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Cheap Land for Sale in Foreclosed Subdivisions in Atlanta

September 18, 2009

Investors looking for cheap land for sale can find plenty of potential investments in idled subdivisions in metro Atlanta as banks that have foreclosed on the projects are now selling them at discounted prices.

Since last year, Georgia has posted the most number of failed banks among states due to the heavy exposure of banks to delinquent residential and commercial development loans.

According to data from Smart Numbers, a real estate research firm based in Marietta, the total number of vacant home lots in failed subdivision projects in metro Atlanta has reached an astounding 150,000 units, which represent the area’s supply for more than 10 years based on current absorption rates.

Steve Palm, president of Smart Numbers, said the median price for vacant lots has sharply fallen to $30,000 this year, compared to $57,000 during the boom in 2007. He added that there are too many vacant lots and too few buyers.

Palm also said that the hardest hit communities are on the outer parts of the region, such as Newton, Jackson and Bartow Counties, where cheap land for sale abounds but no buyers are interested.

One of the many failed subdivisions is the 600-acre WaterLace, a pricey development in Fayette County which was planned to have almost 400 houses. Developer Stephen Macauley went into bankruptcy in 2008, contributing to the failed loans of his lender Security Bank of Macon, which also closed recently due to delinquent mortgage loans. The subdivision, which has only a few finished homes, is now under the control of the Federal Deposit Insurance Corp.

Adding to the problems of failed subdivisions is the differences in the investment models among lenders. Many of the housing projects in Atlanta were financed by several lenders that have different strategies in solving their delinquent loans.

While some lenders want to hold on to the properties until the housing market improves, the others want to sell them immediately even at bargain prices. Some lenders have been dumping vacant home lots as low as 30 percent of their original market values.

Synovus, the second biggest bank in Georgia, has been selling its distressed assets at bargain prices, including vacant lots in the metro Atlanta area.

According to Joe Moss of Security Exchange Bank, large banks bailed out by the federal government are able to dispose of cheap land for sale quickly despite big losses because of their size. He said that smaller banks are affected much more sharply because they do not have the ability to take big write-offs.

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