US Economy Crisis (2)
Posted on February 10, 2008 by Warren Wen | Category: Real Estate
Atlanta Real Estate Outlook in National Real Estate Slump
In our previous article, we predicted that for 2008, a recession in US is not avoidable. Moreover, what the United States has to face today is not only the subprime loan crisis or even recession. It is the falling down of US modern banking system and the worst financial crisis since the 1930 depression. This crisis cannot be dealt with just interest cuts and increasing the supply of liquidity.
For this cycle of economic recession, the obvious culprit is the explosion of the housing bubble. In 2007, the average median price of housing in the US went down, which has not happened for several decades. Houses in many big cities in the US, including Los Angeles, San Francisco, San Diego, Las Vegas, Miami, went down in double digits. As a result, our readers in Atlanta are very concerned about the Atlanta housing market and its future outlook. In this article, we will provide our readers with our analysis of the Atlanta housing market. In summary, during this national slump of housing market the Atlanta housing market has been doing very well compared to other major cities in the US and seems to have a very bright future.
According to a study from the widely followed S&P/Case-Schiller Home Price Index covering data through August of 2007, there is a decline in the prices of existing single family homes in most areas of the country. Of the twenty major metro areas surveyed, fifteen showed a decline in the past twelve months. The area with the largest decline was metro Tampa, with a double digit drop of 10.1 percent since August 2006. In contrast, five metro areas have managed to show positive price appreciation. Areas reporting the biggest price gains were Seattle at 5.7% and Portland at a 2.8%, while Dallas and Atlanta showed a gain of less than 1%. In the most recent report dated January 29, Atlanta housing prices have shown very little price declines, whereas other big cities like Los Angeles, San Francisco, Phoenix have seen big double digit declines.
As a result, people cannot keep from wondering why the Atlanta real estate market can remain stable while the national real estate price is seeing a disastrous price decline. Part of the reason is that price gains in the Atlanta real estate market over the past decade were modest compared to many parts of the nation. It seems that Atlanta’s housing prices were fueled more by job growth and population growth than by the frenzy and speculation experienced by other major cities.
This conclusion is supported by a recently released study of US metropolitan areas by the Brookings Institution, called Blueprint for American Prosperity. The study produced what it calls Metro Nation Profiles, a sort of state by state review of the top 100 metropolitan areas, and gives statistics associated with those areas. This study found metro Atlanta to be ranked tenth in job growth among all the metro areas nationwide, with 67% of all jobs in Georgia being Atlanta-based.
Moreover, the economic bondage between Georgia and Asia is growing tighter day by day. Delta Airline is going to start direct flights to Shanghai, China in March and the growth of the Port of Savannah is accelerating, allowing the trade with China to grow. At the same time, investment from Korea is growing rapidly too, symbolized by KIA‘s plant here in South Atlanta. Because of the rapid growth of the Asian economy, the future looks bright for the growth of the Atlanta economy and its real estate market.
This article is only for your reference. Please do not apply mechanically to any exact cases. You are welcome to consult our attorneys at Liu & Associates, P.C. For contact information, please click here.