Banks Plagued by Vacant Lots

There has been stark fallout. Banks backing up these projects recorded huge losses as they foreclosed property and some sales are at a fraction compared to the original loan price. What’s worst is that a few properties would sit on the market for many months without being sold. There were 16 banks in Georgia that failed, and this number is greater than any other state because of losses in residential real estate.

On the other hand, residents who bought these developments are seeing the value of their homes plummet. In many cases, they’re still waiting for other promised amenities to be built (like swimming pools for instance). The main problem might be sheer volume – over 150,000 vacant housing lots are available across metro Atlanta – so at current absorption rates, there is sufficient supply for a decade. It would be an understatement to say that the market is very sluggish.

According to Steve Palm, president of Smart Numbers, which is a Marietta company tracking the real estate market locally, “From a median sale price of $57,000 in 2007 (housing boom), the current price is $30,000 this year. And it will keep going down because of low demand and plenty of lots. The hardest hit areas would be Newton, Jackson, and Bartow counties.” To complicate matters, the subdivisions were often financed by multiple bank lenders. These banks plagued by vacant lots and distressed subdivisions are now either struggling or closed.