Have we turned the corner on this real estate market?

By John Adams

For the AJC

If I had a nickel for every time I've heard someone say "we've turned the corner" on the current recession, I'd have lots of nickels.

I thought we had turned the corner a year ago when foreclosures slowed down and sales started to pick up last spring. It seemed that the expanded Home Buyers Tax Credit coupled with the annual spring flowering of Atlanta might be enough to inspire the beginning of the end.

But it was not to be. After the tax credit expired, America began to worry about our federal budget deficit and our national debt. That led to a fall election dominated by talk of bankrupt states and cities, severe cutbacks in expenditures, and higher or lower personal tax rates.

America got worried again, and hopes of decreases in the unemployment rate went unrealized. Foreclosures continued to climb to far beyond the record levels of earlier in 2010.

In Atlanta, we have experienced a true "double-dip" recession, with the optimism of last spring vaporizing as summer materialized.

Perhaps the low point was December and January, when inflation began to rear its ugly head, and the national media began focusing on how we had to tighten our belts and raise taxes while cutting vital government spending. Our children would be saddled with a lifetime of debt arising from our excessive spending, and all future hope was lost.

The backward-looking Case-Shiller Home Price Index most recently documented this bad news by showing year-over-year price declines in all but two of the 20 metro areas surveyed.

But just as many in the Atlanta real estate community were considering a career change, a sliver of light appeared in the clouds of economic darkness.

The Mortgage Bankers Association recently announced that the percentage of mortgage holders who were behind on their payments dropped to the lowest level in two years during the final quarter of last year.

Mortgage loans three or more months past due have fallen from an all-time high delinquency rate of 5.02 percent at the end of the first quarter of 2010 to 3.63 percent at the end of the fourth quarter of 2010, a drop of almost 28 percent over the course of the year.

This is significant because if borrowers are doing a better job of keeping their payments current, it means things are actually improving in the economy.

It also foreshadows a future decline in foreclosures, opening the possibility that the staggered Atlanta housing market might finally begin to find its legs. In my opinion, the No. 1 problem facing the metro Atlanta real estate market is foreclosures. If that number begins to subside, then there is hope for a housing recovery.

Mortgage Bankers Association chief economist Jay Brinkmann observed "we have clearly turned the corner." I hope he is right. You can read the entire report from the association at Money99.com.

John Adams is an author, broadcaster and investor. He answers real estate questions at noon Saturdays on radio station WGKA-AM (920) .

For more real estate information or to make a comment, visit www.money99.com.