Earlier in the year, I had to be in Atlanta for a conference, and the venue was one of the grand hotels in the downtown area. Taking a break from all the talk, I took a walk toward the midtown area eventually stopping in front of Bank of America Plaza, which, at 55 stories, is the tallest building in Georgia.

"Nice building," I thought to myself and then moved on. The next day, I scanned the news on the Internet and read that the tower had entered into default.

I don’t really follow the Atlanta market very much although I had read snippets of news about the tough economy there, and as far as the housing market was concerned, it always seemed to skip under the radar while almost all the focus was on the "sand states": Florida, Arizona, Nevada and California.

Yet, the Bank of America folly was on the commercial side of real estate symptomatic of the general economy and the deflation of Atlanta’s housing market.

To get an understanding of what was happening in Atlanta, I first called Jeff Humphreys, director of economic forecasting at the University of Georgia’s Terry College of Business.

Normally, university-based economists try to be fairly upbeat about their state, but not Humphreys; he was very direct.

"If you are making a list of the markets most damaged by the bursting of the housing bubble, Georgia, and specifically Atlanta, belong in the top 10, if not the top five," he said.

That evoked a "wow" from me, as I hadn’t really heard much about a bad housing market in Atlanta. That was because of an odd, economic fluke. They were building so many new homes in Atlanta before the bubble that the overwhelming new supply kept prices from inflating.

Or, as Humphreys said, "We didn’t enjoy the upside of the bubble."

What that meant: When you read that housing prices collapsed horribly, for the most part, in the sand states, you think those places are the pit of the recession, but actually things are worse in Atlanta. In the sand states, prices may have dropped 40 or 50 percent, but that was from inflated bubble prices. In Atlanta, prices declined about 25 to 40 percent, but from noninflated levels before the recession.

"Home prices in Atlanta have been reset to where they were in the late 1990s, which is not true in Arizona or Florida, where prices have been reset to the start of the boom," Humphreys said.

Steve Palm, president of SmartNumbers, a Marietta, Ga.-real estate information, analysis and forecasting company, puts it this way: "The median sale price for the greater Atlanta area is $97,000. Back in 1992 or 1993 the median was no lower than $107,000. The median price is so low, we don’t have records that go back far enough. That’s how devastated the market is."

Again, some of this goes back to the vast amount of homebuilding before the recession.

"Historically, Atlanta was the No. 1 home market in the United States," Palm said. "At peak, we were doing 57,000 new constructions a year. Last year, we did about 7,700, and a lot of that was prospective condo units that had been foreclosed."

Atlanta might have survived the recession better if the economy had been stable. That wasn’t the case at all, and, indeed, Atlanta might have been experiencing a borderline recession years before the rest of the nation.

The first pummeling slipped by almost unnoticed, but it was important — and that was the bursting of the tech bubble around 2000-01. "Atlanta was really the hub of the tech sector in the Southeast," Humphreys said. "So the bursting of the tech bubble did much damage to Atlanta’s economy. We were hit harder than the nation as a whole."

Secondly, the bursting of the housing bubble put a double whammy on Georgia, as a lot of the state’s manufacturing sector (materials, mobile homes, carpet, lumber products) was geared toward housing. Humphreys guesses about 40 percent of the states’ manufacturing base has disappeared.

If all that wasn’t bad enough, Atlanta’s economy suffered one final blow. Atlanta had been a strong financial services city, and with the eviscerating of the country’s finance industry during the recession, the city got smacked hard. Atlanta lost about 17 percent of its finance jobs, Humphreys said, "and the nation only lost 9 percent, on average."

In addition, Georgia has led the nation in bank failures.

Take high unemployment and a devastated housing market and what do you end up with? A lot of REOs (bank-owned properties), which, on an optimistic note, are finally being cleared out of the market. That’s because everything is so cheap.

"We had more sales under $100,000 last year than in all prior years," said Mitch Kaminer, president of the Atlanta Board of Realtors and an associate broker with Re/Max Paramount Properties in Atlanta. "Obviously, most houses under $100,000 are foreclosures."

In November 2011, the number of REOs sold reached 50 percent of total sales," Kaminer said.

SmartNumbers’ data reflects a 23-county area, while the Atlanta Board of Realtors collects data from an 11-county area.

Whereas Palm reports that 1 in 4 homes in metro Atlanta sold at a price under $50,000, he’s including Clayton County, where, he said, the median home cost is around $37,000.

The Atlanta Board of Realtors’ intensive 11-county area includes most of the wealthier, close-in neighborhoods and suburbs, which have remained fairly strong. In the board’s data, the median home price rose from $115,000 in October 2011 to $122,000 in November and $123,750 in December.

With that momentum, Kaminer said, "We are going to see an uptick in the market over the next couple of months."

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