According to an Atlanta Business Chronicle Story new home inventory has declined substantially with more homes closed than started every quarter for the last 30 months according to Euguene James, director of Metrostudy’s Atlanta Division.  They report that March 2009, quarterly starts fell almost 75% year over year.

This is bad news for home builders of course, but for homeowners concerned about declining prices for their resale property here in Atlanta, could this be a good thing?  I would submit that it is, in fact, it is necessary for the inventory to go down in our market.  With fewer available new homes, buyers have fewer choices and that means that those buyers who would have purchased a brand-new home will now be forced to buy a resale home.  This will naturally help to decrease the number of resale homes on the market…thus decreasing supply and increasing demand.  Our current inventory levels are at about 11 months here in Atlanta and for prices to start to rise, that number needs to get to 6 months or fewer.

With the lack of financing available to new home builders, the housing starts have been declining steadily for the last few years and will likely continue to do so until there is a demand for more housing.  This is simple real estate economics and is a natural cycle that markets go through.

So in short, I think that this is good news for the general health of our local housing market and a sign that the maket is beginning to work itself out.  Share the good news!

Keep the Faith!