FDC CEO, TERRY RUSSELL WEIGHS IN ON THE STATE OF THE ATLANTA HOMEBUILDING INDUSTRY
Residential construction across metro Atlanta is steadily picking up speed, though nowhere close to the pace of several years ago, according to new data from Georgia Power Co.
While development permits are the most common way to gauge new construction, Georgia Power has its own measurement — residential meter installations.
For all of 2012, Georgia Power reported 14,303 installations statewide. Through June of 2013, installations stood at 7,415, slightly ahead of last year’s pace.
Most of the installations are focused in metro Atlanta, Georgia Power said.
The trend shows improvement, but it’s still well off the 45,927 installations Georgia Power recorded in 2007, when residential construction was sizzling. Installations began to plummet in 2008. They bottomed out in 2011, with just 12,367.
The latest numbers suggest residential development may continue to increase across Atlanta, Georgia Power spokesman Jacob Hawkins said.
“Although the number of new meters installed in 2013 is trending above the past three years statewide, we’re seeing an especially significant increase in metro Atlanta,” Hawkins added.
Georgia Power is the largest provider of electricity to metro Atlanta. It has more than 1.1 million customers in the region, most of them residential users.
Even though the pace of construction isn’t nearly as brisk as it was before the recession, confidence among developers is improving across the South, said Rose Quint, assistant vice president with the Washington, D.C.-based National Association of Homebuilders.
Its regional housing market index had climbed to 56 in September, up from 36 a year ago. In the South, housing starts have risen 22 percent, according to the Homebuilders Association. That increase comes in spite of “national headwinds,” facing homebuilders, Quint said. That included a lack of available lots to develop, labor shortages and pricing increases for building materials.
Terry Russell, CEO and partner of residential developer FrontDoor Communities, said parts of metro Atlanta have seen construction recover, “but the rebound is still uneven.” FrontDoor broke ground Sept. 18 on a new development along Georgia 400, with at least 400 homes averaging $300,000 to $500,000. It could be fully built-out in five years.
FrontDoor is the latest developer to indicate metro Atlanta — home to one of the nation’s hardest-hit housing markets during the downturn — is turning the corner.
Lennar Corp. (NYSE: LEN), one of the nation’s largest builders, recently said it was optimistic about continued growth in Atlanta.
POWER HOOKUPS SHOW HOUSING REBOUND
PulteGroup Inc., Atlanta’s largest homebuilder, sees much of the same. It broke ground late last year on a project in Marietta. Demand was brisk enough that it began developing the second phase in May.
Pulte (NYSE: PHM) also announced May 31 that it’s moving its headquarters from Bloomfield Hills, Mich., to Atlanta, citing more activity in the Southeast as one of the reasons.
In Atlanta, parts of affluent intown neighborhoods and cities along and north of the Perimeter are seeing most new residential sales and development. The resurgence is generally centered in housing submarkets supported by good schools and strong job growth. “Some submarkets such as south Forsyth are flourishing,” Russell said. “As this rebound continues you’re seeing construction concentrated in North Fulton, South Forsyth and along [the Perimeter] in Cobb County. If you’re outside this sweet spot, there isn’t as much activity.”
Atlanta is also seeing apartment construction boom, especially in parts of the city such as Buckhead and Midtown.
Homeownership rates have declined from about 70 percent almost a decade ago to about 65 percent today. And, it still remains difficult for some homebuyers to qualify for mortgages.
Demand is coming from Generation Y, or people aged from the mid-20s to mid-30s who want to live closer to the city and its amenities.
by Doug Sams
This article originally appeared in The Atlanta Business Chronicle