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Q & A on Perimeter single-family homes: Definitely recovered

Todd Emerson has been working with residential real estate in the metro Atlanta area since 1998. In 2005, he joined Harry Norman Realtors’ office in Buckhead and then, in 2008, was named Senior Vice President and Managing Broker of the Harry Norman office for the Perimeter Center area. In 2009, he also became managing broker of the company’s Blue Ridge office. This year, he was named president-elect of the Atlanta Board of Realtors.

Q. How do single-family home sales in the Perimeter area compare with sales in other markets in metro Atlanta? What drives home sales in the Perimeter?

A. The Perimeter area continues to outperform what I define as the “six core counties” (Cobb, Cherokee, DeKalb, Forsyth, Fulton and Gwinnett) that make up a significant part of metro Atlanta.

Year over year, home sales in the Perimeter area are up 19 percent compared to sales for the same time period in 2012. Conversely, home sales in the six core county area actually are down 9.3 percent compared to the same time period in 2012. However, a significant reason for the year-over-year decline for the six core county area can be directly attributed to a significant reduction in the overall number of distressed properties (REO/bank-owned properties and short sales) that are currently available versus what was available for sale in 2012.

Regarding what drives home sales in the Perimeter area, there are a number of factors: access to good schools (both public and private); the Perimeter Mall area and surrounding shopping venues in general that offer a multitude of choices; the high concentration of office and commercial space that attracts hundreds of companies to the area and thousands of jobs; and convenient access to a number of major surface streets and highways allowing quick access to other areas of Atlanta.

In addition, the Perimeter area has historically been a highly desirable destination for not only those living locally in nearby areas, but also for those relocating to Atlanta.

Q. How did single-family home sales in the Perimeter area fare during the recent recession?

A. As in all markets across the greater Atlanta area, the Perimeter area experienced a decline in the total number of sales during the recent recession, however these declines were not as significant or severe as what a majority of the greater metro area experienced.

The primary reason the Perimeter area was not as severely impacted as Atlanta as a whole can be directly tied to a very low percentage of distressed property sales. Throughout the recession years, distressed sales only represented 5 to 7 percent of the total sales in the Perimeter area, compared to more than 30 percent for Atlanta in general.

Usually, distressed properties are sold at a significant discount (typically 20-30 percent less) compared to non-distressed properties. As the market was absorbing these distressed properties, it had a negative impact on prices and future appraisals. However, now that we have liquidated a significant amount of this type of property and demand has remained high, we are beginning to see prices appreciate across most market areas.

Q. Has the market for sales of single-family homes recovered in the Perimeter area? How close do you think it is to a full, pre-recession recovery? What do you expect to see in the near term in single-family home sales in the Perimeter market? In the long term?

A. Sales of single-family homes definitely have recovered in the Perimeter area. We aren’t quite back to pre-recession (summer 2007) levels; however, we are making very positive strides in that direction.

The simple economic fundamentals of supply and demand indicate we will continue to see positive improvement for home sales in the Perimeter market area. Demand remains high and additional “buyer variables,” such as job growth and low interest rates, also remain positive. In addition, inventory continues to remain relatively low, so properties that are properly priced, that are in excellent condition, and aggressively exposed to the market typically sell quickly.

I anticipate this trend will continue for the next two to three years, at which point we will be back to pre-recession levels.

Q. Multi-family development appears to have returned to the Perimeter market in a big way. What’s happening with single-family development?

A. The challenge the Perimeter area has in regards to single-family development is there just isn’t a whole lot of available empty land in the area anymore. Therefore, in order to create additional households, you are seeing more development “vertically” versus “horizontally.” However, we are beginning to hear saws and hammers in and around the Perimeter area as developers are finding little pockets to build small, single-family developments.

Q. What types of homes do you believe will be in the greatest demand in the Perimeter area in the future?

A. I would anticipate seeing more condo/townhome development close to the shopping and business districts move forward as the whole notion of “live, work, play” continues to be a popular theme.

However, the area in general has always been known as a bedroom community, and because of all of the positive factors I mentioned earlier, it will always be a draw for a variety of different buyers who desire a single-family residence. For that reason, I would expect future purchases to include folks who intend on either renovating or adding to existing homes, tear-downs and rebuilds, or buyers appreciating the variety of architecture available in the Perimeter area and the charm associated with those property types. Regardless of the property type, I fully expect the Perimeter area to continue thriving as a “home destination” for a multitude of buyers for a very long time.

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