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Economists: Housing market bouncing back, local inventory low

COVINGTON -- Newton County is nearly out of houses to sell, just as local officials have declared their intentions to recruit Baxter International employees to live here. The good news is the housing market is improving locally, state and nationwide.

That's all according to Frank Norton, president of Norton North Georgia Real Estate and economic trend detector, and Elliot Eisenberg, a national economist based in Washington, D.C. The two were the keynote speakers at 2012 and Beyond, an event hosted by the Newton County Homebuilders Association at Newton High School Thursday night.

According to Norton, Newton County has a resale home supply of less than four months and a new home supply of 5.5 months.

"In a traditional market, at a 3.5 months supply, lenders would be loaning left and right to build houses here, but today, lenders are paralyzed," he said.

The housing market in Newton appears to have hit bottom and is now bouncing back, he said.

"We've already seen the major bubble of foreclosures pass through Newton," he said.

Norton said there are positive signs that the housing market is rebounding across the country, as pending home sales prices are increasing and "average people are buying houses." Distressed properties account for 25 percent of properties for sale nationwide.

Newton has the lowest numbers of new homes under construction in the metro area, Norton said, with only 23 new starts last quarter.

"You're out of housing," he said, later adding that, "You've got the biggest industry locating inside this county and you're on the periphery of the second biggest industry with the Caterpillar plant," locating in Athens.

Home ownership in the county is at 68.8 percent. "That's high. It shows we have strong home ownership here," he said, but noted that many Baxter employees will be renters. He said housing for executives, middle tier and the labor force class at Baxter will be needed, including rental properties.

Norton said, however, that there are 25 percent more homes being sold in Newton than last year, and resales are gaining ground.

Eisenberg spoke on the benefits of building more homes; primarily, jobs and taxes. Home construction creates a ripple effect as residents move into the county, spend their money on services here and need more services, which creates more jobs and more money spent in the local economy, he said.

In Newton in 2011, the average new house price was $175,000, while existing homes carried an average resale price of around $100,000, he said. The first wave of Baxter employees to move here will be earning around a $100,000 salary, meaning they'll be able to afford homes in the $300,000 to $350,000 range, he said.

Eisenberg estimates that if 100 homes were built in Newton over 10 years, it would generate nearly $37 million in revenues, $7.8 million in local taxes along with 193 temporary jobs and 42 permanent jobs

There were 100 homes built in Newton in less than one month in 2005, he said, and about six years ago there were more than 2,000 homes being built in a year.

But, "the government has to provide services to these houses and that is expensive. There's no free lunch," he said.

The cost of providing services like education and public safety to new and existing homes is about $6,000 a year. Capital costs such as buildings and infrastructure tack on another one-time expense of $16,000 per house.

The result is that, "Houses built here that cost $175,000 pay their way in less than one year," Eisenberg said. He said revenues -- taxes, fees, etc. -- netted the first year from a new house total $107,700 and are about $38,000 thereafter.

"Housing raises more revenue than we think," he said. Also, most people overestimate the number of students attending public school per household, which averages less than one child per household -- only .4 kids per multi-family and .6 kids for single family houses.

"This number doesn't change anywhere," he said, adding that with a growth rate across the country of 9/10s of 1 percent, mathematically, "This has to be."

Eisenberg said Newton County must find a way to differentiate itself from the competition, namely neighboring Rockdale County. He said he drove into Rockdale earlier in the day. "I didn't go, wow, it looks so different," he said.

"If you build homes here in the county people will move here, put down roots here and be happy living here. You have gone through a challenging time but the sun is rising again," he said.

Comments

RV30015 1 year, 6 months ago

Can the board of commissioners please respond to the presentment published in the paper from the grand jury? Why are mechanics liens on the NSP homes and why did Morgan get a lawyer so fast she did not need to unless there is something to hide. Why have there been no reports on the minutes of NSP project and they were the only ones over it on the BOC. Can the paper investigate what they have to say on the request for the new jury to investigate NSP?

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jwm1955 1 year, 6 months ago

That is good news, but I think before a lot of houses are built the Baxter people need to buy the land that they want to build a house on , then they sign a contract with a contractor to build the house. If they do it that way that is good. Contractors would be foolish to build house with no contract and have a lot of houses sitting empty.

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henrystamm 1 year, 6 months ago

What? I see so many homes empty in the county that are deteriorating. It is pathetic that these joker walk around and spread that much bull. Start fixing up those first and than start building new ones. we must change the planning back to a minimum of 1 acre lots in the county and towns to make Newton County livable. Example Walton County. Yes that will bring less obscene profit to some but will help us all.

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Frustrated 1 year, 6 months ago

I wonder if he met with the CoC before he made his presentation? I bet Hall was unahppy with the bad news that Newton was almost out of houses.

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Southside 1 year, 6 months ago

Newton County is almost out of new construction. There are around 500 houses listed for sale by local real estate companies. It's like unemployment, just pick the figures that best suit you.

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