Faced with an inventory overloaded by new homes, developers in Gwinnett have finally begun to pull back on the number of home starts within the county.
In 2006, the county issued 6,617 single-family home construction permits. That number is down more than 19 percent from the previous five years when an average of 8,200 permits were issued each year.
Those in the housing industry say the downturn isn't necessarily a bad thing, but something that eventually had to happen.
"I think there's an overall rationing back (by developers) to more sustainable levels in Gwinnett," said Steve Palmer, chief financial officer for Bowen Family Homes. "Things really exploded a couple of years ago. We're still expecting things to be pretty strong, but we were due for a little breather."
That breather was made possible by fewer buyers looking for new homes. According to metrobrokers.com, new home sales in the metro Atlanta area dropped almost 13 percent in 2006.
With fewer people buying and builders still building, the area became flooded with new homes.
"My personal feeling is that the market started to slow and builders didn't stop building," said Lin Stadler-Perry, a Realtor with Century 21 All Atlanta, Inc.
So where did the buyers go? Housing analysts give several reasons for the recent reluctance from buyers:
•Roger Tutterow, professor of economics at Mercer University, said one reason is the rise of interest rates on adjustable rate mortgages over the past year. Adjustable rate mortgages had been very low since 2000 and allowed first time home buyers to make monthly payments to purchase a house.
•Another reason: many potential buyers are moving from places where they can't sell their old homes, said Eugene James. James is the Atlanta director of Metrostudy, a housing market research firm.
According to James, many of the people moving to Gwinnett are coming from places experiencing double-digit rates of appreciation such as Florida, California and New York. The result is homes that have become difficult to sell and owners who are prevented from purchasing new homes in their new locations.
•Finally, resale homes represented a better value in 2006 than they had in years past, said Steve Palm of Smart Numbers, an Atlanta based company providing residential real estate information and analysis. Resale homes were 80 percent of the value of a new home in 2006, compared with a typical rate of 90 percent.
But how long will buyers stay away? Some real estate agents and development companies say they're already coming back.
Palmer said his company, Bowen Family Homes, has seen a 20 percent increase in buyer traffic in 2007 compared to this time last year.
Stadler-Perry said she has seen a similar trend, but cautioned positive signs were evident at times last year, too.
"I think our market has started to come back some this year, but there were four or five times last year where it would start to come back and then die," Stadler-Perry said.
Despite those words of warning, many expect Gwinnett to rebound and continue construction at normal levels, but not necessarily at the booming levels seen in 2001 through 2005.
"I think Gwinnett is still a very healthy market," Stadler-Perry said. "There's still land to build on and we're seeing construction in higher priced houses."
Tutterow said it's important to remember the housing slowdown has been a nationwide trend, and it doesn't mean people have stopped moving into the Atlanta area.
"In terms of the longer run, we need to keep in mind that Atlanta is still seen as one of the premier destinations for people to locate to," said Tutterow. "As goes growth for Metropolitan Atlanta, so goes Gwinnett County."