Updated:ATLANTA,None — The new housing market is so bad in some counties surrounding metro Atlanta that one real estate expert has dubbed it a "ring of death."
Steve Palm of Smart Numbers LLC told Channel 2's Richard Elliot that his numbers show it's just not economically viable to build new homes in several outer counties when they can't compete with the foreclosures and distressed resales closer into the city.
Palm believes that means many of the unfinished subdivisions in the outer counties will never be built out.
"A lot of these areas, I'm telling people, will never come back," Palm told Elliot. "They'll turn into ghost towns. Ghost developments."
Using his data, Palm created a map showing his "ring of death" -- the areas encircling Atlanta in which he doesn't believe the housing market will ever truly recover.
The area includes Paulding, Carroll, Douglas, South Fulton, Clayton, Henry, Newton, Barrow, parts of far east Gwinnett, Hall and the northernmost parts of Cherokee. He includes Fayette, Forsyth and Coweta in his ring of death, though he said the new housing markets in those counties are healthier than the others and will recover quicker once demand for new homes returns.
"New homes can't compete with the resales," said Palm. "There's so many foreclosures, and they're discounted so much, we can't build a home cheap enough to go up against them."
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Palm said during the housing boom, developers couldn't afford building subdivisions in the closer-in counties, so they snatched up cheap land in these outer counties. But now, he said, the situation is almost reversed. He said his data shows in the first quarter of 2011, there were 1590 new home permits granted in the 26-county metro area. But, he said, 60 percent of those permits were in just Cobb, Forsyth and Gwinnett. He said some of the counties in the ring saw an average of only 10 new home permits in the first quarter of 2011.
"That's virtual stoppage," Palm said of new home construction in these counties. "That's what we're dealing with."
But some experts don't necessarily agree with Palm's "ring of death" prognosis.
"We think the Atlanta area has a ring of trouble and dark spots," said real estate expert Frank Norton, Jr. of the Norton Agency. "What we're seeing is bright spots."
Norton told Elliot he's seeing what he calls "cones of recovery" along the Georgia 400 and I-85/I-985 corridors. He said these are micro-markets of recovery centered on desirable school zones. And he expects to see them expand year to year. He also said he's seen prices stabilize for homes under $175,000 and beginning to stabilize for homes between $175,000 and $250,000.
"There is a recovery zone in this market place that is cleaning itself up faster than the rest of Atlanta," said Norton.
But he also stressed that there will be no traditional recovery in the Metro Atlanta housing market.
"We are not doing to recover," he said. "We are in the process of evolution. We are evolving."
He believes new home construction will never return to the way it was during the boom years. Instead, he thinks builders will begin constructing different kinds of homes, smaller but smarter with more bang for the buck.