Old Fourth Ward to gain midrise apartment building

Published on: 03/03/08

WHAT IS IT?

Alexan 360 will be a 592-unit mid-rise apartment complex in the Old Fourth Ward near the Freedom Parkway/Boulevard intersection. Unit sizes will be 656 square feet to 1,277 square feet and rents will range from $1,055 to $1,800. Amenities will include courtyards, rooftop terraces with views of the Atlanta skyline, swimming pools, club centers and a fitness facility. Trammell Crow Residential is the developer of the $105 million project.

WHAT WILL BE THE IMPACT?

More than 800 people will call Alexan 360 home, which is likely to accelerate the resurgence of the Old Fourth Ward between downtown and Inman Park. Nearby, new businesses are adding life to Edgewood Avenue, and a condominium building on John Wesley Dobbs Avenue called Tribute Lofts has drawn prosperous new residents. The King Center and the Jimmy Carter Library and Museum are within walking distance.

WHEN WILL IT BE DONE?

The first units are expected to be available in May 2009. The entire project should be finished in March 2010.

By JULIE B. HAIRSTON
The Atlanta Journal-Constitution
Published on: 01/18/08Local real estate industry leaders made another stab this week at counteracting the growing tide of gloomy news about mortgages, foreclosure and home sales.

At a panel discussion assembled by the Mortgage Bankers Association of Georgia and the Georgia Association of Mortgage Brokers, representatives of bankers, brokers, real estate agents and builders encouraged consumers to “think of the glass as half full” despite the current woes of the housing market.

They pointed out that mortgage rates are low — 5.87% for a 30-year, fixed-rate loan — and likely to fall even lower, home prices are negotiable and purchase incentives such as upgrades and discounts are widespread.

“It’s a great time to buy,” said Rick Floyd, president of Opteum Mortgage.

On the heels of news from the U.S. Department of Commerce that housing starts hit a 27-year low in December, David Ellis, executive vice president of the Greater Atlanta Home Builders Association, characterized the slump as “good news.”

Metro Atlanta currently contains so much for-sale housing, selling all of it would require more than 10 months, more than twice the level considered optimal, Ellis explained. So, a slowdown in new construction gives the market time to absorb some of the excess.

“It’s a challenging time for the people I represent,” Ellis said.

In response to the panel’s message, the president and CEO of the Atlanta Neighborhood Development Partnership Inc., a grassroots organization that promotes affordable housing, said that tightening mortgage markets are squeezing many families.

“The reality is that most families, particularly those of moderate income, usually have less than perfect credit,” said John O’Callaghan in subsequent telephone interview. “If you have great credit, now is a good time to buy. But if you have less than perfect credit, you are going to have a hard time purchasing a home that meets your family’s needs.”

The panel found itself before a somewhat sparse audience on Thursday, perhaps deterred by winter weather.

But Powder Springs resident Lynette Joseph braved the cold to learn more about the housing market and the shifting requirements for mortgage lending.

A fledgling real estate investor with three properties in her portfolio, Joseph is hoping to build a retirement nest egg by buying and selling metro Atlanta houses.

She left the panel discussion with renewed enthusiasm.

“I learned that the market is not as bad as the media has made it out to be with foreclosure statistics,” Joseph said. “I’m walking with confidence as a young investor that I can still prosper in this industry.”

Moderated by 11 Alive Consumer and Business Editor Bill Liss, the panel acknowledged the economic “correction” triggered by the default of millions of high-risk loans that had been sold to Wall Street investors in bundles.

So far, American investment banks have written off losses on those investments totaling more than $100 billion, according to an estimate given to congressional leaders by Fed Chairman Ben Bernanke Thursday.

The defaults have been accompanied by a rising tide of foreclosures, which have reached record levels in metro Atlanta.

These foreclosures not only affect the families who lose their homes, according to O’Callaghan, they also limit the ability of surrounding homeowners to tap the value of their homes for important maintenance investments.

Still, qualified buyers have no reason to hang back from the market, Floyd said.

“There are issues going on in America. There are issues going on here in Atlanta, GA,” said Floyd. “But look at it as ‘the glass is half full.’”

For borrowers with steady, documentable income and a good credit history, loans remain readily available and likely to contain attractive terms. Government incentives for first-time buyers also can help overcome many common barriers to home ownership, the panelists said.

“Although credit has tightened, there are still a lot of programs and products out there today that can get people into a home,” Floyd said.

By ALEX FRANGOS
The Wall Street Journal
Published on: 11/22/07Even the Trump name isn’t bigger than the calamitous condo market.

Donald Trump’s reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble.

In recent years, Trump has lent his name, and in some cases his own money, to at least 20 projects in the U.S. and another half dozen abroad, including buildings in Dubai of the United Arab Emirates and Seoul, South Korea. While in some cities such projects are doing fine, others face slow sales, project delays and cancellations — and irate buyers.

In Tampa, buyers who placed deposits of $200,000 to $1.2 million on units in the 52-story Trump Tower Tampa are fuming. Nearly three years after the $260 million skyscraper was started, construction has stopped.

A Fort Lauderdale tower with Trump’s name on it was put on hold indefinitely last month, and a West Palm Beach project could be put on the shelf shortly. Construction on a Trump Tower in Toronto is just getting under way after years of delays and a reduction in height. And at Trump Tower Chicago, a hotel and condo project set to be the second tallest building in the city after the Sears Tower, 30 percent of the 825 units remain unsold as the condo market there slows.

In Atlanta, two condo towers with the Trump name are about to be launched at a time when 5.8 percent of the homes there are for sale, the second-highest inventory of unsold homes in the country, according to Zelman & Associates, a housing-research firm.

Trump says Atlanta is “a beautiful job going well.” Asked about Atlanta’s poor housing market, Trump said, “You know I can’t be everywhere. It’s like somebody says, ‘why didn’t you build here or there?’ Who’s done better deals than me?”

Trump is known for focusing on the positive. “All of my stuff has been a great success,” he said in an interview last week. “Nobody has even come close to the track record that I have.” He points to many other projects he is involved in that he considers outsized successes, including ones in Las Vegas, Hollywood, Fla., Miami, New York, Hawaii and the Dominican Republic. “Somebody says ‘how’s the market?’ I say not good except for Trump,” he says.

But the recent problems at developments bearing his name are evidence that no one is immune from the downdraft in the housing market. New housing projects throughout the country are suffering from weak demand and falling prices as banks tighten credit standards and a glut of empty units swells.

This time around, Trump personally is in little danger financially. During the last real-estate collapse in the early 1990s, he was pushed to the brink of bankruptcy because he was personally on the hook for hundreds of millions of dollars worth of debt. He later restructured his debt with the banks and worked his way back to doing real-estate deals.

In some recent condo projects, Trump has sold his name to developers for a fee and, in certain cases, he gets a portion of the sales in the building as well. In some he has contributed a minority slice of equity. This means, even if the projects fail, his financial exposure is limited, although his reputation may suffer. In other projects, such as in Chicago and Las Vegas, he says he is the lead investor.

At Trump Tower Tampa, which began its marketing in 2005, sales initially soared. The local development company, SimDag LLC, sold all 192 units and then, as the market skyrocketed, returned buyers’ deposits, raised the units’ prices and sold out again.

Then in August 2006, a city inspector examining a key part of the foundation known as the caissons discovered the plot of land wasn’t solid enough to support design. Construction never resumed.

In May, Trump sued SimDag in federal court in Tampa, charging the developer with failing to pay him much of his licensing fee and failing to execute on construction and sales milestones promised in the contract. Court documents filed by Trump’s lawyers say his involvement was limited to licensing his name to the developer for $4 million plus a cut of the sales.

But many of the buyers feel that they were led to believe that he had a much larger stake. “The only reason we bought into this was because of Trump,” says Don Wallace, a local restaurant owner whose wife, Elaine Lucadano, has interests in two units. “He’s bashing Rosie O’Donnell, and we’re twisting in the wind,” referring to Trump’s tabloid spat with the talk-show host. Jugal and Maju Teneja, who paid $528,000 to reserve a unit in October, filed a suit against Trump and SimDag in Hillsborough County Circuit Court, claiming they deceived buyers into thinking Trump was closely involved in the development of the tower.

Trump says his role as a licensor was disclosed in offering documents given to buyers, a point Wallace disputes. Trump also noted that his ability to deal with construction problems has been limited. “When I license my name to somebody, I don’t have the same power over a job,” he says. “I could have pulled the Tampa job off easily. Other people can’t pull it off easily.” Now, Trump says, the Tampa project has become a victim of the deteriorating financing and sales climate. “If there was a job today that was going to start…I would most likely say let’s wait a little while,” he says.

Overall, though, he says his projects are successful, even in markets that are suffering problems, noting his name indeed sells units. “How many times is Trump supposed to be selling out a building before they move forward?,” Trump asks. As for his brand image, he says: “Tampa doesn’t hurt me.”

Atlanta’s bloated condo market in ‘danger zone,’ expert says

By KEVIN DUFFY
The Atlanta Journal-Constitution
Published on: 10/14/07Kevin Esch was in week four of his condo hunt. Was he getting antsy? Not in the least.

Esch looked at a one-bedroom unit at 905 Juniper St.; then with his real estate agent, Geoffrey Greene, walked over to Peachtree Street to check out Viewpoint, a 36-story tower under construction.

“She’s getting tall,” Esch, a fitness trainer, said, gazing up at Viewpoint while standing across the street at Spire, a residential high-rise finished two years ago.

Esch and Green visited the Viewpoint model home inside Spire, then drove four blocks north to hear the sales pitch at 1010 Midtown, a 35-story tower scheduled to open next year.

After that, they called it a day. Three condos. Two-and-a-half hours. No decision.

Esch can take his time. Atlanta is awash in condos.

“At a time when the pace of new development needed to slow, a record 3,050 units were started in the first half of 2007,” researcher David Haddow said in his midyear real estate report. “Atlanta’s intown condominium market has clearly entered the danger zone.”

A record 6,000-plus units are under construction, Haddow reported. Enough condos are out there to meet demand for the next 31 months, his figures show.

Haddow’s calculations don’t include the projects that have been proposed but not started, such as the two Trump Towers in Midtown.

“It’s the slowest market I’ve ever actually worked in,” said Greene, an agent with City Living.

Market changes caused the glut. In 2004 and 2005, Atlanta enjoyed a run-up in condo sales as intown living grew in popularity and easy credit made home ownership possible for more people.

Last year, buyer exuberance began to peter out and sales returned to levels closer to the norm. Condo projects, however, marched on. Supply and demand took different directions.

That’s a short-term disconnect that will correct itself, developers and real estate experts said. Long-term, the condo market will continue to grow right along with the city, they said.

“Commercial real estate markets have always been prone to this overbuilding,” said Richard Martin, a real estate professor at the University of Georgia. “They all see the same demand signal.”

From mid-2006 to mid-2007, condo sales fell to 2,239 units, sharply off the prior two years, when an average of 4,000 units sold, Haddow reported. The historical average is 2,733 units a year.

Gigi Giannoni, president of Evolv real estate service, said one reason for the downturn is that investors who had hoped to rent and sell condos lost confidence and fled the market.

“A lot of developers ran into that problem, that investors just decided to pull out,” Giannoni said. “Under-contract condos went empty.”

Relaxed credit requirements led to an increase in condo defaults. RealtyTrac, a company that tracks foreclosures, looked at how many Atlanta condos were repossessed from April to September over three years. This year, repossessions over that six-month span totaled 163 units, compared with 28 the year before and 59 in 2005.

Daren Blomquist, RealtyTrac’s marketing communications manager, said condos are undercounted, so the true totals are undoubtedly higher.

“These numbers are not comprehensive,” Blomquist said. “My suspicion is that more records in our database are actually condos.”

Condo developers have begun their retreat as the market corrects itself.

Cousins Properties put off building a 210-unit tower on Ponce de Leon called The Premiere at Fox Plaza.

“That site is fantastic,” said Larry Gellerstedt III, president of Cousins’ office and multifamily division. But “we just took a look at the number of units coming out and hitting at about the same time.”

Coro Realty Advisors switched to apartments for its Buckhead Place project on Peachtree Road.

Wood Partners announced a similar switch for a tower at The Streets of Buckhead site.

Kim King Associates dropped plans to build condos atop the Hotel Palomar, now under construction in Midtown.

“It’s not that they don’t want to buy,” Mark Randall, a director with Wood Partners, said about condo hunters. “They’re scared to buy. It’ll settle out.”

Randall said he’s been trying to bat down rumors that the Trump Towers project, which Wood is shepherding, is gasping.

“I can tell you the way I’m writing checks right now, it’s not dead,” he said. “We continue to sell units. We will get started because we’re Trump.”

Novare, the biggest condo developer in Atlanta, is offering $10,000 worth of freebies to spark sales at Viewpoint. Free washer and dryer. Free refrigerator. Free hardwood floors.

“The market is different now,” said sales agent Michael Rosser, who showed Esch the Viewpoint model. “We have to give a little bit more.”

Novare President Jim Borders said it’s hunker-down time. “I don’t believe there’s going to be a tremendous new supply that is started in Atlanta over the next couple years,” Borders said. “For now, we’re going to sell the projects that we have.”

The demographics bode well for Atlanta’s condo market. The ranks of retirees, baby boomers seeking a second home and young urbanites are swelling.

A study released last year by a Portland economist said that from 1990 to 2000, Atlanta was the percentage leader in attracting the college-educated young, 25 to 34 years old.

A newcomer from New York or Chicago accustomed to high-rise living wants the same in Atlanta. Since 1997, 32,000-plus condo units have been started or built, Haddow’s research said.

“The speed of development of condos has just been tremendous,” said Karen Gibler, a real estate professor at Georgia State University. “Twenty years ago you probably couldn’t give a condo away. We just weren’t that kind of market.”

After periods of little growth or decline, the city’s population rose significantly the past two years. Spring 2006 to spring 2007 showed an increase of 12,600 people, the biggest spike in 30 years, according to the Atlanta Regional Commission.

“It’s a real change in the metropolitan area,” UGA’s Martin said. “There’s a taste for living in the city of Atlanta again.”

Sam Williams, president of the Metro Atlanta Chamber of Commerce, said jobs will determine the health of the condo market.

No one is making a bigger bet on Atlanta than the Miami-based Related Group, which has built more than 55,000 condos and apartments in Florida since 1979.

Over a period of years, the Related Group plans to build 13 condo towers in Buckhead. One project, CityPlace, would have nine high-rises and 28 townhomes off Roxboro Road between Peachtree and East Paces Ferry roads. The first tower, One CityPlace, a joint effort with Cousins, is set to get under way in December or January.

The Related Group also is teaming up with Cousins to build two high-rises off Piedmont Road, and it’s partnering with Simon Property Group to build two more at the end of East Paces Ferry Road.

Reasonable home prices and above-average household incomes will continue to draw residents to Atlanta, said Lee Hodges of the Related Group said.

“Atlanta is going to be a destination city because of the local economy,” he said.

Condo hunter Esch was effusive about Midtown’s vibrancy and convenience, but the idea of living in a really tall building left him cold.

“There’s something about that that’s just not inviting,” he said.

Finally, though, he found a condo that met most of his needs. It was affordable, close to work, just big enough and in a building of acceptable height – 20 stories.

It took five weeks, but Esch was almost home.

Now that is cool! A green development powered entirely by wind!

By JULIE B. HAIRSTON
The Atlanta Journal-Constitution
Published on: 09/12/07Faced with growing inventories of unsold homes and reluctant buyers, a coalition of metro Atlanta homebuilders will launch a media blitz Saturday to spur sluggish sales in the region.

Blaming a relentless tide of bad news about home sales and prices in national and local media, the homebuilders are trying to counteract what they say is a false impression of Atlanta’s market that is discouraging potential buyers from purchasing a new home.

Steve Palmer, chief financial officer for campaign participant Bowen Homes, said the million-dollar campaign will remind consumers that now is the best time in years to buy a house and reassure them about the long-term stability of the Atlanta home prices.

“I think the media is doing homebuyers a disservice by pounding people with all this negative news,” Palmer said.

Homebuilders like Monte Hewett, president of Monte Hewett Homes, said the current climate is prompting even qualified buyers with steady incomes to hang back.

“People are very nervous about the market,” Hewett said.

Single family home sales in metro Atlanta declined from 48,369 in the first eight months of 2006 to 40,739 between Jan. 1 and Aug. 30, 2007, according to ReMax Realtor Tal Kramer, who tracks sales trends for his monthly newsletter. The median price has increased slightly in contrast to the negative national trend.

David Ellis, executive vice president of the Greater Atlanta Home Builders Association, said the real estate boom years of 2005 and 2006 created unrealistic goals for home sales, making Atlanta’s current slow-but-steady numbers appear more gloomy than they really are.

“We’ve slowed down. There’s absolutely no doubt about that. But we’ve slowed down to where we were in, say, 2000, and that was a record year,” Ellis said.

The campaign, under the slogan Get Home Atlanta!, will employ a variety of techniques to steer attention to its Web site. In addition to offering prizes for visitors such as a week’s resort vacation and sky-box seats at the Georgia Dome, the site will list 10 reasons why a house is a good investment and why now is a good time to buy.

“Now’s the time to act if you’re looking to take advantage of this buyer’s market,” Ellis said.

Ray Bouley, president and CEO of Full Circle Real Estate Marketing, said the campaign will employ a wide variety of media from print advertising in newspapers and magazines to fliers and Web links.

“If we can stem the tide of national press lumping us into everyone else, maybe we can get some momentum going into the spring market,” said Bouley, whose firm drafted the campaign concept and is managing its rollout.

Flashy logo
Consumers are likely to notice the first flashes of the hot orange logo on 100 MARTA bus banners, 10,000 yard signs and thousands of bumper stickers. The campaign also plans to use 15 metro area billboards.

The builders have raised about $400,000 so far in cash and in-kind contributions to fund the push. Fundraising and additional campaign strategies will extend into 2008, Bouley said. By the end of the campaign, the homebuilders plan to have employed more than $1.3 million in media resources.

After a two-month push from now until November, the campaign will regroup over the winter holiday season and refresh its efforts with new strategies in January.

Seed money for the campaign began earlier this year with local-match funding from the National Association of Home Builders, which is encouraging its chapter affiliates to band together to boost buyer confidence.

After developing the campaign theme and parameters, Bouley and Ellis began meeting with homebuilders and marketing professionals around the region to raise money for the rollout.

While no accurate measure will be able to indicate whether the campaign is meeting its goal, Hewett said he hopes it will prod uncertain buyers to take advantage of builders’ and sellers’ individual incentives among the Atlanta market’s bloated supply of unsold homes.

“Nobody’s going to ring a bell when we’re at the bottom of the market,” Hewett said.

By JULIE B. HAIRSTON
The Atlanta Journal-Constitution
Published on: 07/01/07Lela Hinson put her Campbellton Road house on the market last fall just as the U.S. real estate market plunged into its deepest sales slump in years.

Working without an agent, Hinson only managed to draw a few lookers and no takers. Month after “stressful” month, her house languished on the market.

“I did get a few calls, but mostly people just wanting to look at the house and who were not prequalified,” said Hinson, 28, a paralegal. “Nobody was really interested.”

Throughout metro Atlanta, agents and brokers are reporting slowed sales and rising inventories of unsold houses, even as national reports indicate month after month of falling sales and prices now projected to last well into 2008.

Harvard’s Joint Center for Housing Studies reports that the current national oversupply of unsold houses would take two years to sell off.

Metro Brokers GMAC agent Katrina Wood said she works closely with sellers now to negotiate the tricky choices the soft market imposes.

“Are you willing to list your home slightly below the market value in order to make the sale?” she asks them. “Some sellers are not willing to do that and some are.”

From May 2006 to May 2007, inventories of unsold houses in metro Atlanta soared in every county, climbing between 18 percent and 70 percent in just one year, depending on the area.

Cobb County seems to have struck the best balance in the softening market, holding its inventory to less than an eight-month supply, an increase of just over 21 percent from the year before.

Hardest hit were Rockdale County, where inventory increased more than 70 percent to more than one year’s supply, and south Fulton, where a 53 percent increase pushed supply to almost 13 months.

Dac Carver, marketing director for Metro Brokers GMAC, said Atlanta’s market slowdown began last spring and “the bottom fell out at the end of the year.”

“South Fulton,” Carver said, “a few years ago was the talk of the town. Everybody was flocking there. Then, the months supply [of unsold homes] just rocketed up.”

Soft-market strategies

After mulling her options, Hinson, whose home was in that tough south Fulton market, decided to call in an expert. She had met Metro Brokers GMAC agent Debra Wilson this year when Wilson stopped by to look over the property.

When Hinson hired Wilson, the agent made a careful analysis of the property’s value. Impressed with the 1-acre lot and attractive interior features, Wilson actually advised Hinson to raise her asking price to $130,500 from $120,000 based on sales of comparable properties in her area.

Potential buyers sometimes suspect a hidden flaw or legal entanglements when a house is priced below its market value, Wilson said.

“Lela was selling herself low according to the market,” Wilson said.

Then, Wilson started handing out fliers and held an open house. “You have to price it right, and you have to generate traffic,” Wilson said.

Two weeks later, Hinson and her agent had a firm offer. The property is set to close at a price of $129,500 on Tuesday — more than six months after she first began her efforts to sell.

Wilson admits she doesn’t always fare as well with her listings in the current real estate climate.

“It’s just taking longer to sell. Buyers have so much to choose from,” she said. “A home might be out there 60, 90, even 120 days now.”

Cancellations rise

Greg Duriez, division president for KB Home, the national builder that debuted the popular Martha Stewart line of homes last year, said the slowdown is showing up in more ways than one.

“Net sales are slower than they were last year, and not only are sales slower but [contract] cancellations are up,” Duriez said. Hampton Oaks in south Fulton County was the second Martha Stewart community in the country. The company has since launched Windchase in Cherokee County, also a Martha Stewart community.

KB Home is reporting about 30 percent of its contracts for new homes in metro Atlanta are being canceled before closing. In 2004 and 2005, he said cancellation rates averaged in the 15 percent to 20 percent range.

In part, Duriez blamed tighter mortgage lending standards for the high cancellation rate as a growing rate of default on risky, subprime loans sweeps the nation. He said he expects the effect to fade as buyers become more accustomed to the new standards.

David Tufts, president of the Marketing Directors, a national marketing firm for new condominium developments, said the real estate slowdown has affected metro Atlanta sales, but he expects the area to be spared its worst effects.

“There really is a lull in the market, but it’s not for any economic reason in Georgia,” Tufts said. “Atlanta in particular is not a ‘bubble market’ and never has been.”

Cities like San Diego and Miami are prototypical of the so-called bubble markets. In those cities, real estate prices experienced double-digit increases for several years running as speculators bought and sold property for quick profits. Such areas have been especially hard hit as investors withdraw and overbuilt, speculative projects sit unsold.

Atlanta, by contrast, has seen smaller but steady gains in the 3 percent to 5 percent per year range, and growth projections for the metro area continue to buoy developers’ optimism that currently high inventory levels will be absorbed quickly in the recovery.

“Once the national market improves, [Atlanta] is really going to pop,” said Metro Brokers’ Carver. “We’re going to see a huge pent-up demand.”

Duriez shares Carver’s perspective.

Metro Atlanta, which is gaining some 500 new residents every day according to the U.S. Bureau of Census, is expected to gain 1 million more people by 2030.

“It’s still a healthy market,” Duriez said.

Intown, luxury hold up

While average prices nationwide have recently experienced their steepest decline in 16 years, Atlanta’s median home price continues to increase at about 5 percent a year, reaching $191,587 from $182,500 in 2005. Fayette County on metro Atlanta’s Southside posted the highest median price for a new home at $370,187, while north metro’s Forsyth County posted the highest median resale price at $252,000.

With empty nesters and traffic-weary suburbanites repopulating the city’s core, prices and inventories in the city of Atlanta are faring better than many other areas, according to Carver.

And outside the Perimeter, Douglas County and north Fulton are faring well in the luxury house price categories starting around $1 million, Carver added.

“Right now, the high end in certain areas is holding up well,” Carver said.

But metro Atlanta is unquestionably a buyer’s market, with developers sweetening their incentive packages and sellers showing great flexibility in price negotiations.

“Don’t be afraid to ask for things now,” Carver said.

Having fared well as a seller, Hinson and her architect husband, Antonio, ended up in good position as buyers of a new College Park house, where the builder upgraded their new home’s accessory package while they were waiting for the contract on the Campbellton Road house to close.

By TAMMY JOYNER
The Atlanta Journal-Constitution
Published on: 06/13/07If Conrad Coles had it to do over, he would have factored in the sale of his Hampton home when he took the job he now has in Virginia.

“I would probably have never taken the offer without them buying the house,” said Coles, who left his family in Georgia in April to take a managerial engineering job at Sonoco Products Co. in Richmond.

He figured it’d be a cinch selling his $528,000, five-bedroom home. Two years ago, he sold a half-million-dollar home in Virginia in seven days when he moved to Georgia for a job.

“The market was on fire then,” he said. “The market’s really turned over. It’s a buyer’s market now.”

His current home has been on the market for about nine weeks.

“I just knew it would be gone like that, you know?” Coles said. If it hasn’t sold in another month, Coles said he’ll drop the asking price and double buyer incentives from $5,000 to $10,000. Come September, when school starts in Virginia, the house could be a “deal-breaker” between him and his current employer.

“I’m very concerned. I have a wife and three daughters. I have to be with my family,” said Coles, who has been in temporary housing in Richmond since May 7. Sonoco has given him 45 days in living expenses.

“It’s costing me more just to be here.”

As “For Sale” signs languish longer on lawns around the country, relocating for jobs is getting harder for workers like Coles. And more difficult for companies looking for highly skilled executives.

“It’s not an ideal situation,” said Joe Bottenfield, director of avionics for North America at Barco Inc., a Belgian firm that makes everything from giant screens at sports stadiums to flight simulator panels.

Bottenfield works in Duluth. His family is still in Lancaster County, Pa.

“But it’s almost over with and we’re excited about that,” he said last week when his family arrived in Atlanta to house-hunt.

The Bottenfields recently sold their four-bedroom colonial in Pennsylvania.

“We were fortunate. There are other houses that went on the market before us and still haven’t sold,” Bottenfield said.

Slowdown worse at top

Maureen Young, a Realtor for Coldwell Banker Bullard Realty in Henry County, said she definitely has seen a slowdown, “especially in the higher-end homes.”

She blames it on “instability in the economy and uncertainty in employment,” and other future unknowns.

“People are feeling uncertain about their own jobs and futures,” she added “They’re kind of skittish about moving.”

In extreme cases, job offers are being rejected because people can’t sell their homes or don’t want to risk a big loss if they do.

“There’s kind of a hesitation in the market right now. Homes are staying on the market longer. It’s going to take some time for that to be absorbed,” said Rachel Drew, a research analyst who headed the latest national housing report for the Harvard Joint Center for Housing Studies.

“People are trying to see where everything is going to go.”

So are companies.

Considering it can cost up to $100,000 in today’s market to move a top executive, some businesses are being even more selective about their relocation choices.

“Employers are carrying the burden here,” said Robert Baxter, Atlanta-based senior client partner at Korn/Ferry International, a major search firm. “The big pushback in relocation is the cost to employers.”

Those companies that go after prized executives are responding to a slower housing market with bigger relocation packages, going as far as buying the homes of executives or paying closing costs and other housing-related expenses.

Relatively stable here

While metro Atlanta home sales have slowed, the market remains relatively stable compared to other regions. People want to move here, real estate agents say, but Atlanta is seeing the fallout of housing troubles in other parts of the country.

Nationally, sales of new and existing homes have fallen precipitously from peak levels in 2005, according to Wachovia’s June Housing Chartbook released Friday. The report forecasts continued declines through 2009.

“A lot of people are reluctant to accept a position unless the company is willing to take over the responsibility of selling their house,” said Emory Mulling, chairman of the Mulling Corp., a Dunwoody firm that provides services that include outplacement and career transition, executive coaching and retained search.

In the last nine months, Mulling has seen about a dozen “serious cases” where the fate of job offers hinged on home sales. The executives lived in California, New York, Texas, Illinois and other parts of the Midwest.

“In three cases, the companies agreed to buy the homes when they originally said they wouldn’t,” Mulling said. “Four people declined the offers because the companies wouldn’t buy the house.”

Companies do more

A check of other metro Atlanta recruiters, employers and real estate agents found that companies are using innovative tactics to quell what some call “relocation anxiety”:

• The Home Depot and Coca-Cola Enterprises will buy a crucial employee’s home after a certain period of time. In CCE’s case, it’s 60-90 days. At Home Depot, it’s 90 days. “The change in the housing market has meant the company now has to help our associates more often in disposing of their homes to make the transfer possible,” said Home Depot spokesman Jerry Shields.

• One consumer company accommodated a division president by extending his commute from his home in the Northeast for six months to a year. His home hasn’t sold.

• Another Atlanta company paid $5,000 toward the closing cost on one executive’s home. Still another gave a job candidate a lump sum of money toward moving expenses.

“Most of these assignments are mission critical,” said Dale Jones, an Atlanta-based managing partner for executive search firm Heidrick & Struggles.

“So the softness in the housing market rarely will scuttle the deal, but oftentimes it may delay the deal or cause the deal to be more expensive.”

Despite the national housing slump, metro Atlanta continues to attract people because of affordable homes, weather and other lifestyle issues.

“The Atlanta market is wonderful compared to everyone else,” said Dana Eskridge, vice president of relocation and corporate services at Metro Brokers GMAC Real Estate.

“They’re still coming and they’re still buying,” Eskridge said “They’re just going to have to take their time. They’re not going back or giving up.”

Meanwhile, the Bottenfields seemed close to finding a home here.

By midafternoon Friday, the family had seen about 17 homes. “There’s one that we found up in Chattahoochee River Club that seems to be everyone’s favorite,” Bottenfield said. They had one house left to see.

“Hopefully we can pick one and just go forward.”

TO MOVE OR NOT TO MOVE?

It can cost a company $60,000 to $100,000 to relocate a senior executive and his or her family. Here’s how it typically breaks down:

• Moving expenses

• Househunting trip for spouse.

• Brokerage commission. This is one of the biggest expenses when you consider a 7 percent real estate commission on a half-million dollar home is about $35,000.

• Closing costs.

• Temporary housing. (Typically about six months)

• Taxes

• Miscellaneous or curtain allowance. Amounts to two weeks or a month’s base salary. It’s usually used to help the executive and his family get established in their new home.

By TOM WALKER
The Atlanta Journal-Constitution
Published on: 06/07/07 Sellers dominated the stock market for the second straight day on Wednesday as a hint of wage inflation reinforced earlier investor concerns that Federal Reserve interest rates may not go lower anytime soon.

All the major stock market indexes continued to fall back from Monday’s year-to-date highs. The Dow Jones industrial average fell 129.79 points to 13,465.67, the index’s fourth-biggest daily loss in 2007.

The sell-off started early and continued all day after the government announced that first-quarter nonfarm productivity growth was weaker than originally estimated, while unit labor costs — a measure of wage inflation — were worse than initially projected for the January-March period.

This came a day after news of stronger-than-expected growth in the U.S. nonmanufacturing, or services, sector. Also Tuesday, Fed Chairman Ben Bernanke highlighted his ongoing concern about core inflation, suggesting that the Fed might not lower its federal funds rate as early as Wall Street has forecast.

Treasury prices also fell on Tuesday as bond traders reacted to the same Fed rate concerns, a move that sent short-term Treasury yields to 5 percent — a level attractive to investors and competitive against stocks. On Wednesday, those yields apparently did attract buyers, which had the effect of lowering the yields, which move opposite to price.

Strategists blamed Wednesday’s broad market sell-off on the prospect of rising prices.

“Today’s Labor Department report of higher wage cost and slower productivity growth added to the market’s concern that inflationary pressures may be rising,” said Phil Larkins, senior portfolio manager for Northern Trust-Atlanta.

As for the bond market, Larkins said yields that go “too much above 5 percent” may prompt investors to take “a fresh look at their asset allocation to determine if they might switch some assets out of stocks and into fixed-income assets.”

Analysts at UBS Investment Research somewhat tempered Wednesday’s productivity and wage revisions. The downward revision in productivity — to 1 percent annually from the initial 1.7 percent — “appears to largely reflect the cyclical downturn in housing,” the analysts said in a client message.

Meanwhile, the increase in unit labor costs to 1.8 percent from the original 0.6 percent may reflect changes in the timing of year-end bonuses by companies to workers, exaggerating the strength of the fourth quarter, UBS said.

The market’s two-day dip is the first setback for the Standard & Poor’s 500-stock index since it broke above its previous 2000 high to close at a record on May 30, after which it posted three additional highs.

The Dow, meanwhile, has become more volatile since its 416-point one-day loss on Feb. 27. The Dow has posted four daily losses of more than 100 points.

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