Sleepwalking through Metro Atlanta’s — and Georgia’s — housing bust
By Tom Baxter
In many ways, Georgia has sleepwalked through its housing crisis.
It wasn’t a poster child for the real estate bust in the way Arizona, Florida and other Sunbelt states were, back when the collapse in home values dominated the headlines. Yet the bust started earlier here and has lingered much longer, as attested by the recent news that the state’s foreclosure rate is now the highest in the country. Metro Atlanta ranks second in the list of large metro areas, behind only the Riverside-San Bernadino-Ontario metro – the so-called Inland Empire – in California. Douglas County leads the list of the nation’s worst-hit counties, with one foreclosure for every 122 properties.
Testifying at a U.S. House committee hearing in 2009, Georgia Tech professor Dan Immergluck, an early prophet of the perils of the sub prime lending market and author of the book “Foreclosed: High Risk Lending, Deregulation and the Undermining of America’s Mortgage Market,” said some south Atlanta neighborhoods had experienced boom-bust cycles worse than those more widely noted in Las Vegas or Phoenix.
Atlanta’s foreclosure map has changed, Immergluck said in a recent interview, reflecting new and troubling developments in the economy.
The old foreclosure hotspots have “tapped out,” he said. The homeowners from those neighborhoods who survived the last few years are generally in very strong positions, and often own their homes outright. In addition, many of the foreclosed properties were owned by investors who walked away from their loans early on in the collapse. Other investors, often of the mom-and-pop variety, bought the properties at bargain-basement prices, often for cash.
These neighborhoods haven’t bounced back. Immergluck thinks some half-empty subdivisions should be turned into parks, and foresees more tax delinquencies, especially among the investor properties. But essentially, there aren’t many loans left there to walk away from, and the new standards for lenders have made it much harder for low-wage dual earners to get a mortgage.
Over the last two years, the wave of foreclosures has moved outward, he said, to Gwinnett and other “middle-class, sprawl suburbs, southeast of I-85 and southwest of I-75.” What began as a wave of delinquencies and foreclosures within the subprime market in south Atlanta has spread into the suburbs being hit hard by unemployment and weak employment – families getting by on much smaller monthly incomes than they had a few years ago.
The result, he said, has been “an excrutiatingly long decline in prices, which makes it harder and harder for people on the margins to escape foreclosure.”
Race might just have a little to do with why Atlanta’s housing collapse never got as much attention as other parts of the country. More than in other places the crisis was centered in African-American neighborhoods, a pattern which has continued into the middle-income, heavily black and Hispanic neighborhoods in the metro area.
The metro neighborhoods that are doing better these days, Immergluck noted, are those where people are still moving in from outside the region, generally to accept high-end jobs. Those which have hit the skids are those into which people would normally be moving from elsewhere in the metro area, going from renting to buying.
“That market is really dead,” Immergluck said.
An attentive reader will have noted that this column started out with a mention of Georgia’s new ranking as the nation’s worst for foreclosures, and proceeded to discuss only Metro Atlanta. That’s in part because Atlanta was the flashpoint for the crisis, and the metro area continues to be hardest hit. But to return to the theme of sleepwalking, there hasn’t been as much Georgia consciousness about this problem as you might expect, given the deep hole we’re in.
Maybe I missed something, but the only point-counterpoint on the issue of Gov. Nathan Deal allocating $99 million from the foreclosure fraud settlement with the nation’s largest lenders to two business development funds has been on the Saporta Report, in the exchange between Kate Little, president of the Georgia State Trade Association of Nonprofit Developers, and Chris Cummiskey, commissioner of the Georgia Department of Economic Development.
Hooray for us. But wouldn’t you think Deal’s decision to do something only a handful of states have resorted to would have sparked a little more debate than that? Shouldn’t the diversion of all the discretionary funds intended to address mortgage fraud to another purpose be held to a little brighter light? Even to call Deal’s decision an “issue” in Georgia may be exaggerating a little, unless you count the complaints raised from out of state. There’s been little hell raised about it here, or even notice taken.
Meanwhile, the state’s foreclosure heat map continues to grow redder, radiating out of Metro Atlanta like our hot summer sun.