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.