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Bills to create a Regional Transit Authority in Metro Atlanta have now both passed overwhelmingly out of their respective Chambers and were in transportation committee this week in the other Chamber for consideration.The expectation in committee is that both would substitute the other bill’s language for the original house or senate version, and then head to a conference committee for agreement. Both Bills are now in Rules Committee and are expected to be on each respective chamber floor for a vote this week, and head to conference committee for potential agreement.

Senate Transportation Committee Chairman Sen. Brandon Beach (R-21) proposed SB 386.

Major Provisions:

  • Creates the Atlanta-Region Transit Link (ATL) Commission. The purpose of this Commission would be to coordinate the funding and construction of transit facilities in the 13 county metro-Atlanta area.
  • Creates an optional T-SPLOST that counties which are apart of the system may adopt through a referendum. The money would be used to fund public transit expansion within the local jurisdiction. The jurisdictions are encouraged to enter into an intergovernmental agreement with MARTA for their transportation services.
  • Authorizes the Georgia Regional Transportation Authority to oversee the creation of the ATL board to develop, manage, and execute regional transit strategies throughout the metropolitan Atlanta area. The ATL Commission will consist of the Georgia Commissioner of Transportation, Mayor of Atlanta, Chief Executive Officer of MARTA, and County Commission Chairmen from each member-county.
  • The House Transportation Committee passed Senate Bill 386, but stripped it of all language from the Senate Bill and substituted all of the language for House Bill 930.

Rep. Kevin Tanner, Chairman of the House Transportation Committee, introduced HB 930 as a result of the work of the House Regional Transit Funding and Governance Commission. The bill was amended to remove the special tax district for Cobb County and allow the entire county to have the option to join the new Regional Transit Authority if created.

Major Provisions:

  • Restructures GRTA into the Atlanta-Region Transit Link (ATL) Commission incorporating the 13 counties in the ARC region in the new authority governed by newly created districts.
  • Identifies two new funding revenues to support transit: (1.) Adds a 50-cent charge per trip on rideshare, taxi and limo providers (2.) Creates a 1% airport tax on concessions at the Atlanta airport.
  • Allows new counties to call for a referendum to levy a 1% transit SPLOST.
  • The Senate Transportation Committee passed HB 930 by substitute with language from SB 386 and is now in Senate Rules Committee.

Leadership in both Chambers agree that metro Atlanta needs well-networked, efficient transit and both are committed to passing framework legislation. What that final piece of legislation will look like remains to be seen. Rep. Tanner and Sen. Beach have both indicated that House and Senate are working together but differences remain.  This is likely to not be decided until the last day of the session, Sine Die on March 29.

Recently Built Homes the New, New-Built

By Geoff Smith

It should be no secret that homebuilders are having trouble keeping up with the demand in the market right now. So it appears that homebuyers thirsty for newly built homes are finding what they want in recently built homes.

A new chart released by Atlanta’s own Smart Real Estate Data shows that 33% of all Metro Atlanta resales(homes sold that are not new construction) in 2017 were homes built between 2000 and 2007. That’s pretty significant when you think about the fact that we’ve been building new homes in the metro area since the 1960’s with the attitude that we can’t build them fast enough.

Mitchell Palm with Smart Data says homebuyers are attracted to homes from this area for several reasons.

“These 10-15 year old homes offer decent layouts, a lot of home for the price, and larger lots than what most homebuilders are providing today,” he said. “Update some flooring, counters, appliances, and a fresh coat of paint, and you have practically a brand-new house.”

Housing designs have gone through many iterations throughout the years, but a relatively new tool to builders became mainstream in the late 1990’s: the engineered beam. This improvement made it cost-effective for builders to start offering more open floor plans. Before this, if a builder wanted to have an opening from one room to the next of more than, say, 10-16 feet, they probably had to use a custom-built steel beam. Today, you can go to any professional supply store and pick up an engineered beam and cut it to size.

That’s why houses built in the 80’s and 90’s all have those similar layouts – you walk into the foyer with a dining room on one side, a formal living room on the other, and the kitchen and den in the back. The engineered beam made is so that you didn’t have to walk through a small doorway to get from one to the other. And we seem to like that.

In fact, when I had my remodeling company 10 years ago, we went into several homes built in the 1980’s and 1990’s and used engineered beams to remove walls and open up floor plans. It certainly made the house feel bigger. Brenda and I used engineered beams to open up the floor plan in our first home – an 1,100-square-foot cabin originally built in the 1920s. The difference there was night and day.

But there are a lot of things people want out of a new home. Just the fact that it’s new is attractive to a lot of homebuyers. I have people come to me all the time interested in getting a construction loan so they can build a house themselves. They love the idea of picking out all the finishes and the layout and making the home that much more personal to them. Few actually have the stomach for it though. Building a home today is no joke. Homebuilders in our area have this down to a science, and even they are having trouble keeping costs down. It’s a pricey market to build in right now. First of all, there is nowhere near enough labor to build the demand, and builders are having to lure subcontractors away from other builders by paying them more. Regulations have made building more expensive. And wood prices are through the roof – pun intended.

Most of those that come to me wanting to build themselves either end up buying new construction, or doing what Palm from Smart Numbers said and buy a recently-built house and upgrade all the finishes.

It’s an interesting market right now. But with home values and interest rates going up like they are, there’s no time to buy like the present.

Fulton County Board of Commissioners and MayorsCourtesy of Fulton County:“This pic is from the first meeting between the Fulton County Board of Commissioners and the Mayors of Fulton County. In 2015, the BOC brought box lunches over to the Mayors who were attending the annual GMA Mayors Day Conference. This informal meeting has led to cooperation and communication between Fulton County and all 15 cities in Fulton, and we now meet quarterly to discuss issues that impact us all. And there are many – tax assessments and collections, elections, health issues, library services, senior services, animal control to name just a few. The issue that seemed to be of highest concern to all is traffic congestion and mobility. As a direct result of working together, in November of 2016, the .075 cent TSPOLST was approved by the voters of Fulton County for road, bridge and sidewalk infrastructure improvements, and the city of Atlanta voters approved a combined .09 cent TSPLOST and MARTA expansion plan. As we continue to work together to find solutions to get people moving throughout Fulton and our region, our work has turned to developing a future public transit expansion plan that works for Fulton County to reduce traffic congestion and move people where they need to go, Since beginning the study in February 2016, we have held a series of 30 public meetings in every Fulton city to gather data and citizen input. The BOC and Mayors meet again Monday to discuss a direction for potential transit expansion.”View the Fulton Transit Plan options here.

A Story for Your House Please

by Geoff Smith

For at least three years now, inventory in the under $400,000-market here in Atlanta has been at record lows and buyers have been fighting each other for good deals. The result is a sharpened artform that many agents have crafted to be ‘the one’ chosen from the many.

I was reading a great article in the Wall Street Journal titled The Strangely Effective (and Easy) Way to Win a Bidding War. It details several methods agents and buyers used to win deals, and showed data collected by Seattle-based realty firm Redfin.

With inventory so low and competition so high, a listing agent’s job is to really find the buyer who can close with the best offer and with the least amount of fuss. I’ve heard of houses that have gone under contract the first day on the market and had more than 10 offers to sort through. I’ve been told of showings where the buyer had to wait for an hour outside the house while people before her were shown the house. If you are trying to by one of these houses, you have to make yourself stand out.

According to the article, the best way to stand out is to use cash. I would be a bad mortgage lender if I didn’t remind people that an average retirement account earns more than 7%, while mortgage interest rates are still in the mid-4% range. That said, using all cash nearly doubles your chances of being able to beat out the other offers. If you are using cash, that means you typically can close much quicker and without a bank having a say in your purchase. Listing agents like that.

Another method that appears to be highly effective, and one that I personally do not like at all, is waiving the financing contingency. This contingency basically gives the buyer in a contract a certain amount of time to get approved on their loan. If they don’t get approved in that time, they can walk away from their deal with the earnest money check(a deposit of sorts that is written and held in escrow just after signing a contract). This makes a listing agent comfortable because if there is no financing contingency, the buyer would have to kiss goodbye that check if they decide to walk away from the deal. This puts a lot of pressure on the lender to do a very thorough pre-qualification. Earnest money is typically 1% or more of the purchase price. But waiving contingencies apparently increases a buyer’s odds of winning the deal by 57.9%. So as an agent, you might earn their praise by initially winning the deal by waiving the contingencies. But if your lender doesn’t get the loan approved and they lose their earnest money, their perspective will very quickly change.

The method that came in third is actually my favorite: writing a personal letter. Having buyers write a personal letter to the sellers actually was a very close third, boosting your odds to win the deal by 52.2%. Selling a home can and should be an emotional endeavor. We live there and leave behind a lot of memories. Writing a letter telling the seller how you will live there, how you will maintain the house and what you love about the house seems to go a long way. The letter adds a personality to the offer and it also seems to let the seller know that the buyer is serious, according to the article. I have seen this method work on several occasions.

As a lender, my agents always make sure to let the listing agent know they can and should call me. This has proved to be a huge advantage. Our industry is a little wild-west and there are a lot of very inexperienced lenders out there. Giving the listing agent the opportunity to talk to me and, at the very least, find out that I am competent, experienced and that I did a thorough prequalification, goes a long way. Once the deal goes binding, everyone is to some degree at the mercy of the lender to get the money approved and bring the deal to close. So it is also important to make the listing agent comfortable with your lender.

With 90,000 people a year moving to the metro Atlanta area, it is hard to imagine that inventory will increase anytime soon. So sharpen your pencils and start writing some good stories.

Rates Push Further Up

Mortgage interest rates continued their steady march upwards this week. Economists are grappling with an economy that has no visible downside right now. As such, they are investing, the stock market is going up and so are mortgage interest rates.

What this Means to You:
According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.28%.

Smile. You’re Branded.

by Geoff Smith

Fork in his eyeThe quote-master, Mark Twain, once said: “Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it.” I’m often amazed at how thin the line really is between the two.

I just read an article by Maria Saporta in the Atlanta Business Chronicle about how the Georgia Chamber of Commerce is going to ask our congressmen to take a pledge. It will ask them to promise to “do no harm” to our state’s image. If you did not know, Georgia is now one of the most admired states in the union for the economy we have created here. If you don’t believe me, go to Lansing, Michigan, hang out at the bar Tavern and Tap across from the state capital and wait for session to get out. It will fill up with congressmen that will gush over how great our state is.

It has taken decades for Georgia to position itself as an economic powerhouse that has been named the best state to do business in. With a few state races, some candidates are finding success in telling rural voters that they may sign a religious freedom bill. According to the article, the Georgia Chamber seems to fear that a backlash from such a signing would be similar to what happened to North Carolina. And that’s a big deal – especially with Amazon now looking between us and 20 other cities as the location for their HQ2.

Apart from state politics, the article got me to thinking about branding. While our state has spent decades building an admired economy, one mistake could tarnish our reputation overnight. You don’t believe me? Just ask Harvey Weinstein, Matt Lauer, or – and it truly kills me to say this, Charlie Rose.

I knew a guy who coaches in the same basketball league I coach in. Everyone used to know him as the nicest, most put-together guy – kind of quiet, but always to the point. Then we saw him on the court coaching a 5th-grade basketball game. He was way more Bobby Knight at Indiana than Mark Richt at Georgia. All of you Hoosiers fans might point out that Knight won three NCAA championships. While that’s true, I’m talking about a 5th-grade coach with no championships.

In the span of a week, the guy went from being put-together to always being a step away from coming un-glued. Now, for the rest of us, it was probably a good thing that him coaching basketball flushed out that side of his personality. But for him, it wasn’t good at all. It would have been better had he prescribed to a phrase my engineer brother always said to me growing up: “It is better to remain silent at the risk of being thought a fool, than to talk and remove all doubt.”

I know a bunch of people that would sour to the thought that what they do in their personal lives should have an effect in their professional lives. They are crying “phony!” I can hear them. But that doesn’t change the fact that everyone around them has a perception of who they are. You can think the greatest thoughts in the world, but if you present them poorly – who will know? It’s like the tree falling in the woods analogy.

I actually like branding. It requires effort and loyalty to an idea. I’m always looking for the people who are shining lights on things for me to follow, rather than those who are constantly pointing out the darkness. I don’t want to know how bad everything is. I want to see how great it all can become.

Rates Push Further Up

While the movement has not been huge, nothing has been able to knock mortgage interest off their stride in a steady move upwards.

Since passage of the new tax bill, there has been really no bad news to cramp our improving economy’s style. For the past several years, while we’ve seen good numbers from most of the things economists measure to determine a strong, growing economy(GDP, consumer confidence, unemployment, etc..), inflation has remained stubbornly low. Inflation is the measure of wages and the prices of goods and services. Economists, including governors at the Federal Reserve, have been flummoxed that prices and wages have not gone up with the growing economy.

They reasoned that it was because of us now competing more with a global market than we were prior to the economic collapse of 2008. If we raise prices of our goods and services, we won’t be competitive with our foreign companies. And we can’t raise wages if we can’t charge more for our products and services. Otherwise inflation usually goes up when everything else looks good(low unemployment, rising GDP, high consumer confidence and retail sails, etc…). Inflation seems to be the last hold-out on the Fed declaring full success for our economy. It kind of felt like the guy charged with opening the doors at Wal-Mart on Black Friday.

Well folks, inflation finally started to move and those doors could now be open.

We’ll see where it goes from here. But as far as mortgage interest rates are concerned, we all expected them to be well into the 5%-range by now. But they have hovered above and below 4% for the last 3 years. Rates typically rise in a growing economy and that’s what they have been doing for several weeks now.

What this Means to You:
According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.22%.

Another Company Moves to be Near MARTA

by Geoff Smith

The sun came up and another company has decided to move its headquarters next to a MARTA station – what else is new?

Insight Global, a staffing company for Fortune 500 companies across the United States and Canada, has decided to move 800 employees into a new, 16-story building that will be built between Perimeter Mall and the Dunwoody MARTA station. There has been a lot of talk over the last year of plans to build a high-rise here on the eastern side of the station, now they have a tenant. State Farm is currently building the second of its four high-rises on its new campus across Hammond Drive from the Dunwoody MARTA station. Their first building includes a walkway over Hammond Drive to the station. And there is already talk of more high-rises that could go up along the western side of the MARTA station.

It has become common knowledge that most company executives believe that to stay competitive for the future workforce, they need to be located near mass transit. Every major corporate move to the Atlanta area has been at or near a MARTA station. Along with State Farm, Mercedes-Benz is building their North American headquarters down the street from the Sandy Springs MARTA station. NCR Corp. just moved its large headquarters from Duluth to intown Atlanta to be near mass transit.

According to a recent article in the Atlanta Business Chronicle, Metro Atlanta Chamber of Commerce President Hala Moddelmog said that the recent corporate relocations were in part, because of MARTA.

“They would not have come to this market if it had not been for MARTA,” she said.

As the Georgia General Assembly heads into session, transit and expansion of MARTA is something that will again be a hot topic. It has only been in the last couple of years that state legislatures have seen expansion of the system as an issue they need to be concerned with. With these large corporations citing MARTA as a reason for their move to Atlanta, it has become more acceptable for legislatures from outside of the Metro Atlanta area to be open to conversation about putting state money aside for MARTA expansion.

State Senator Brandon Beach, who chaired the Transportation Committee in the Senate last year, said one of the big issues this year will be to try to bring Gwinnett and Cobb Counties together with Fulton, Dekalb and Henry counties in funding MARTA. Gwinnett and Cobb both have their own transit systems independent of MARTA. Even though their systems drop riders off into the MARTA system, they do not help fund it. Being two of the most populated counties in the metro area, bringing them together with Fulton, Dekalb and Henry would be a huge plus for transit in Metro Atlanta.

Here in North Fulton, the debate continues about what an expansion of mass transit would look like. Many officials seem warm to the idea of expanding rail up to Holcomb Bridge Road. But there is little consensus to go further north than that. State Senator John Albers is preaching another concept: autonomous vehicles and buses. Rail expansion is expensive and would take 5 to 10 years to build. By that time, Albers says autonomous vehicles will be in use and residents will be more used to taking Uber and Lyft. Instead of spending the billions of dollars it would take for full-rail expansion, a fraction of that money could be used to install a state-of-the-art system of autonomous buses, he argues.

With NCR’s move intown, North Fulton officials are taking the issue of mass transit expansion in North Fulton serious. Fulton County officials are in the middle of putting together a comprehensive master plan for transit it North Fulton. Called the “Fulton County Transit Master Plan,” it will have recommendations for how North Fulton should move forward with transit improvements. They hired a consultant to put together several options for local officials and residents to consider.

The options will be presented on January 23 at the Atlanta Mariott in Alpharetta from 6 to 8 p.m.


Rates Jump on Tax Bill, Bond Market

Mortgage interest rates jumped Monday and Tuesday as investors sold off bonds to put money into stocks. When bonds are bought in low volume, or are not in demand, mortgage interest rates tend to rise. And they did – to their highest level in the last 6 months.

They could get another push upwards today if the numbers released for the Consumer Price Index rise. This would signal a rise in inflation – something economists and the governors at the Federal Reserve have been waiting to happen for several years now. Inflation has been the one sour spot in what has been viewed as an otherwise robust economy.

What this Means to You:

According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.14%.

Fed Raises Rate and I Don’t Care

By Geoff Smith

You would be hard-pressed to find a legitimate economist who was surprised by the Federal Reserve’s move last week to raise its short-term interest rate for the third time this year. But you could open your inbox (or look in your junk mail box) and probably find 20 loan officers who are.

While some are probably pretty tame, I’m sure you also get your share of ones that sound kind of like this: “Quick!!! Buy your next house now because rates are rising through the roof!!!” When in fact, they are not.

Loan officers are taking the news that the Fed raised its rate as an opportunity to warn consumers of a possible correlation to a rise in mortgage interest rates. It’s an easy argument to make. After all, the Fed’s interest rate and mortgage interest rates both have the phrase “interest rate” in them.

While the Fed’s short-term interest does have an impact on the bottom line of the banks who ultimately set the mortgage interest rates, the correlation is really not all that direct. Here is the proof:

In December of 2016, the Federal Reserves raised its rate for the second time since dropping it to near 0% in 2008. Just before it did that, MortgageNewsDaily’s average 30-year fixed conventional interest rate was at 4.38%. Today, after that increase and three others this year, the rate sits at 3.96%. The Fed raised its rate by more than a full 1% in the last year and current mortgage rates are averaging almost a half of 1% LOWER.

As the hosts of my sons’ favorite tv show say: Myth Busted.

While there is some correlation between the Fed’s rate and the average mortgage rate, you would be better served in watching the 10-year treasury if you want to predict the future of mortgage interest rates. When those are bought in high volumes, mortgage rates almost always go down. When they are not, rates go up. This actually makes predicting mortgage rates a much more volatile enterprise because treasury bonds are typically bought when investors are nervous about the stock market and visa versa. It’s almost impossible to predict because our economy is global and one never knows where the next surprise will pop up from around the globe.

If you want to know where the rates for your credit cards, auto loans, business loans and other lines of credit are headed, then pay attention to the Fed’s rate. Banks do peg their base interest rates for those types of loans to the Fed’s short-term rate. But not mortgages.

I’m not saying all of those e-mails you are getting are totally misleading, because there is a correlation between the Fed’s rate and the average mortgage rate. And it goes like this: Mortgage rates tend to go up with the economy. When investors feel good about their understanding of the economy, they play the stock market and don’t buy bonds – which as I just said, makes rates go up. The Governors at the Federal Reserve are some of the most well-respected economists in the world. When they raise the Fed’s short-term fate, it’s because they feel good about the economy and that borrowers, mainly businesses who borrow, don’t need the incentive of a low interest rate to apply for a loan. If you follow this logic, it should make sense that we are indeed headed toward a rising-rate environment. We are just not there yet.

If you are really on the fence about buying a bigger home, the larger concern should be rising home values here in Atlanta. If you get an e-mail about that – that is no joke.

Has MARTA Conversation Shifted for North Fulton?

By Geoff Smith

While we in North Fulton have been dickering for years about MARTA expansion, I noticed a change: the conversation seems to have shifted from “yes” or “no”, to “what kind.”

Fulton County Commissioners and the county’s mayors got together yesterday to see the results of a 6-month transit analysis and public engagement study. According to an article in today’s Atlanta Business Chronicle, the consultants hired by the county presented five different options ranging from an “aspirational” plan that includes the rail lin expanded up GA400, to one limited to bus-rapid transit.

North Fulton residents and leaders are mixed in opinion with some wanting the rail line expanded to Windward Parkway, while others don’t want it expanded past Holcomb Bridge Road. Conversation hit a fever pitch last year as leaders first pitched an increased sales tax that would go directly toward MARTA expansion. What was finally approved by voters was a 3/4 of a penny increase in our sales tax with the funds being divvied up among the cities to be used only on transportation, not transit, improvements. This was a huge shot in the arm for our North Fulton cities and a number of projects are underway now because of the influx of revenue.

But the argument for expansion of MARTA remains strong in North Fulton. Fulton Commissioner Liz Hausmann summed up the reasons for expansion pretty well in the article in the Chronicle.

“It’s imperative our region consider transit as a necessary component for congestion relief,” she said. “A well-managed transportation system will foster economic prosperity and continue to keep our state as a national leader in which to do business.”

It’s almost impossible to determine how many more people would actually ride the train if it was expanded to Holcomb Bridge Road, especially considering that if we started construction on it tomorrow it wouldn’t be finished for another 5 years or more.

But there is a lot of talk about our lack of affordable, or critical workforce, housing in North Fulton. Land has become so expensive here that without significantly increasing the density, which is measured in things like units per acre, or number of stories a building can go up, developers cannot build homes or condos under $400,000 and make a profit. So our firefighters, policemen and women, and restaurant and retail workers all have to fight through traffic to get here. If you have a friend who owns a restaurant, ask him or her how often they have to rehire. My friends tell me its often. If we cannot figure out how to get more ‘affordable’ housing here in North Fulton, an efficient transit system could help alleviate that problem.

If ridership doesn’t move you on this issue, perhaps this will. Even if you have only casually been following all of the corporate relocations to Atlanta over the last several years, you understand this: today’s corporations want to be near mass transit. Mercedes-Benz put their North American headquarters off Abernathy in Sandy Springs. In their press release, they said being near MARTA was critical. State Farm is building a massive campus across the street from the Dunwoody station. They included a walking bridge over Hammond Drive connecting the campus to the station. You can bet that if Amazon puts HQ2 in Atlanta, it will be next to a MARTA station. If we want to attract new relocations to North Fulton, it’s going to be harder to do without a good mass transit system in place.

But here is something else to think about: NCR just moved their headquarters from Duluth to downtown Atlanta. They wanted to be in a walkable environment with plenty of mass transit options. So not having a mass transit system in place is not only hurting our ability to recruit new business, it’s giving existing businesses a reason to move out. I will now think about that every time I drive through downtown and see NCR’s new 22-story building reaching up and over the highway.

Setting aside the fact that these corporations help our local economy by supporting our retail, restaurant and network of other small businesses throughout the day, having less of them will only exacerbate our traffic issues. Once finished, you know how NCR’s employees that live in North Fulton will get to work? GA400 south.

By Geoff SmithWhile there is a lot of drama going on in the country between people groping other people, Trump saying weird things about Pocahontas and the University of Tennessee hosting a reality show about how to not hire a head coach, it turns out the economy is killing it.It’s easy to see success around the metro area. There are cranes almost everywhere you look. The Congressional Budget Office just released statistics that show the U.S. economy is operating at full stride. So the success you are seeing here is for real.The study in the report measures the economy’s potential to produce goods and services based on the supply of people working and how productive they are. The conclusion is that we are doing the best right now with what we have.

Economists measure the productivity of our workforce by determining how much product the average worker can produce. They can then multiply that times the number of people in the workforce and determine our economy’s potential to produce goods and services. As it turns out, our production – measured in Gross Domestic Product, was actually slightly more than our potential.

We are essentially right where we want to be. This is a good thing if you are happy with where things are. But if you want faster growth in our economy – where do we go from here?

If we start overproducing from what economists believe is our maximum potential, then experts say the economy will overheat. Which means that banks and businesses would start being careless in their lending and spending. Right now, we basically have full employment and the supply is meeting an honest demand. An economist in a recent Wall Street Journal article called it “the sweet spot.”

The same article also reported that many economists believe an economy operating beyond its potential will put pressure on product prices and worker wages to increase. This is welcome news for the Federal Reserve, whose governors have been concerned with the stubbornly low inflation numbers we’ve been seeing.

This could also be welcomed news for our housing market. I just listened to a real estate industry expert who predicted that a 4% increase in wages would set loose a home-buying spree across this country. He pointed to statistics that show that we only buy houses after our salaries have increased from where they were when we first bought the houses we are in.

It’s an interesting theory. In the metro area, there is less inventory right now of houses priced under $400,000 than in any other time since folks started recording inventory levels. It’s almost the opposite case for homes priced over $500,000. There is an overabundance of inventory in that market. If wages increased, and people started moving up, you could see a slew of new inventory flood the market in the starved sub-$400,000 range, as people who own homes in that range list their houses so they could buy in the above $400,000 range.

As we head near the end of this year, and the beginning of the next, you can expect to see articles predicting greatness in 2018. It’s happened almost every year since I started paying close attention to the economy. I’m not sure if this is born out of hopefulness or if its strategy to try to create some inertia going into the new year.

The truth is, if we want to see a significant jump in growth, if we are operating at full stride, we’ll need a new product or market to appear, which will have to be accompanied by either an increased labor force, or a technology that drastically improves our productivity at work. The internet created a huge market in the late 1990s that took years to fill. Is there something bigger on the horizon that will instantly create an expanse of capacity?

If I knew, I’d be a hard man to find. As it is, I’ll enjoy living in Roswell and waking up every day doing the best with what I’ve got.

Woodstock Draws Office to Live, Play Community

By Geoff Smith

City leaders in Woodstock have worked hard over the last 20 years crafting what has become one of the metro area’s most successful suburban downtown areas. And as the saying goes, success breeds success.

When I was at Chattahoochee High School back in the early 1990s and we traveled to Cherokee High School to play football, it seems like we made it west clear to Alabama. The country started pretty much right after Crabapple Road on 92 in west Roswell and went on for what seemed liked forever. If you grew up in the metro area and have not been to, or heard what’s going on in, Woodstock lately, then you are probably wondering why in the world I’m writing about it.

A real estate agent friend of mine was driving around a family who wanted a house in Roswell for under $350,000. They could not find what they were looking for. She kept telling them about Woodstock, but they just turned up their nose – would not entertain the thought. So my friend headed up Arnold Mill, pretended to get lost, and wound up in downtown Woodstock. That family now lives in Woodstock.

Woodstock had some decent bones to start off with. The town, like many, grew up around a small rail stop. The old town spread along Main Street and one side of the railroad tracks. The other side of the tracks was mostly woods.

City leaders back in the early 2000’s got aggressive and saw what many at the time did not. They partnered with some local developers and coordinated a town center that consists of several city blocks, some five-story buildings filled with condos, apartments, and retail and restaurants on the bottom, and an entire neighborhood of detached and attached homes, all around a very wooded neighborhood park.

The downturn in 2008 halted the project for a spell. But it got back up and going and is at this point running full-steam ahead.

The new buildings are all leased up. The old town on the other side of the tracks is leased up and restaurants seem to be clamoring to get in. A fantastic concert venue called MadLife opened up. It’s a venue that looks like an old jazz club with a huge stage, high-top table seating and a bar on the lower level, and an upper level with a bar. Quality music acts play there almost every night.

And they love their beer in Woodstock. Reformation Brewery is about a mile down Arnold Mill road, and they are planning a new location in downtown. Reformation has expanded and it’s hard to find a grocery store locally that does not carry their product. They also had a great growler shop that grew into a bar/restaurant. The shop’s owner had a great idea to open a bar focusing on carrying a wide-variety of micro-brews, with space behind the bar for a different food-truck to pull up every night. The idea was so new, that the city was not sure how to approve it. It was a restaurant without a kitchen. It was a bar that technically did not sell food. It went against their existing guidelines. But what did Woodstock do? It said ‘hey, this is a great concept. This would make our downtown better. Let’s figure out how to make it work.’. And it did. The second location is going up in Alpharetta’s downtown.

That attitude has created a downtown so successful that city leaders are now getting inquiries from developers who want to build Class A office space nearby. Businesses want to be where the action is. And if Woodstock’s attitude towards those projects is similar to how it took on development of its downtown, Woodstock will soon be a true live, work and play community.

The Data Says Buy A $900,000-House

By Geoff Smith

If you are looking for a new home under the $400,000 price-range, I know how competitive it is. But after some serious research, I have found a solution for you: go buy a $900,000-house.

If only it were that easy!

I just finished reading through Smart Real Estate Data’s third quarter newsletter and I’m stunned again by the lack of inventory available to most homebuyers. Our homebuilders can’t seem to catch up to the demand that is out there.

Inventory is measured in ‘months of supply’. The numbers reflect the months it would take for homebuyers to buy up all the currently listed homes if no new houses came onto the market. Experts consider a healthy housing economy to have 6.5 months of supply. Why is it unhealthy for there to be more or less? Supply and demand.

If you have less months of supply, then the demand is stronger than the supply and home prices rise quickly as buyers compete for the relatively low number of houses on the market. If you have more than 6.5 months of supply, then it’s a buyer’s market and values can drop as sellers compete for the relatively few buyers.

In the below $300,000-market, there are less 2.5 months of supply. That is one of the lowest months of inventory in the history of people keeping track of these numbers. In the $300,000 to $400,000-range, it only rises to just above 2.5 months. The $500,000 to $600,000-range is where the market finally starts getting healthy with about 6 months of inventory. Above that and it quickly gets unhealthy again with inventories above 7.5 months.

By the way, that $900,000 to $1M-range I mentioned at the beginning of this article has well over 10 months of inventory. It is a good time to get a deal in that range.

Based on the laws of supply and demand, prices on sub $400,000-homes are rising and on the $600,000-homes are lowering. Maybe someday everything will be priced around $500,000!

Obviously that won’t happen. But the laws of supply and demand are making the lower priced homes even more expensive, eventually creating even less inventory for a market already starved for inventory. Capitalism usually has a way of evening these kinds of things out. But building houses in the sub $300,000-range is a hard thing to do these days.

Land has gotten more expensive in the metro area. Builders are having to pay more to comply with an increased number of regulations that most residents want, and pay more for increased impact fees which help fund capital improvements to fire, police and other municipal departments. There is a labor shortage in the construction industry, so builders are having to pay more to lure subcontractors away from other builders. And with unemployment so low in general, we are not seeing employees from other industries jumping over to meet the demand.

The average price of a new home was $334,977 for the third quarter. With the increased costs, the builders are having to build more expensive homes to keep their margins. But if you look at the more expensive homes – there is a relative glut. The demand is for the lower-priced homes.

In the coming years, it’s very possible that we could see more effort from both the private industry and the public, to find creative ways to build more, lower-priced homes.

Some cities and counties are seeing this as an ‘affordable housing’ crisis where many of the people who work in their police, fire and retail service sectors are not able to live close to where they work. I’ve heard some folks try to blame the developers. But developers are pretty simple creatures. If the project will make their business money, they’ll probably build it. If it will lose their company money, they probably won’t. They know the demand is there, it is just hard to make the numbers work.

Atlanta Area Demographic Data

by Geoff Smith
If your household earns more than $77,233, then you have made it into the top 40% of income earners in the metro Atlanta area. I would bet more than 90% of you reading this article fall into that category. But hold on, the numbers jump quickly as we climb to the top. To get into the top 20%, your household needs to earn more than $122,065. And finally, to get into the top 5% of all income-earners in the metro Atlanta area, your household needs to bring in more than $234,699.

The Census numbers I saw didn’t break it down further than that. But if you are still wondering, a CNN chart predicts that you have to earn more than $440,000 to be in the top 1% of all U.S. income earners.

If you are sour because you did not make it in the top 5%, here is something to boost your spirits. All of you are probably in the top 1% of income earners in the world. To do that, according to Investopedia, your household needs to earn more than $32,400 a year.

Mortgage Rates Jump

Mortgage interest rates jumped this week, moving up at the fastest pace since last June. Much of the movement, according to experts, has to do with a hopeful outlook that lawmakers will be able to pull off some form of tax reform.

Most investors believe this would be good for business. And when they believe that, they invest more money in stocks than in the more risk-averse market of bonds. And when bonds are bought in low volumes, mortgage interest rates rise.

What this Means to You:

According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.09%.

Why North Fulton is So Stinking Great

By Geoff Smith

The Alpharetta Hotel and Conference Center should be complete in Avalon early next year

The Alpharetta Hotel and Conference Center should be complete in Avalon early next year

I was born in North Fulton, raised in North Fulton and I live with my family today in North Fulton. I have a good many friends up here who have said I should get out more, but you know what? All those friends moved here – to my home.

Roswell's locally renown Canton Street during an Alive After Five event

Roswell’s locally renown Canton Street during an Alive After Five event

If you know me, you’ve heard me say this: I’d rather be from the place everyone is moving to, than the place they are all moving from. And for the last 43 years, people and businesses have fought to get into North Fulton.Some say that North Fulton’s success is because of the fiber-optic cable that was laid along roads in Alpharetta in the early 1990s. Others say it was Jim Cowart’s vision to build the first gated community of Country Club of the South. I’ll add that it was Roswell’s vision back in the 1970s to develop what just recently was awarded the Gold Medal Award for the best Recreation and Parks Department in the entire country.

You could keep going further back to Roswell’s founder, Roswell King in the mid-1800s. He stopped in Roswell to build a cotton mill. He was from Connecticut and back then, the south shipped most of the cotton it grew to the north for processing. The finished products were shipped back down here to sell. King started the mill to cut out the shipping costs and boom – a successful business town was born.

It is beautiful country up here. Roswell has about 10 miles of the Chattahoochee River running through it, and Johns Creek has about 13. Big Creek flows from Forsyth County with a near-continuous bike path along it through Alpharetta to Roswell. Take a drive through Milton’s horse country and you’ll get jealous in a hurry that you don’t live there. Go to Canton Street in Roswell, or see what’s going up in downtown Alpharetta near Avalon and you’ll feel the same way.

One of Milton's many horse farms

One of Milton’s many horse farms

It’s no wonder people want to pay top dollar to live here, and businesses want their employees to work here. Alpharetta has more than 600 technology companies within its borders. Windward Parkway should be a brand in itself. Johns Creek is awash in successful corporate offices – its downtown is essentially a grouping of corporate campuses.When they look for a move, today’s corporations are trying to think like millennials – who will make up half of the workforce by 2020. Most think that means moving intown near mass transit and in areas that are highly walkable and full of action. North Fulton is countering this with the most desired suburban downtowns in the metro area and an incredible collection of undeveloped parks that take full advantage of the river and creeks. Roswell owns more than a mile of parkland along the Chattahoochee that is already master-planned. And once developed, will be a park not just enjoyed here in North Fulton, but admired throughout the metro area. It will surely be yet another draw for businesses looking to make a move.

John's Creek recently approved plans for a linear park near some of its office parks

John’s Creek recently approved plans for a linear park near some of its office parks

I have not even mentioned the schools, but by almost any measure, you will not find a collection of higher-performing public high schools anywhere in Georgia. U.S. News’ rankings have 6 of the top 8 public high schools in Georgia as being located in North Fulton.North Fulton didn’t get this way because of a few major events. It got this way because great servants in our community took these great resources and worked them inch-by-inch, project-by-project and success-by-success to piece together what I think is the best place to live, work and play on the planet(a new friend of mine said its better than her home city of Paris, France. So…). The key now will be to take what we have been given to the next level so that my two boys will say the same thing in 30 years. And with the resources we already have, the sky should be the limit.

Market Watch

Rates Sitting Still… Still

Mortgage interest rates have not really budged from this time last week. There is talk about a new tax plan, talk about the Executive Branch rolling back some policies involved in the Affordable Care Act, and talk about the Fed standing firm on several interest rate raises throughout next year. But at this time, investors seem to be saying…”that’s just talk.” They all seem to be from the “Show Me” state this week. Mortgage Interest rates are holding firm to recent highs.

What this Means to You:

According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 3.96%.

Downtown Lawrenceville Awash In New Development

By Geoff Smith

Suburban downtown areas are flush with redevelopment these days as cities and developers rush to meet market demands of residents who want to be close to where some action is. Lawrenceville is the latest to double-down on this idea.

A couple years ago, or really any time in the history of the Atlanta metro area, I would have trumpeted what is going on in downtown Lawrenceville as epoch development. But these days, what they are doing is keeping up with what’s going on in other cities like Alpharetta, Sugar Hill, Chamblee, and Sandy Springs. All that said, there are at least three major projects going on in downtown Lawrenceville that will transform a city that already has seen significant downtown development.

The projects include almost 40 acres of mixed-use development and a 2.2-mile linear park that will connect Georgia Gwinnett College with the downtown district, and open up development opportunities along the way.

The biggest project being proposed is a 32-acre development behind the Lawrenceville Lawn Park and around City Hall that would include 600 residential units – 435 multifamily units and 159 single-family and townhouse units. Within that project would also be about 15,000 square feet of retail. Novare Group is the developer and is scheduled to present the project to the city in December, according to the Atlanta Business Chronicle.

Just across the Lawrenceville square and on 7.5 acres that used to be the site of the now demolished Lawrenceville High School(built in 1895), Richport Properties is proposing a $20 million mixed-use development. The project, being called City View, would include 58 single-family homes, townhomes, “cottages” and office space. According to the AJC, the developer is under a purchase-sale agreement with Lawrenceville’s Downtown Development Authority.

The linear park is a significant project, mostly because of the opportunities it will create. This project has been in the planning stages for several years and the city has recently hired Georgia Development Partners to run construction of the project, which is expected to begin next month, according to the Gwinnett Daily Post. In addition to a new two-lane road, the project will include multi-use trails, bike paths, roundabouts and landscaping features. Multiple pocket parks and detention ponds are also shown in the plans – as are spaces for new townhomes, a restaurant, some retail space and a multi-level residential structure.

One of the biggest things this corridor would do is connect the roughly 11,000 students enrolled at Georgia Gwinnett College with the downtown district and the two other projects mentioned in this article. The corridor will also fold in an existing brewery named Slow Pour Brewing Company, and 550 Trackside, a popular event facility housed in the city’s old train station. It should take about a year to demolish some of the buildings in the corridor to make way for the new road and trails. At that point, construction on the new infrastructure is said to begin.

I imagine that retail businesses in downtown Lawrenceville are chomping at the bit to see these projects completed. With almost 660-residential units going in, they will see a significant increase in night-time and weekend customers. And with the office development and the connection to Georgia Gwinnett College, they will see a significant increase in daytime customers during the weeks. It will be a good time to be doing business in Lawrenceville for sure.

Beltline Creator Sets Sites on Buford Highway

By Geoff Smith

There isn’t much doubt about it, most people will finally agree that there are really great restaurants throughout the metro Atlanta area.

Growing up in Roswell, it seemed that transplanted New Yorker’s loved to complain about the food. The Italian food was boring, there were no good bagels, and forget about finding a good Chinese restaurant. Well nowadays, I don’t hear that kind of talk. Folks are pretty fat and happy in Atlanta.

Chefs have grown more and more creative. And creative in a way that draws people consistently into their restaurants. Different parts of the metro area are developing their own styles too. Canton Street in Roswell has more great restaurants per square foot than maybe anywhere else in the metro area, all serving out of buildings first built in the late 1800s. Alpharetta’s restaurants are a bit more spread out and refined, but fantastic. Ponce City Market in Atlanta has its food court packed with several unique and great restaurants where most of the seating is stretched along barstools.

Perhaps the most unique area walks a thin line between being considered under the radar here in Atlanta, and well-known among chef circles outside of Atlanta. It is Buford Highway. Written up in Bon Appetit, this 7-mile stretch of road heading north from I-285 was called a “United Nations of restaurants.” In this stretch of road you can get Vietnamese, Korean, Chinese, Indian, Somali, Mexican, combinations of those, and many other types of food. Some of you might think that you’ve got Vietnamese, Chinese and Mexican restaurants close to your home. But the difference here is that these restaurants cook their food as if they are serving not Americans, but people from their home countries.

It has developed a serious ‘it’ factor. So much so that when Anthony Bourdain, a king of cool, brought his show to Atlanta, he spent a lot of time eating in, and complimenting restaurants there.

To the eye, this stretch of road is probably not the most inviting stretch of road. These great restaurants are scattered throughout strip malls that were built during a time when we had little ability for urban planning. But that could be about to change.

One of Atlanta’s king of cool, Ryan Gravel, is setting his sites on Buford Highway.

If you do not know, Gravel conceptualized the idea of The Beltline while a student at GA Tech, and then worked as a planner to make it a reality. The Beltline has become one of the most successful redevelopment ideas of our time anywhere in the country and has transformed every community it runs through. He left The Beltline project because he thought they were getting away from his idea to incorporate more affordable, lower-income workforce housing.

According to Reporter Newspapers, Gravel created a nonprofit called Generator. Its mission is to be an “idea studio…committed to the production of ideas about cities that nobody is asking for.” His first Generator workshop will be a School of Design class at Georgia Tech that will focus on Buford Highway.

According to the article, he finds this area interesting because it deals with a lot of issues that are prevalent throughout the country. There is a large immigrant population there, and he sees this as a way to create a solution for suburban immigrant populations throughout the country. They are going to look at different transit options and different ways to move people around. His design principals will go much deeper than transit and affordable housing options too. He wants to create ways to force people to interact and “love” each other more.

Best of GA Fall Blows Through the Mountains

By Geoff Smith

This is the time of year in Georgia when spurts of cool breezes blow through the humidity and heat, and tickle our spirits into a state reminiscent of an old college buddy popping in through the door to whisk you off to one more, wild weekend. Or at least into trying to be fancy with your writing of a business article.

Truth be told though, there are few places on the planet better than Georgia in the fall and spring. It’s a proven fact…probably. The weather is a big reason that so many people have moved down here – just ask someone from the great city of Chicago.

This time of year, those cool breezes move my attention to the mountains. Standing mountaintop, looking out miles and watching the wind blow up and down the red- and gold-covered hills and valleys, will lead you to a true moment where you say “there really is no other place I’d rather be.” And there are many great places to go in the North Georgia mountains. Blood Mountain is one of my favorite spots. It’s just north of Dahlonega and is an easy day trip. You could drive up GA400, enjoy the ride, park at the base of the mountain, hike to the top, enjoy the open views and be home in time for dinner. Or, better yet, eat on the square in downtown Dahlonega.

Georgia’s mountain towns have developed nicely over the years and there is a wide variety of places to go visit. There are relatively large cities such as Dahlonega and Clayton that are surrounded by great parks and nature, but also have large commercial districts and hotels. Then there are also small towns like Blue Ridge and Ellijay that have just enough.

Perhaps the most visited, or most known, is Helen. This city was originally founded as a logging town, but in the last 1960’s reinvented itself as a Bavarian alpine town lined with buildings modeled after many of the great south-German cities. It has become crowded over the years and is flooded throughout the day and night with sounds of loud motorcycles, but it has a thriving commercial district with shops and restaurants, is built along a much smaller and younger Chattahoochee River and is surrounded by awesome sites like Anna Ruby Falls, Unicoi State Park and Dukes Creek Falls.

Blue Ridge and Hiawassee are two of my favorite North Georgia towns. Both have nice-enough downtowns, good restaurants, and are surrounded by fat mountains. But what they also have are incredible lakes. Lake Blue Ridge and Chatuge Lake are surrounded by mountains, have clear water and whisper serenity.

That said though, if I’m talking about North Georgia lakes, I have no choice but to mention Lake Burton. As far as beauty and serenity goes, it has both Chatuge and Blue Ridge beat. Located just west of Clayton, it is also lined with some of the most expensive real estate in the state. Many famous people have houses there including Nick Saban and country music star Alan Jackson, and houses go easily for $2M to $5M. I spent part of a summer in college working at Camp High Harbour, which long ago secured a prime spot on the lake. The owner of Waffle House had just bought the small mountain next to the camp and was in the process of blasting off the top of it so he could have 10 flat acres. I bet it’s interesting walking around the grocery store on the weekends there these days.

In Georgia, there are countless day hikes, waterfalls, small lakes and small towns. Oh – and canyons. Right. Cloudland Canyon is one of our recent finds. It is awesome and is about a 20-minute drive from Chattanooga, TN. Last time we went we camped there and drove into the city for dinner. It was fantastic.

Bottom line is, it’s that time of year again. Do yourself a favor: just pick a spot and go.

New Construction at Pre-Recession Levels

Inventory Still Historically Low

Courtesy of Smart Real Estate Data

By Geoff Smith

For the first time, new home construction closing numbers are competing with pre-recession levels. And it’s nowhere near enough.

According to numbers just released from Smart Real Estate Data, there was an estimated 5,566 new construction closings in the 2nd quarter of this year, and 10,182 closings in the first half of this year. These numbers are similar to numbers posted in the first half of 2008, which was right before the collapse.

And this trend doesn’t appear to be slowing down. In the 2nd quarter, 7,110 new home permits were issued – the most permits issued for a quarter since 3rd quarter of 2007. So clearly with all of this new construction going on, we must be flush with new homes on the market. Right? Wrong.

In most markets, it is hard to find and buy a house. Housing inventory is measured by the numbers of months it would take to sell out all existing listings with no new listings coming to market. Most experts agree that a healthy market is with 6 months of supply. At that mark, home values are increasing at a safe pace. With too much inventory, sellers are competing for limited buyers and home values can actually start to drop. With too little inventory, buyers are competing for limited houses and home values rise too fast. Right now, inventory is historically low at an average 3.29 months. It’s the lowest level since they’ve been recording this type of data. And that number is trending downward. Inventory averaged 3.63 months the same time last year.

And in keeping with the laws of supply and demand, the invisible hand has pushed home prices up an average of 5.6% over the last year. In some markets its less than that, and in others it’s much more.

You might think that since new construction pace is back to pre-recession levels, and inventory is still low, then resales are probably down. You might think that, but you’d be wrong. In the 2nd quarter of this year, the metro area set an all-time record for the most resale closings in a quarter with 25,992 closings. So why is inventory so low then?

Here is why: we are adding more new homebuyers to the market than homes being built. Over the last three years, according to the U.S. Census Bureau, the metro area’s population has grown by an average of just over 20,000 people per quarter, or about 7,000 people a month. Not all of those people need a home as families are included in those numbers, but add to those numbers the amount of first time homebuyers trying to move out of their parents’ basements and you have more new homebuyers than new homes coming to market. And this trend doesn’t look like it will be changing anytime soon. So that is leaving the door open for other types of housing to grow.

“All around Atlanta’s core are apartment buildings going up left-and-right,” said Mitchel Palm, Senior Associate with Smart Real Estate Data. “That is where a lot of these people moving to Atlanta are residing.”

Homebuilders are trying to do their part, but Palm says a lack of affordable, developable land, inflation on building materials, and a lack of skilled labor are sucking the wind out of their sails.

An interesting point that stuck out to me is that we are nearing peak levels of new residential construction, but our inventory is shrinking. The metro area has become massive. We are operating in much deeper waters than we were just 9 years ago. The city’s success is attracting people from all over the world.

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