Eugene James, director of the Atlanta market Metrostudy, gave more than 400 government officials, business leaders and residential developers a “good news touched with a little bad news” scenario during the Eighth-Annual South Metro Development Outlook Conference held last Tuesday at Clayton State University.

The good news is south Metro no longer has an over supply of residential housing inventory.

Housing starts, he said, leveled off in the fourth quarter of last year while home sales and closings, with homebuyers actually purchasing and moving in, have increased.

However, the bad news is the area still has almost a two-year supply, about 43,000, finished residential lots ready to have units built on them that are not being developed, due to the large number of still available homes built in 2005 and 2006.

“For a solid three years,” James said, “we wildly over-built, doing about 4,000-plus housing starts every quarter.”

To explain his point, James said, during the “wild building days,” in 2005 and 2006, banks and lending institutions were so free with loans to home owners, “I could have almost put my dog’s name on a loan application and have it approved.”

“There is good news on housing lots,” James said, “as no additional home lots are being added.”

At the end of last year, he emphasized, south Metro had 1,227 housing starts but also more than 700 closings.

“Housing starts have not only leveled off, but they are starting to go down,” James said. “The days of an over-supply of housing inventory are gone, which is the best news I can share with you today.”

Despite housing starts going down, James said, the available inventory, which includes finished homes and those under construction, is still at a 12-month supply level.

“The good news on that is we haven’t seen inventory levels that low in many years,” he said.

If the job market improves, he added, James expects to see more of the inventory absorbed that much faster “and we could wind up having a major under-supply, which will drive up the cost of homes instead of down as we have seen in this time of over-supply.”

He believes when the housing inventory drops to about a third of what it is now, it will signal more housing starts.

In south metro, the area has seen its existing inventory of about 7,000 available units drop to 2,500, which constitutes, James said, in about a month’s supply.

There looks to also be bright news regarding the resale value of homes, which, he said, has come down “quite significantly” for the 15-county region. However, for south Metro, the inventory of homes available for resale has also seen a drop, now standing at 7.9 percent.