GWINNETT COUNTY - Neal Cagle is a hard bargainer and a sluggish housing market helped the veteran salesman and his wife Janet get a prime deal on a new home.
"We could have gotten a better deal, but we were under contingency (with the sale of the previous home)," Janet Cagle said.
With an overabundance of homes for sale, builders have slowed construction of new houses. Construction permits for single-family homes issued in the month of March totaled about one-third the number issued one year ago. Gwinnett County approved 148 permits last month compared to 411 in March 2007.
"That's about common for the market," said Bob Hartwell, vice president of sales and marketing for Millard Bowen Communities. "We have reduced our new home starts by about that much. We are building on order, but we have about stopped building spec homes. Normally, you want to maintain a certain number of homes under construction but now we don't want to get too far ahead of ourselves."
The relaxed lending practices popular about five years ago led to a frenzy of home buying and allowed some people to purchase homes they could barely afford. When mortgage rates adjusted upward or a catastrophe, like a job loss or illness, befell the family, many homes were sold or slid into foreclosure. That bounty of empty houses, combined with the new home inventory already on the market, produced a glut of homes for sale. With money tied up in new homes that weren't moving, builders were forced to halt.
"The builders are rationally responding to the slowdown in home sales," said Roger Tutterow, professor of economics, Mercer University. "Starts will continue to dip as builders wait for inventory levels to get back down."
Although new home starts are significantly lower than last year, Gwinnett County is doing as well or better than the metro-Atlanta area as a whole, said Eugene James, director for Metrostudy's Atlanta market, a housing market research firm.
"Although Gwinnett is down in starts, they still have more starts and closings than any other county in metro-Atlanta," James said.
Over supply drives prices down. Those motivated builders are offering attractive incentives and lower prices to move those stalled homes, as the Cagles discovered in Trilogy Park, a new home community near Hamilton Mill.
"My husband is in sales and he was dead set on getting a certain price and he got it," Janet Cagle said. "The market is what it is and they are willing to work with you. We looked at a lot of resale homes, but we get a lot of house for our money here."
Johnson Neel Communities, Trilogy Park's developer, has fared better than some developers.
"We have managed to control our supply of speculative homes," said Wade Johnson, spokesman for Johnson Neel Communities. "We saw a down turn coming. We cut back our supply of specs from 22 to 12 or 13. Every builder is feeling the pinch right now, but we have really good builders who have been in the market for some time and they know how to get through it. We will build about the same amount as last year, but we are replacing based on sales. It's not the volume it used to be, but that market will never come back."
Richardson Housing Group, with subdivisions scattered across Gwinnett, expects to reach its goal of 200 homes sold this year, said Jason West, spokesman.
"The industry is going through a difficult cycle," West said. "Last year we sold 188, so we were a little bit off our goal. In some of our subdivisions we are running low on inventory in the price ranges of $150,000 into the $200,000s."
That's a sign of the housing market correcting itself, James said.
"When people stopped buying houses about two years ago, the housing market ballooned and builders had to pull back to allow that inventory to get it absorbed. That is happening," he said.
This is a great time to buy a home, West said.
"The buyer can get a lot of upgrades," he said.
Neal Cagle used his bargaining strategies to secure generous upgrades in their new home.
"They offered us $10,000 in upgrades and a nice appliance package," Janet Cagle said.
SideBar: By the numbers
Number of single-family home construction permits issued per year:
· March: 148
· February: 105
· January: 118
· December: 128
· November: 160
· October: 157
· September: 203
· August: 314
· July: 336
· June: 404
· May: 328
· April: 366
· March: 411
· February: 361
· January: 360
· December: 287
· November: 340
· October: 422
· September: 415
· August: 644
· July: 561
· June: 748
· May: 729
· April: 589
· March: 714
· February: 606
· January: 561
Source: Gwinnett County Department
of Planning and Development