How will the housing bust affect a renaissance in downtown living in cities across Georgia?|
Georgia Online News Service
Across Georgia, thousands of condos, townhomes and other houses built around urban town centers are for sale with few if any interested buyers. In Athens, two prominent condo properties are in foreclosure, and in Atlanta, most of the top 20 condo complexes sold just a handful of units, if any, in the final months of 2008.
Planners and developers in cities such as Covington and Columbus that have embraced downtown living more recently are also finding themselves saddled with excess inventory.
The current housing bust has brought construction of condos and town center-style development to a halt. It's also pushed prices downward for homes in coveted in-town neighborhoods.
But some argue it doesn't mean that the renaissance in downtown living is over. New urbanists people who believe in more compact development less reliant on cars and more friendly to transit -- and other experts say the areas of Georgia that have invested in walkable communities will see the end of the housing downturn sooner than those where suburban developments dominate. And they point to several demographic shifts as evidence that interest in urban and urban-style neighborhoods will only increase.
A rising number of households have no children, so typical concerns such as school districts and spacious backyards are taking a backseat. As baby boomers age, they are looking to retire in dynamic communities where they can pursue interests and mix with other people easily. At the same time, the overwhelming majority of "Generation Y" young professionals want to live in urban areas where they don't necessarily need a car. And as a sun-belt state, Georgia is well-positioned to attract both groups.
"They both want urbanism," said Andres Duany, a leading new urbanist developer, who held a series of public meetings in Atlanta this month. "It's a double market. Never have things converged like this before."
Living downtown was once a hard sell, even in cities with established residential quarters such as Atlanta. People cited crime, and poor school performance among other concerns. And of course, American homebuyers became accustomed to limitless space, which typically can only be found outside city centers.
But in the boom years of the housing market earlier this decade, condo and townhome construction spread like wild fire, and prices for existing homes in urban cores shot up. Some condo properties, particularly in Atlanta, sold out before a single shovel touched the ground. Prices soared, and in a city like Columbus, where the median household income is about $35,000, developers felt comfortable asking $300,000 and up for some condos.
The economic downtown that began last year has stunted such momentum. Some of the fanciest condos in Atlanta will be auctioned off individually this week for less than half of their original asking prices, and in Savannah, a massive mixed-used condo project has been plagued by delays.
To be sure, all segments of the housing market are down. New housing permits in Georgia have dropped about 75 percent since their peak in the first quarter of 2006, according to a 2009 economic outlook produced by the University of Georgia's Terry College of Business. The same report termed Georgia's housing market as in "freefall."
"Construction everywhere is awfully flat so new urbanist projects are stalled just like every other project," said Ellen Dunham-Jones, director of the architecture program at Georgia Tech.
In cities where downtown living is a newer concept, the slowdown has been painful and has provided fodder for the doubters who say consumers are not ready for it. Indeed, in Columbus, developers have had to educate consumers on the pros of living downtown and the intangible value of condo living where space is constrained.
Leah Braxton, of the W.C. Bradley firm, which is marketing condos in a converted cotton mill in Columbus along the Chattahoochee River, said people are accustomed to thinking more space means more value, and that makes the sale of a downtown condo even harder.
"There are just not a lot of condos here," said Braxton. "We are trying to tell people there are real amenities here in the downtown."
Even in cities with a long track record of downtown living, there have been setbacks. Banks have foreclosed on two high-profile condo projects in Athens that targeted alumni of the University of Georgia.
The lack of sales, however, is due partly to construction delays that postponed the completion of the projects until the housing market had already begun to decline. By comparison, prices for existing homes in downtown Athens have remained fairly constant, and the influx of new residents is expected to continue.
"People are actually moving to Athens as they retire, not just for the university but also because we have a great cultural scene," said Lucy Rowland, a librarian at UGA and a member of the city's planning board.
That trend bodes well for downtown living in Athens, even if the condo projects are far from selling out. That's because baby boomers and young professionals will help shape and shift housing trends in the years to come that will alter the landscape. In particular, baby boomers are seeking out communities where they won't need cars once their infirmities prevent them from driving.
Other factors have also changed the face of home-buying, including the cost of gas, which most experts agree will not stay low forever, and will continue to be a source of concern for consumers. Gas prices coupled with increased traffic congestion have helped spur sales of urban condos as well as units in suburban properties that feature a town center.
Emory Morsberger, who lives in suburban Gwinnett County, is planning an ambitious mixed-used project in Atlanta called Ponce Park, where he plans to live. Morsberger, chairman of The Morsberger Group in Lawrenceville, points to traffic as one of the impetuses for his projected move.
"I am sick of driving and being stuck in traffic, " he said.
He added, "The only thing that will slow down urbanization is increasing crime."
The concern about gas prices and the frustration over traffic point to a wider trend a demand across the board for sustainability.
"We are at a fundamental change point in American life. It is called the sustainable revolution," said Ed McMahon, of the Urban Land Institute in Washington, D.C. "Cities going forward will be the winners here."
Richard Florida, who has championed cities as incubators for creativity, said mega-regions that contain multiple cities such as "Char-Lanta," the Charlotte, N.C.-Atlanta corridor, will continue to attract young professionals.
Writing in the March issue of The Atlantic, Florida said "talent-clustering" is important when times are good, and even more critical when the economy goes south.
"The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism," he wrote. "Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required."
Indeed, some predict a dire future for the suburbs, where experts say ghettos could sprout and where the glut in retail will begin to produce massive vacancies.
"We will see dead shopping malls," said Dunham-Jones of Georgia Tech.
Earlier this month when noted new urbanist Andres Duany visited Atlanta, he pointed to a city on the other side of Georgia as a model for the future: Savannah. Praising the city's famed squares, he called Savannah "the encyclopedia of squares" and said its construction in the 18th century was "the English-speaking world at its finest."
These comments are not lost on developers such as Ambling Cos. of Valdosta, which has embarked on a massive mixed-use project along the Savannah River that will duplicate architecture in the existing city.
To be sure, Savannah River Landing, which will feature hotels, condos, single-family homes and retail, has been dealt a series of setbacks, including an easement last year that halted construction. But Daniel Carey, president of Historic Savannah Foundation, points to the project as proof that traditional urban environments have cast a long shadow, and will continue to attract residents.
"It will be complementary and yet brand new. That to me is very instructional," Carey said. "What we have must work. It must work economically and socially because people are imitating it."
Jeanne Bonner is the senior business writer at Georgia Online News Service. [full bio]