Realtors in Dalton get pep talk on economy

  by Ellis Smith

DALTON, Ga. -- Few metropolitan areas suffered as much during the recession as Dalton, which depends heavily on the carpet industry for its livelihood.

The carpet industry, in turn, relies on new home construction for carpet sales, a dependency that drove the city's growth a decade ago and yanked it back to earth during the recession.

Unemployment now is higher than in any other metropolitan area in Georgia, and sales of local houses have plummeted.

That didn't stop the CEO of New Jersey-based Coldwell Banker, Jim Gillespie, from visiting real estate agents in Dalton on Thursday to rekindle their spirits.

Gillespie told Realtors that though 2012 won't be a barnburner, he believes that barring some unforeseen incident, the year will at least remain stable.

"We're on the right trajectory," he said.

Though new home construction in Dalton has slowed since the real estate crisis hit, there are signs of life returning to the carpet capital.

Investors are buying more than 20 percent of all houses sold, a signal that houses are perceived as a safer investment than stocks or bonds.

The average rate on fixed-rate mortgages rose this week for the first time this month, but the rate on 30-year home loans remained below 4 percent for the eighth straight week. Combined with lower home prices, housing affordability is the best in more than a decade.

"Right now is the greatest time to buy if you have a job," Gillespie said.

The Federal Reserve System signaled this week that interest rates will stay low through at least 2014 to spur borrowing, giving buyers a window to move on their first purchase. Nationally, more homebuyers pulled the trigger in 2011, as home sales rose 1.4 percent, he said.

But even Gillespie, a strong believer in the viability of housing, admits that there are still rocky times ahead.

He expects between 1.8 million and 2.2 million additional foreclosures this year, as banks move through the backlog of homeowners who are chronically late on their loan payments. The trend could bleed into 2013, he said, putting off a full recovery until 2014.

And new home construction, which traditionally has led the country out of economic malaise, may not pick up for years.

With home prices down another 0.6 percent in 2011 if distressed properties are excluded, builders have no real incentive to start new construction until the profit picture brightens.

"We're not going to see an appreciation in home value until the foreclosures are over," Gillespie said. "Is it going to be gangbusters this year? No, but it's slowly, slowly moving."

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