BTB Exclusive - Isakson appears at Wednesday morning's housing rally

Bobby L. Hickman

August 27, 2008

More than 100 housing industry professionals gathered at the State Capitol this morning for a rally supporting the housing legislation adopted by Congress and President George W. Bush last month.

"It's a brighter day for the housing market," Sen. Johnny Isakson told the group as they huddled under umbrellas beneath grey skies on the steps of the Capitol. "The rain is passing; the clouds are breaking."

Isakson was joined by real estate agents, homebuilders, mortgage bankers and other providers to mark the passage of what several termed the most important housing legislation in a generation. Many carried signs and wore stickers with messages such as "Now is a Great Time to Buy". The supported the message that current market provide the best opportunities homebuyers in many years.

The new law includes a $7,500 tax credit for first-time homebuyers. Isakson, who founded Northside Realty in 1967, recalled that he was selling homes in Cobb County when legislation was adopted in 1974 that provided a tax credit to help recover from that housing slump. "We went from a three-year inventory of homes in 1974 on a one-year backlog the next year," Isakson said. "So, in February 2008, when Congress began talking about what to do to address the current situation, I said, 'Why reinvent the wheel?' Tax credits worked before."

Roger Tutterow, an economics professor at Mercer University, agreed. "Economists know tax credits change behaviors," Tutterow said, adding the 1974 bill helped the housing industry recovery during that time. He added this year's credit "will be a catalyst that will bring more housing starts in the next six to nine months."

Scott Simpson, president of the Atlanta Board of Realtors, said that although the tax credit expires in July 2009, the effects of the housing stimulus bill will be seen over the next three years. While Atlanta's market has been down the last couple of years, there are signs of recovery. Home prices have been increasing every month since February 2008, and more than 5,000 families bought homes in the Atlanta market last month, Simpson said. Tutterow added that while housing prices fell 15% to 20% across the country, Atlanta's home prices only dropped about a third as much as the national average.

Steve Palmer, president of the Greater Atlanta Home Builders Association, said the housing bill takes a number of steps to address volatility in the housing market, including assistance to borrowers facing potential foreclosure and stabilizing the housing capital markets. "A vibrant housing market is vital to Atlanta's economy," he said, noting studies show one of six Atlanta jobs is tied to the housing industry. The local homebuilding market peaked in February 2006, he said, and new housing starts declined 54% in the 12-month period ending in June 2008. However, he noted, recent surveys indicate Atlanta's housing starts will be up 20% in 2009, "a figure I believe is conservative," Palmer added.

Tutterow said the housing industry is a key component in Georgia's economy. Before the market peaked in 2006, Georgia was the fourth strongest housing market in the country, and Atlanta was second only to Houston. In addition to construction jobs, housing also supports the floor covering industry in the Dalton area, and companies such as Home Depot and Georgia Pacific that provide building materials.

While housing added .5% of the GDP during the good years from 2003 to 2005, the decline in the industry shaved a full point off the GDP over the past two years, Tutterow said. "When one industry can have a net 1.5% swing in the GDP," he added, "housing really matters for the economy in Georgia and Atlanta."