer lifelines, their mind-set is to hoard for a longer life and buy based on price, not size or luxury."

The Village at Deaton Creek, a popular 1,300-home active-adult community catering to boomers 55 and older, is on course to exceed last year’s sales pace, said Eric Younan, spokesman for Bloomfield Hills, Mich.-based developer PulteGroup Inc.

Offering two- to four-bedroom homes in the $190,000 to $300,000 range, The Village at Deaton Creek has a heavy-duty amenity array mirroring that of similarly targeted PulteGroup communities that, in some locations, are marketed under the "Sun City" brand. These include a 35,000-square-foot clubhouse, a junior Olympic-size indoor pool and spa, and an 8,000-square-foot fitness center.

Buyers here are empty nesters who tend to come from the metro Atlanta area, according to Younan. And, contrary to the typical conception of a 55-plus community, PulteGroup's in-house research has shown that approximately 60 percent of the residents here still work, he said, adding, "With our proximity to Atlanta, residents can work during the week at their professions, and enjoy our lifestyle on the weekends."

Pennington is president and CEO of Willis Investment Counsel.