Georgia's looking hot, and it's not just about Atlanta. Observers expect a decent year for mortgages across the country, spurred by adjustable rate offerings and greater demand among immigrants. By Matthew de Paula Out-of-town federal bank examiners visiting Georgia couldn't believe Genevieve Cole's tiny hometown of Hiram was burgeoning. "Our delinquency rate was low. We had so much on the books with real estate, I had to get them in the car and drive them here because it was just remarkable to them," says the president and CEO of $170 million Community Trust Bank. That was a few years ago. Population overflow from Atlanta continues to make Paulding County one of the fastest growing in the nation-sixth according to Web site Stats Indiana, a clearing house for demographic data. It grew 126 percent since 1990 and 366 percent since the 70s. Georgia has 25 counties among the U.S. Census' top 100 fastest growing (April 2000 to July 2002)-the most of any state. It's one of the six markets Countrywide Financial Corp., the third largest consumer mortgage originator and servicer (see top 50 originators and servicers, p. 61-62), is honing in on this year to accelerate growth, says Brian Hale, the firm's managing director. With Atlanta as the hub, Georgia is a promising mortgage market because of sheer population size and because houses run the gamut, from affordable condominiums to high-end custom homes, Hale says. "Atlanta is one of those markets, not unlike Dallas, that you get it all in the market." There are no Georgia-based firms among the top 50 originators and servicers. Countrywide and Bank of America are the most notable large players in the South. Even with the big banks, there's still enough mortgage business to satiate a local competitor like Community Trust Bank, which did $62 million in mortgages last year and $53 million the year before (92 percent of its loans are in real estate). Construction lending dominates at Community Trust. "It's been very, very generous to us and that could be said with all of metro Atlanta," Cole says, adding that competition is fierce, with 20 different financial institutions duking it out in the small community. Paulding is on the same trajectory as Cobb county, which lies between it and Atlanta and where real estate prices have jumped. "There's always a demand for first-time homeowners," Cole says. "So we are still building some starter homes, but we are also finally getting some very, very nice developments with golf courses and so forth." The bank's average loan size last year was $142,500, up from $134,000 in 2002. Only 1.7 percent of Paulding County's population is Hispanic, according to the most recent Census data. Economists expect immigrants and emerging markets to fuel mortgage demand. "The fastest growing market for mortgages is really the ethnic market-Hispanic and Asian populations in particular," says Sung Sohn, Wells Fargo's chief economist. Across the board, mortgage originators, particularly the top three, are ramping up credit education programs and bilingual services in pursuit of the unbanked and first-time homebuyers, which include immigrants, says Standard & Poor's Vicki Wagner. "Banks are gearing down for lower volumes, but realize at the same time it's still going to be a pretty big mortgage year," she says. Adjustable rate and hybrid mortgages have jumped since December and should remain popular, while firms retrench and tighten belts in staffing and operations, she notes. In dense markets like Southern California and New York City with large immigrant populations, demand is keeping prices up, says University of Southern California's Raphael W. Bostic, associate professor and director of the Casden Real Estate Economics Forecast. Converting vacated and sometimes dilapidated downtown commercial property is a growing trend that could be an attractive option for developers. "The question that has not been answered is the strength of demand and its stability. So this is really an experiment to see if these kinds of markets can sustain themselves. My guess is that in a place like Los Angeles that won't be much of a problem," Bostic says. Countrywide's Hale sees a "return to urbanism" in metropolitan centers by a broad segment that just prefers to live closer in proximity to cities after decades of moving to the suburbs. And like New York, Chicago and Boston, Hale says more communities that historically haven't been driven by vertical residential property development are now embracing it as "a cost play."
April 2, 2004