Is The Current MARTA Vision Worth The Chase?

The article below was written by Mayor David Belle Isle, the mayor of Alpharetta, who gave me permission to share it with you here.


Is The Current MARTA Vision Worth The Chase?

I’m a vision guy. I love looking at something and imagining what it could be; what it could be like; and how to get there. I love chasing a vision and seeing the pieces fall into place. But, for a vision to be worth the chase, the promise of “what could be” has to be better than “what is.”

Last week, I found myself in a makeshift room midway up the interior back stairs of the State Capitol. The room was packed. The air was hot. I was there to testify on behalf of Alpharetta at a committee hearing on the proposed MARTA expansion bill, SB 330. To my surprise, the room was not full of concerned every day citizens seeking faster commute times to home and work. Rather, it was filled with developers, lobbyists, and employees of chamber and public policy groups. Indeed, a total of 7 lobbying firms have been retained to make sure this MARTA bill gets passed and that you vote for it. Big money. Big stakes. Big supporters.

Among others, two developers spoke of how wonderful the MARTA expansion would be for the economy, specifically their economy. They introduced a new phrase: “transit premium.” This is the concept by which the properties serviced by the rail will increase in value by 50%. This is fantastic! Fantastic, that is, if you’re a property owner or developer near a proposed new transit station.

On the whole, I firmly believe that the expansion of public transit is part of the solution as we look to shorten our drive times to home and to work. But, the current $8 Billion proposal has me scratching my head:

  1. What About the 97%ers? Only 3% of commuters within reach of the current rail use MARTA and ridership is down over the past 10 years.
  2. Convenience Factor. For most, using rail involves a six-part process: a drive to the station, a wait for the train, a ride on the rail, a wait for a bus, a ride to a bus stop, and a walk to their building. Real people will weigh that time and hassle against driving straight to work.
  3. Transit for Everyone… Else. Many who support the expansion of MARTA rail are laboring under the hope that others will take the train so that their drive downtown won’t take so long.
  4. Until Death Do It Tax. 43 years is a long time to pay a tax on everything you purchase. This puts the full payment outside my life expectancy. I’m 40.
  5. Bait and Switch. The MARTA project list is disposable. MARTA is not obligated to build the projects the voters are being asked to fund. They should be.
  6. Hadn’t Thought of That. No one has thought to measure the expected improvement, if any, along Georgia 400. For an informed vote, we need to know how much quicker our drives will be.
  7. Federal Match? The proposed expansion is dependent on federal matching funds of $4 Billion. There is no obligation by the Fed to commit these funds. Before MARTA expansion hits a ballot, there should be.
  8. I’m Against What? The ballot question is worded in a way that a “No” vote implies you oppose traffic relief and economic development. The question should be neutral.
  9. Stacked Deck for Alpharetta. If successful, 3 new transit stations will attract 3 new streams of traffic from surrounding areas and require 3 new 2,500-car parking decks constructed MARTA-style.

I truly want to see us, as a region, take on traffic and develop a comprehensive plan. I can see it. That’s my vision. It is imprinted on my mind. Yet, we need to look at all the options openly: heavy rail, new roads, light rail, additional lanes, bus-rapid-transit, managed lanes, bus circulator programs, intersection improvements, signal timing, adaptive traffic, Uber, driverless cars. If we’re not careful, we’ll spend more than half of our transportation dollars on 3% of our commuters. “What could be” will be no better than “what is,” except we’ll have the pleasure of paying for “what should never have been.” The best answer probably lies in some combination of travel methods. We don’t know. But before we vote, let’s find out if this vision is worth the chase.



AJC Home Sales Report: No telling when we’ll hit bottom

The AJC began a realistic presentation of the Atlanta real estate market in a two part series they call the AJC Home Sales Report. You should read the whole thing here.

Some highlights include:

Our annual analysis tracks the sales of 43,000 houses in metro Atlanta in 2010, and the trend is still going in the same depressing direction.


Analysis from this year’s Atlanta Journal-Constitution Home Sales Report reveals that home values in metro Atlanta remain locked in a four-year slide as the pace of home sales sputtered. Five thousand fewer homes sold in nine metro counties last year than in 2009, accounting for a 9 percent drop. Those that did sell went for less than in 2009: Home prices fell 4.5 percent last year.


Homes in the northern suburbs sold at a faster pace than other areas, though suburban home values continued to slide. Cherokee, Cobb, Forsyth and Gwinnett had increases in the number of existing homes sold. But prices decreased 17 percent to $126,500 in Cobb’s 30067; 11 percent to $135,250 around Woodstock in Cherokee’s 30188; and 15.8 percent to $80,000 around Norcross in Gwinnett’s 30071.


The report, along with interviews with dozens of buyers, sellers, agents and experts, paints an uneven picture of the market. This much, however, is clear: Metro Atlanta’s housing market remains a big gamble.

This is a far cry from seven years ago when home sales began to increase 10 percent a year while median home prices grew about 5 percent a year. That ended in 2007, when home prices in the 20-county region went flat and home sales fell 22.3 percent.

I would love to tell friends and clients that the real estate has hit bottom and everything will be rosy from here on out but that simply isn’t the case. There are still too many foreclosure and short sale properties on the market with more in the pipeline for the market to stabilize.

Is it a good time to buy a home? Yes. If you need or want to buy a home and are in the financial position to do so this is a great time to buy and there are some incredible deals out there. But don’t let anyone tell you that the overall real estate market has hit bottom or is even close to doing so… yet.

A glimpse into Alpharetta real estate through the lense of one home


The home above is for sale in Alpharetta. It is not far from my house and as a result I have watched it experience the wild fluctuations of Alpharetta’s real estate market for nearly a decade. I do not claim that this home is representative of the overall market in Alpharetta but I do think its history is an excellent example of what has gone on in our local real estate market. I also think the history of this home can help people outside of the real estate profession gain insight into what is going on around them.

The home in the picture is a 5 bedroom brick home on a lot of about a 1/2 acre in a very nice subdivision in Alpharetta. It was built in 1993 and according to the tax records it is about 4300 square feet with a 2200 square foot finished basement. The home has a three car garage. It also has granite countertops and the floors are mostly marble and hardwood.  It also has a beautifully landscaped, heated inground pool in the back yard.

According to tax records the home originally sold for $464,500 in 1993. Then according to records the original owners lived in the house for 11 years before selling it in 2004 for a price of $740,000. That is about 60% more than the original owners paid. When the home sold in 2004 I had just recently moved to the area and was glad to see that kind of appreciation close to my new home because it would help increase the value of my home as well. You know the old saying, “The rising tide raises all ships.”

In 2006 the home sold again. This time the sale price was $850,000. At the time I was surprised because even though it was a beautiful home I just didn’t believe the home had appreciated so much in such a short period of time. While there were homes nearby that sold in the price range those other homes were either much larger, nicer or on the lake. The comparables around us just didn’t support the sales price but it was a time of irrational exuberance and given the lax mortgage underwriting standards of the time the loan was made.

Fast forward to 2011. The home was listed on the market for $549,888. After a few weeks on the market the price of the home is now down to $499,888. The home is scheduled to be sold in a foreclosure auction on the steps of the Fulton County Courthouse next week.

So a home that originally sold for $464,500 in 2003 rode the real estate bubble to a price of $850,000 13 years later. And in the 5 years since that time the real estate market has plunged to the point where a bank will be fortunate to get the original sale price of $464,500 for it.

Sadly, just as the home’s rapid rise in price helped increase the values of surrounding properties it is now helping to drive down the values of those same homes. A rising tide does indeed raise all ships but a dropping tide also lowers them.

Atlanta real estate is still struggling to find bottom

AJC reporter Michelle Shaw has a piece in today’s paper which relays the latest grim news about Atlanta’s real estate market. The headline sums it up well, “Metro home prices, sales plunge”.

The article says that single family home sales for October were down 10.6% from last year and that in the first six months of the year foreclosures were 23% of sales in the Atlanta metro area. Ms. Shaw does a good job of painting a realistic picture so you should read the whole thing:

Some of the people interviewed even hint that real estate is in a cycle of deflation. Deflation means that buyers are holding off on purchases because they expect prices to fall and then because the buyers are holding out, the sellers are forced to lower prices. Deflation sounds good for buyers but it can be a stubborn, self fulfilling prophecy with devastating long term consequences. At first the lower prices would be good for buyers. But eventually the constant decrease in prices would be devastating to homeowners, banks and businesses. Eventually the new home buyers would find themselves suffering from lower wages that were brought on by the same deflation they had earlier welcomed.

A fear of that deflationary cycle explains why the federal reserve has decided to pump money into the economy even though food, gas and other necessities are already going up in price. Printing more money is going to make inflation worse but the fed seems more concerned about real estate deflation than they are about overall inflation.

Real Estate will rebound. It’s just a matter of time. But the market still has to hit bottom before we can have a real recovery and unfortunately there just isn’t any evidence that we have hit bottom yet.

Are we in the eye of the real estate storm?

In an earlier post I wrote about the foreclosure market grinding to a halt as the system becomes overloaded with distressed properties, Today I saw a post on Twitter by @northatlnews pointing out a related article in today’s Atlanta Journal Constitution.

The article notes that the foreclosure rate in the north Alanta metro area during the first six months of 2010 is up 29% over the rate for 2009. That is not good. Even worse is the fact that despite a higher foreclosure rate there are even fewer of these homes selling now. According to the article the actual sales of foreclosed properties have declined by 47%. Foreclosures up 29% and sales of foreclosures down 47% is ominous. You should read the entire article here:

I get the distinct impression that the real estate market has made it half way through a terrible storm and now sits in the relative calm of the storm’s eye. The problem is that we won’t be out of the storm until we break on through to the other side. I hope I am wrong.

September real estate activity in North Fulton

A quick review of the real estate data for North Fulton County shows that there are currently 2020 single family homes listed on the multiple listing service for this area. In the month of September 211 homes went under contract so there is about a nine and a half month supply of homes currently on the market. Roughly 25% of the homes that went under contract are distressed sales, bank owned foreclosures or short sales.

The foreclosure market will bottom out sooner or later. But which?

The impact of distressed sales on residential real estate has been the biggest reason for property value declines over the past few years and it doesn’t look like we have reached the bottom yet.

A recent article in the New York Times explains, “About two million households in the country are in foreclosure, and millions more are on the verge.” Since only four million existing homes are expected to sell in all of 2010 we still have a huge problem.  In fact distressed sales were 34 percent of all existing home sales in August according to the National Association of Realtors .

The real estate market will eventually recover but it is hard to believe we have already hit the bottom of the market when more than a third of the homes for sale are selling at discounts and millions more are on the way. Real estate prices won’t rise appreciably until we cull through the excess inventory of distressed properties and that is why I find another recent development so problematic.

The entire foreclosure process in the United States seems to be grinding to a halt. Mortgage lenders and other institutions responsible for getting defaulted homes back on the market are completely overwhelmed.

JP Morgan Chase, Bank of America and GMAC are three of the largest mortgage lenders in the United States and they have all stopped foreclosure proceedings because of legal issues raised by their process of  dealing with loans in default. The legal issues raised by foreclosures have also led a major title insurance company to stop insuring foreclosed homes and that means borrowers will find it even harder to get mortgages on these properties. Without title insurance the potential buyer of a foreclosed property could be forced to pay cash and there aren’t many buyers out there with that kind of money right now. It has even gotten so bad that the governor of Connecticut has halted all foreclosures in the state. All of these problems are making it difficult for the market to correct itself and slow down the natural healing process.

Despite all of the ominous signs in the foreclosure market, every month you can still find an expert predicting that real estate prices have reached the bottom and sooner or later one of them will be right. Sooner or later the legal wrangling over foreclosures will stop and the homes will be sold. Sooner or later the market bottom will be reached and property values will once again rise. Sooner or later everything will be fine. The problem is that the sooner seems to keep getting later and later.

Hat tip to for bringing the New York Times article to my attention. You can read the entire piece here: