The Atlanta Journal-Constitution
Published on: 11/25/07
The white paint has barely dried on the cathedral ceilings. And some of the stacked-stone chimneys have yet to crackle with that first fire. Here, in a half-built neighborhood near Grayson, everything is freshly minted, down to the suburban dreams.
Yet earlier this month, outside the Gwinnett County courthouse, nearly half the subdivision was auctioned off the latest casualty of a foreclosure crisis that has pounded model-home sales offices around metro Atlanta.
|Foreclosures have hit builders hard in Grayson where Chandler Woods Estates has been left with many empty lots and some residents fear what could fill those spots soon.|
Pouya Dianat/Staff Photographer
|Some homes are not even finished.|
"Going once, going twice, sold to Legacy State Bank," attorney Samuel L. Chesnutt shouted to a crowd of investors showing little interest.
In less than two hours, the bank bought 21 properties owned by the builders of Chandler Woods Estates. A few were unsold homes. Most were vacant lots. All went to a buyer with no home-owning dreams.
"We expect to see a lot more of that, to be honest," said Domonic Purviance, a senior consultant with Metrostudy, a housing market research firm.
The building gloom is a stunning reversal for one of this decade's hottest Zip codes for new-home construction in metro Atlanta.
Even now, by all outward appearances, this corner of Gwinnett is still bursting at the seams. Road crews are widening traffic-clogged Ga. 20. Another middle school is under construction. Subdivisions are sprouting up around every corner.
But peek into many of those new houses, and there's something missing: people.
Metro Atlanta has 140,000 vacant lots, Purviance said. That's a nearly four-year supply, or double what's normal for the region. And nobody is in a hurry to build on top of them. The supply of unoccupied new homes has soared and is now twice the usual three-month inventory.
The problem is most acute in outlying counties, from Henry in the south to Forsyth in the north, where large blocks of lots are going into foreclosure.
Folks who might otherwise move to Atlanta from places like California, Florida and New York can't sell their homes there. The once-reliable reservoir of potential home buyers has receded, leaving many Atlanta developers high and dry. And each foreclosure puts another property on the market.
"People paid premium prices for land," Purviance said. "But the prices were a little inflated. The developers are stuck now."
So are homeowners like Mark Braswell, who moved into Chandler Woods Estates last July. From his cul-de-sac lot, he expected to see property values rise with each new home. But sales slowed. And construction nearly ground to a halt.
Last month, "Reduced" stickers joined the "For Sale" signs that lined Cattail Ives Road. Then, on a record-setting Tuesday for foreclosures in Georgia, the signs disappeared altogether. The properties went to the bank that issued the construction loans in the first place.
Braswell fears the lots will end up in the hands of a builder who brings a cheaper product to the neighborhood, where homes currently are priced from the high $200,000s to the mid $300,000s.
"It leaves us very vulnerable to whatever comes in," he said.
Chandler Woods Estates builder Theo Watkins slashed prices and offered to pay closing costs. But even that couldn't help him reach his modest goals. He needed to sell a couple of homes a month to stay afloat.
"There's no consumer confidence," Watkins said. "That's what's killing us."
Now Watkins faces another challenge. He's the builder in an even more expensive neighborhood next door. The lender on that subdivision, whose brick homes are priced in the $400,000s, is working with Watkins, he said, giving him more time to catch up on payments.
In Chandler Woods Estates, residents fear the rash of foreclosures could snowball. Several neighbors have told Braswell that they took out adjustable rate loans expecting property values to rise. Now, when refinancing, their loans will look inflated compared to sale prices dragged down by all the foreclosures.
"I really love my home," said Melissa Scourlas, staring at a line of empty lots next to the house she bought in September. "But what will this do to property values?"
Purviance, of Metrostudy, said existing homeowners will have to ride out the storm until the market correction ends. He doesn't expect that to happen until at least the end of 2008.
But for those looking to buy, Purviance said, now's a good time.
That has Scourlas thinking creatively. Residents of Chandler Woods Estates have tossed around the idea of buying a couple of lots and building a neighborhood swimming pool.
Perhaps, she said, they can get a deal.