Across US, Long Recovery Looks Like a Recession
They have already missed a payment; they want to sell the house in hopes their lender will forgive the shortfall between their loan balance and the lower sale price. They are asking $279,900.
“When we did buy, the market was still moving pretty good,” said Mr. Furrow. “Then it got to the point where people said it is not going to last. And of course it didn’t last.”
Some of the homes being offered at distressed prices are dragging down prices for less troubled homeowners who hope to sell. And with foreclosures now in disarray, the market could be further weakened. “Even someone who is trying to sell a normal, well-maintained house is at the mercy of these low prices,” said Walter Bud Crane, an agent with Re/Max of Cherry Hill.
So the houses sit, awaiting offers that rarely materialize. According to Mr. Crane, the average number of days that homes sit on the market has nearly doubled, to 62 this year from 32 in 2005. Buyers are chary, not sure if their jobs are secure. Open houses draw sparse crowds.
In Camden County, where Cherry Hill sits, unemployment is near 10 percent. Several large employers have closed or conducted huge layoffs, and others have pruned hours. With Gov. Chris Christie reining in spending, government workers are jittery.
Real estate agents say it has rarely been a better time to buy: interest rates are at record lows, house prices have fallen and the selection is large.
Tara Stewart-Becker, a 28-year-old financial services manager, said she and her husband would love to buy a sprawling fixer-upper just three blocks from the narrow colonial they purchased four years ago in Riverton, which backs onto the Delaware River.
But a bad kitchen flood and a loan to pay for repairs has left Ms. Becker and her husband, Eric, owing more on their mortgage than the house is currently worth. Even though the couple make far more money than they did when they bought their house and could afford a larger loan and renovations, they cannot sell.
“I would gladly take a new mortgage and stimulate the economy for the rest of my life,” Ms. Becker said.
“Unfortunately, there isn’t anything that a government or a bank can do,” she added. “You just have to settle for less and wait.”
Long fast-growing, no-holds-barred Atlanta has burned to the ground before, figuratively and in reality, and each time it was a phoenix rising. But this recession has cut deeper than any since the Great Depression and left Atlanta’s commercial and high-end condo real estate in an economic coma.
Over all, assuming a robust growth rate, industry leaders say it could take 12 years for Atlanta to absorb excess commercial space.
“That one — see it?” Alan Wexler points to a gleaming blue tower as he drives. “A Chicago bank took it over six months ago. Sold at a 40 percent discount.”
“And over there” — he juts his chin at a boarded-up hotel topped by a Chick-fil-A fast-food restaurant crown. “That was going to be a condo. They just shut it down and walked away.”
Mr. Wexler, a wiry and peripatetic real estate data analyst, describes it all on a drive down Peachtree Road, Atlanta’s posh commercial spine.
He starts in the Buckhead neighborhood, which has more than two million square feet of vacant commercial space. A billboard outside one discounted condo tower promises “New Pricing from the $290s!” There are towers half-empty and towers in receivership. Office buildings that once sold for $85 million now retail for $35 million.
Approaching downtown, Mr. Wexler hits the brakes and points to an older, white marble building. “See that one? It’s the Fed Reserve. That’s where they sit, look, sweat and wonder: How did we get into this mess?”
That’s a question much on the minds and lips of residents.
The commercial vacancy rate in Buckhead is near 20 percent, and the Atlanta region has added jobs only at the low end.
Mike Alexander, research division chief for the Atlanta Regional Commission, posed the question: “When do we start to add premium jobs again?”
Lawrence L. Gellerstedt III, chief executive of Cousins Properties, sits in an office high atop an elegant Philip Johnson tower, with a grand view of the Atlanta commercial corridor running north. He does not see improvement on the horizon.
“We’re all wondering what gets the economy producing jobs and growth again,” he says. “Atlanta always was the fair-haired child of real estate growth and now, it’s ‘O.K., poster boy, you’re getting yours.’ ”
Small banks are a particular disaster, 43 having gone under in Georgia since 2008. (Federal regulators closed 129 nationally this year, up from 25 last year.) Real estate was the beginning, the middle and the end of the troubles. In one deal, dozens of Atlanta banks invested in Merrill Ranch, a 4,508-acre tract of desert south of Phoenix.
The deal imploded and took a lot of banks with it.
“No one was demanding documents or reading the fine print, and mortgage banks were fat and happy,” recalls John Little, a developer. “Well, that train couldn’t keep running.”
He has a ringside seat on this debacle, as he sits in the office of a handsome condo complex he built in west Atlanta. He faced price discounts so deep that he decided to rent it instead.
Nationwide banks have no interest in lending to local developers, and the regional banks are desperate for cash and calling in their loans.
Mr. Little got lucky; he bought out his loan and kept his property. “Most of my generation of builders has gone under,” he said. “It’s still spiraling out of control.”