Housing collapse trickles down

The Atlanta Journal-Constitution

By Christopher Quinn

7:13 a.m. Tuesday, April 6, 2010

Christopher Norrell weighs the effects of the home-building crash in Cherokee and Forsyth counties by the bacon and eggs he hasn’t fried at his Cherokee Ranch Restaurant on Ga. 20.

The highway once carried roofing crews, carpenters, construction foremen and lumber trucks to the new subdivisions spreading east and west from Canton and Cumming. Men with hammers and power saws would fuel up on Cherokee Ranch’s breakfasts or the meat-and-two-vegetable meals for $6.25 before heading to green fields and forests, where metro Atlanta’s exurban fringe was sprouting two-story houses.
For decades metropolitan Atlanta has pushed outward, creating a new community out of the clay and pine and then pushing farther outward to create another. And another. At one time that cycle seemed endless — Atlanta, marching inexorably toward Chattanooga.

But the recession and its aftershocks have brought that march to a halt in suburbs such as Cherokee and Forsyth. Is this where sprawl has gone to die, or is this just a respite in the march?

At Norrell’s restaurant, the crowds were steady when he left the drywall business and bought the eatery with his father three years ago.
“We thought we were going to do great,” said Norrell, whose father splits his time between the restaurant and the drywall jobs he is still able to get. “But we just don’t see the people coming in for breakfast or lunch anymore. ... It’s all we can do to survive right now.”

This stark set of numbers tells the story.

Cherokee County issued 2,021 new single-home permits in 2006, the year before the home-building industry began wobbling. In 2009, it issued 267. It has issued 63 this year through March 30. The county cut its building inspection staff from 17 to 10 and its engineering staff from 12 to six.

Forsyth County issued 4,253 home permits in 2005. It issued 825 in 2009. So far this year it has issued 336. It also dismissed staff, reducing home inspectors from 23 to nine and its planning department staff from 67 to 35.

That contrasts with the mid-1990s, when Cherokee and Forsyth made it annually onto the list of the nation’s fastest-growing counties by percentage of population.
Growth was the source of new wealth for everyone from local contractors and mom-and-pop businesses to high-dollar developers who honed their craft in Cobb and Gwinnett counties. Cherokee and Forsyth were also the battlegrounds where the slow-growth movement drew leaders as the displacement of pastures and rural towns with subdivisions and strip centers horrified some residents. Developers responded by creating smarter growth with green space or by building within the towns. Some of the best and worst of Atlanta’s boom years played out here.

The difference between Cherokee and Forsyth and metro Atlanta’s core counties was that Cherokee and Forsyth did not have diverse economies. Home building had become the arch that supported the local economy.

Frank Norton Jr., president of Gainesville’s Norton Agency, which tracks real estate and business in northeast Georgia, estimated that growth in Forsyth County generated 40 percent or more of business activity, when revenue streams are monitored. Cherokee likely has been less affected by the downturn because it has a hospital and a more established business base that has spread jobs around. Home building still remained a key growth area. Norton named companies and employees negatively affected by the home-building downturn.

“There were sales of appliances, plumbing supplies, electrical supplies,” he said. “You had decorators, paint suppliers affected.”
Norton pointed to attorneys involved in closings, real estate agents, mortgage companies, pest-control companies, bank employees and companies renting out heavy equipment, all of whom have lost business. When not working, these people don’t spend in their communities, either.
“It has been devastating,” Norton said.
Family-run businesses, from people hanging Sheetrock to painters, have made severe, even personal, cuts.
“I know people who have laid off their children,” he said.
Despite the severe drops, the two counties were still leaders in new homes built in metro Atlanta. Forsyth built the most new homes in 2009 thanks to cheaper land and taxes and good schools, according to Steve Palm, president of Marietta-based Smart Numbers. Fulton, with most homes built in the south part of the county, was second in new homes, followed by Gwinnett, Cherokee and Cobb.
Norton said Forsyth even has a couple of hot spots, where new houses continue to go up in numbers.
“I think we will see some growth in the next two years,” he said. “But it will be some time before we ever get back to 2005 and 2006 numbers.”
County employment numbers by trade were not available, but metro Atlanta construction jobs plummeted from 127,100 in 2005 to 89,200 last February, according to the state Department of Labor. That number does not include specialty trade contractors, such as plumbers, electricians and carpenters. From February 2009 to February 2010, the drop was from 71,000 to 56,400. Membership in the Greater Atlanta Home Builders Association also fell sharply, going from 4,100 in 2006 to 1,300.
Until 16 months ago, Phil Burruss of Burruss Cabinet Shop near Cumming employed 10 men. Burruss now is a one-man operation. He once had work lined up six months in advance. Not anymore.
“Now my phone doesn’t ring,” Burruss said. “That has been the hardest thing to get used to. The telemarketers don’t even call.”
Kim Bates, one of the owners of Bates Building Materials between Canton and Cumming, estimated his business was down 60 percent to 65 percent. He had 22 employees in the boom years. Now he has 10.
“The truth of the matter is we could make it on less than that, but we have guys that have worked with us a long time,” Bates said. “They have families that depend on us.”
Don Sackman, former Cherokee Country chapter president of the Greater Atlanta Home Builders Association, once built 20 to 25 homes yearly worth $500,000 to $1 million each in north metro Atlanta suburbs.
“Now I am building decks and doing any odd job I can find,” said Sackman, 59.
Sackman hasn’t given up on home building. Every three months, he has checked on lot prices and run the numbers: It comes down to how much money could be made if he and his sons bought a single lot and did all the work themselves. Sackman just wanted to make regular wages out of the deal. It wasn’t possible. Even with lots at bargain prices, no financing and minimum subcontractors, he still couldn’t build a house and sell it to earn a worthwhile hourly wage. There were too many foreclosures selling below cost and he couldn’t compete with that.
There are men who have worked a lifetime in construction trades and sit at home idle, drawing unemployment or Social Security or trying to patch together a living similar to Sackman’s in remodeling, he said. Yet there are more eager workers than remodeling jobs.
“I don’t have anything at all to do this week,” Sackman said. “I am thinking about going fishing. At least that way I can put some food on the table.”

Cherokee County

Population in 2000: 141,903; 
in 2009: 210,529
Homes in 2000: 51,937; 
in 2009: 80,742
Median household income 
in 2008: $68,627; 
in Georgia: $50,834
● 65 percent of workers travel outside the county to work
● 37,871 students in 2009
● Average 2008 SAT scores of 1,578 (Ga. average 1,466, national average 1,511)

Forsyth County

Population in 2000: 98,407; 
in 2009: 174,520
Homes in 2000: 16,781; 
in 2009: 32,682
Median household income 
in 2008: $88,626; 
in Georgia: $50,834
● 32,514 students in 2009
● Average 2008 SAT score 1,550 (Ga. average 1,466, national average 1,511)
Sources: Atlanta Regional Commission, U.S. Census, school districts