The housing market slump is a multi-faceted issue and declines in this industry are affecting jobs, state and local taxes, property values as well as peripheral industries such as banking, local jobs, automotives and retail.
Therefore, this week I convened a joint Economic Development Committee meeting at the Capitol to discuss the condition of Georgia’s housing industry.
Georgia is home to some of the largest building and construction companies in the country, including Home Depot, John Wieland Homes, Beazer Homes and
Georgia Pacific. When the housing market declines, these companies are drastically affected. This, then, hurts the local job market and family incomes of those employed in these industries. If family incomes decrease, then they aren’t spending as much on items such as clothing, cars and food. This ripple effect is felt throughout local, state and national economies.
Here’s some statistical information to shed some light on Georgia’s housing market:
• Regionally, new homes sales in the South declined 6 percent in October, compared to 5.3 percent nationally.
• Georgia is steadily increasing in the number of foreclosures and late payments. Metro Atlanta trails the national average in home equity gain with a 1.9 percent increase over six years, compared to an 18.3 percent increase nationwide. The state also ranks third in delinquency payments.
• In Georgia, 23 percent of homes are worth less than the mortgage payment.
• Despite the above stats, home sales in Atlanta increased 9 percent from September to October.
Due to the decline in the housing market and the ripple effect it causes, we saw a major effect on the job market from 2006 to 2008.
Collectively, local incomes dropped just over $10 billion; local taxes dropped just over $2 billion; and we witnessed a decline in nearly 200,000 jobs.
Keep in mind that these numbers are based off of multiple industries being affected including banking, car repair, dental services, dry cleaning, electricity, newspaper delivery and restaurants in addition to the building industries.
That’s a big ripple.
So, why encourage stimulus in local infrastructures and in the building industry?
Unlike some other states and comparatively across the nation, Georgia has no major overbuilding, no major foreclosures or defaults on loans and more people want to move to our state due to the cost of living and the potential for new business. Experts anticipate that new housing units will be needed in Georgia in 2010, 2011 and 2012.
A stimulus in our state’s housing market will alter the timing of the new housing units a bit earlier. By doing this, we can create jobs sooner and dampen the economic volatility in our state.
A “stimulus” does not have to be a traditional government bailout. It is anything that would stimulate more growth to our economic situation. We need to bring more jobs to Georgia through manufacturing, transportation and the housing industry.
Now is the time to implement policies that will help us ride out these difficult times and provide solutions for the future.
Sen. Chip Pearson serves as chairman of the Economic Development Committee. He represents the 51st Senate District, which includes Dawson, Fannin, Gilmer, Lumpkin, Pickens and Union counties and portions of Forsyth and White counties. He may be reached at (404) 656-9921 or via e-mail at firstname.lastname@example.org.