Atlanta Hit Hard by Downturn

There are certain lists you don't want your city to be near the top of. Foreclosure rate would certainly be one of those, spelling bad news if you're a remodeler in Atlanta.

While not hit as hard as the California and Florida markets, Atlanta was still a Top 20 market for foreclosures in 2008, according to RealtyTrac. Outside of those markets, only Las Vegas, Detroit and Phoenix ranked ahead of Atlanta.

Atlanta's rising home vacancy rate, combined with a 16.1 percent rental vacancy rate, prompted Forbes to name it the third emptiest city in the country.

That's led to less work for remodelers in the city, and those homeowners who are looking to remodel are reducing the scope of their projects, says Brad Cruickshank, president of Atlanta-based Cruickshank Remodeling.

"Most people are not remodeling to do a showplace kitchen to keep up with the neighbors or for resale," he says. "They're doing projects that will make their lives better."

Even high-end clients have been affected, as they're less confident in the market and the value of their homes, says William Bartlett, president of Home Rebuilders in Atlanta.

"People are fearful of over-improving their homes," he says.

Home Rebuilders has seen average project size drop from $200,000 to less than $100,000 since September, as clients focused on improving their living space without making expensive upgrades.

Cruickshank and Bartlett both think the Atlanta market could turn around later this year as people opt to stay home and invest in their houses instead of spend money on items such as expensive vacations.

"What I see in Atlanta is that there are a lot of people who really want to do something," Bartlett says. "I think the hysteria's gone. We're standing on a bottom, and I think we're going to grow out of it."