A Look Back: Cobb Housing Market Continues 'Gradual Recovery' In 2015
KENNESAW, Ga. (Jan 4, 2016) — By many metrics, Cobb’s housing market continued to show improvements in 2015: More homes broke ground in 2015 than in 2014, and fewer homes were advertised for foreclosure.
However, as the market enters year five of its recovery in 2016, the pace of construction may begin to taper off, according to Roger Tutterow, economist and professor at Kennesaw State University’s Coles College of Business.
“If you think about the housing market, 2015 was the fourth year that it was recovering, and it’s been kind of a gradual recovery,” Tutterow said. “Very early in the recovery, we were coming off a floor with valuations, so we saw home prices going up real quickly. … As we get into the fifth year of the recovery, you’re going to see those year over year comparisons for home values and the volume of construction start to look a little bit more moderate. And that’s exactly what we would expect.”
Through November, a total of 1,393 building permits for single-family homes were issued in Cobb and its six cities this year, up from the 1,265 permits issued at this time in 2014. However, November saw just 93 permits issued across Cobb, the fewest of any month in 2015 and down from the 119 issued in October.
One reason new construction may begin to slow is a low supply of available land, Tutterow said.
“I think housing continues to recover in Cobb, as is the case in most markets around the nation. We’re not yet back at pre-recession activity levels, but I think part of it is that there’s actually some restrictions on the supply side,” Tutterow said.
Cobb is a “matured” housing market, Tutterow explained. In the 1970s and 1980s, the county experienced significant growth in population — and a corresponding increase in construction activity — as people moved to Cobb from Atlanta. Today, much of Cobb has been built out, and the lack of available land may begin to slow the pace of construction, Tutterow said.
“Early in the recovery in the housing market, there were inventories of lots, some of which were available very cheap because they came from failed financial institutions. Most of that inventory has been burned through, so we’re in a position now where access to buildable lots is probably holding back the pace of activity in some markets, including likely here in Cobb,” Tutterow said.
With less property for single-family home developments available, the county is seeing more activity in multifamily developments, particularly near big commercial areas like Town Center and the Cumberland Galleria areas, Tutterow said.
“Also, we’re seeing continued re-gentrification in some of the more mature neighborhoods that we had, particularly in south Cobb, where individuals are going in and they are replacing houses that might be 40 to 60 years old with newer properties,” Tutterow said. “That’s a different way of seeing housing construction. … That’s different than historically what (housing construction in) Cobb had been, which was taking large tracts of land and building all new subdivisions.”
Fewer new homes under construction has not limited the county’s real estate market, though.
“On the other side of it, though, because the Cobb market has been so strong for so many decades, there is a pretty attractive inventory of existing housing,” Tutterow said. “While that doesn’t show up in building permits, it nevertheless does show up as transactions from the perspective of the Realtors.”
According to RE/MAX of Georgia, fewer homes on the market and rising prices made it a favorable year for sellers in the Atlanta area. The median sales price in the Atlanta area through November 2015 was $208,000, up from 2014’s median sales price of $195,000.
Tutterow said prices are close to pre-recession levels in some areas of Cobb where demand is high, which typically correlates with homes near schools with good reputations.
“In fact, in extreme east Cobb and north Fulton and the hot neighborhoods, you’re actually seeing when there are new homes being built, builders are getting multiple inquiries while the project is still underway,” he said.