We’ve all seen the signs around Intown Atlanta and Decatur - we all know that lots of houses are not selling. Here’s two things to think about:

1. Personal Responsibility

2. Corporate Greed

Ever heard of a “Special purpose vehicle?”

No, I’m not talking about a paramilitary transport. I’m talking about how the Wall Street salesboys, and a compliant SEC (The Federal Government’s Securities Exchange Commission) neglected the best interests of consumers with a hoodwinking flim flam job. Credit salesboys packaged good loans with bad loans and sold “Special Purpose Vehicles” to “institutions” like small and large pension funds and to municipalities, like small towns in Norway…Here’s how they did it:

The sales pitch is based on the idea that “housing always goes up in value and people can always refinance an adjustable mortgage.”

The products sold are financial market commodities known as collateralized debt obligations (CDOs) which are a type of asset-backed security and structured credit product. I pulled this definition from Wikipedia…”CDO’s are constructed from a portfolio of fixed-income assets. These assets are divided into different “tranches”: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher interest rates to compensate for the added default risk. CDO’s serve as an important funding vehicle for fixed-income assets.” Here’s a detailed Wikipedia entry:

Collateralized Debt Obligation

However, when the buyers of these CDO’s called their investment banks and politely asked, “hey, salesboys, where is our monthly interest payment?”

The investment banks said sorry, bad assumption about the health and wellness of the North American consumer - no monthly interest payment for you - and oh, by the way, the insurers can’t cover it.

Thereby, the United States of America has an international credibility problem.

Here’s the completely discombobulated personal responsibility / corporate greed perfect storm, explained in stickfigures. You gotta hand it to the genius with lots of free time who came up with this one…

The Sub Prime Primer, explained in stickfigures…

I just got Steve Palm’s Smart Numbers letter for January, and he reports some telling statistics when he surveyed the 14 metropolitan Atlanta counties. Read on…

A nearly 40% year over year decline from last January. A Nearly 50% decline for condo sales.

When demand declines, prices soon follow. Condo prices are down nearly 10% and are expected to go down even further - there is nearly 12 months supply for resale condos and a very high 16 months of supply for new condos. Thanks Ivanka Trump (the so-called “next generation of Trump style” - I hope that doesn’t mean she has a comb-over hairdo in her future).

Until then, lets digress from the bad news and let a photo of Ivanka take our breath away…

Lets keep talking about what Ivanka hath wrought: the 16 months supply is only the supply that is listed! The actual floor plans available that are not up and ready for sale is - GULP - 4 years worth of inventory. Lets keep an eye on luxury condos - we need Buyers, sexy, wealthy, international buyers!

The average single family house price is down by about 20% from the all time high of June 2007 - the all time high was about $285,000 - the average sale in January was $240,844.00. 20% is a “correction.”

Oh, by the way, did you read that part about when demand declines, prices soon follow? Take heed, another correction is coming for many unhealthy Atlanta submarkets.

Mark my word, the neighborhoods with good fundamentals - cohesive curb appeal, good public schools, attractive locations - those neighborhoods, will thrive in a limited demand market. Read the rest of this entry »

Do you know Fonzworth Bentley? Remember the guy who held Sean “P Diddy” Combs umbrella a few years back? Puff Daddy’s right hand man?

He’s a cool fellow. Multi-talented, dapper and smooth. He has advanced well past his post-collegiate work as a stylish valet.

He’s also a class act, and he’s in town, his hometown, for Youth Day at Historic Ebenezer Baptist Church on Sunday the 24th. I drove up Jackson yesterday, and the sign said Fonzworth Bentley would be in the house on Sunday. I immediately called my friend John and told him to be there to represent.

I can not attend - the newborn will probably not be ready for church tomorrow. However, you should. He’s cool. Our children need good role models, and he is someone that many of Atlanta’s youngsters should emulate. Style. Manners. A flair for business. He just wrote a book - Advance Your Swagger: How to Use Manners, Confidence, and Style to Get Ahead.

Here’s a link to his My Space page…

Here’s link to the church’s website: Historic Ebenezer Baptist Church in downtown Atlanta

Come on, get out and live a little people.

Alcove Gallery…

Mudfire Clayworks…

Bart Webb / Duckbill Studios…

Amalgam Arts…

Avondale Estates is where it’s happening in the Intown Atlanta and Decatur art world. Get a date, gather with some friends, and join the innovative business owners who have transformed a sleepy railroad corridor into a vibrant arts district -the “studio cruise” is tonight!

Here’s the 411.

Just because lots of houses are in pre-foreclosure, just because lots of houses are in short sale status with written mortgagee approval (or not), or just because lots of houses already are in REO foreclosure deed status with clear title and ready sellers … just because we have a high inventory “foreclosure market” … that doesn’t mean that any and all Buyers should even consider buying a foreclosure.

This is food for thought for any potential Georgia buyer. Did you know that the new Georgia Purchase and Sale Agreement says that “at closing, Buyer agrees to pay Seller the purchase price of the property in cash, cashier’s check, certified check or wire transfer of IMMEDIATELY AVAILABLE funds?” Did you know that in Georgia in 2008, unless you stipulate otherwise, Sellers only work with Buyers who can buy under the terms I just stated?

That means, line up the financing first. Be 100% sure about your financial status before you pursue any purchase. That means, the bank that is financing may not want to fund a distressed property - find that out up front. That means, have funding for the due diligence period - $1000 to $2000 - ready to go at Binding Agreement. That means have a right to terminate. That means, pay for every inspection that matters. That means, get a survey. That means, know your lender and your loan before you write up any paper.

Furthermore, the Buyer’s funding lender would like to see some skin in the game from the Buyer - a downpayment. The Seller would like to see substantial Earnest Money - if the Buyer defaults, the Buyer should suffer.

There are some hidden gems amongst Georgia’s distressed properties, but caveat emptor.

If you have some cash and want to invest in a distressed property then you are a better buyer for that type of property. If you are seeking 100% financing, then you should probably look for more move in ready, fully disclosed properties and seek a win /win with a motivated Georgia seller. We have a lot of these available!

Concourse E and their remarkable designs in Reynoldstown

The folks at Concourse E are working on 2 really cool projects in the shadow of the CSX Hulsey railroad in Reynoldstown. One house is on Manigault and the other is on Weatherby.

We find it refreshing to see innovative design done well, and we are glad to see more and more of it, in lieu of the ubiquitous newly built craftsman house with Hardi Plank siding.

Somebody come down to Reynoldstown and get your real estate on!