Athens Foreclosure Rate Drops Despite State Average

Though Georgia has the highest foreclosure rates in the nation, the housing market in Athens may be on the upswing.

Georgia topped foreclosure rate charts in May when a real estate study showed that one in 300 housing units have received a notice or have been repossessed. According to RealtyTrac, the realty research firm which released the original numbers, Georgia's foreclosure rate is more than double the national average, which is one in 639. Counties with the top foreclosure rates include Fulton, DeKalb and Cobb, according to the Atlanta Journal Constitution.

Athens-Clarke County rates are closer to the national numbers than to Georgia's, however. In May, RealtyTrac reported that there were 82 foreclosure properties, averaging to one in every 623 housing units. The foreclosures were divided between Winterville and Athens, with all but seven occurring in Athens.

Justin Woodall, a realtor with , said when this year's house sales are compared to house sales which occurred from Jan. 1, 2011 to mid-June, 2011, the numbers are promising.

"The actual number of foreclosures are down 2.3 percent and the number of sales are up 6.2 percent," he said. "We might be doing a little bit better than other areas of the state. We've actually sold more houses this spring than we did last spring."

Foreclosures still pose a problem for the area, however. Tax Commissioner Mitch Schrader said even though foreclosure rates are going down, those properties still affect the overall housing market. Georgia law mandates that foreclosures be considered when determining property values.

"A couple or three years ago, those values were really rejected because they were not considered arm's length transactions," he said. "But since there were so many foreclosures over the past couple of years, since the bubble burst, you had banks buying and selling. They used to be rejected as bad sales. They weren't calculated as part of the market value. Now they have to be."

Schrader said because banks often sell foreclosed houses for prices under what the property would normally be worth, those properties and transactions bring down the value of surrounding houses. 

"Let's say you have a neighborhood of ten houses where all the houses are of similar construction and value. They're about $100,000," he said. "Seven of them are arm's length sales but three of them are bank sales that go for about $70,000. Those properties that sold at a lower price would be considered along with those that were sold at $100,000."

The number of foreclosures affecting property values seems to be steadily declining over the years, however.

Kirk Dunagan, Chief Appraiser for the , said foreclosures dropped from 927 in 2010 to 658 in 2011. There has also been an increase in the number of bank-owned houses which are being sold. These transactions, while still affecting property values, may also provide an overall stabilizing effect.

"The quicker the foreclosures and bank owned properties are sold, the quicker you go back to person-to-person transactions," Dunagan said. "Once those are absorbed into the market, then you'll get back to what is true market."

Some realtors, such as Woodall, have theorized that housing sales in Clarke County may be rising due to factors like low interest rates and the upcoming Caterpillar plant.

"I think [Caterpillar has] been a little bit of a boost in the arm for the area," Woodall said. "Buyers are becoming a little bit more confident in the local economy."

Signs of improved housing market conditions are not a guarantee, though. Schrader said there are signs property values may rise in some parts of the county, but there is no way to guarantee the trend will continue.

"I think there's certain indicators that say that say that yes those property values are going to rise," Schrader said. "But nobody has a crystal ball, and until it happens it's all just speculation."