By Geoff Smith

When we think of Augusta, GA, I know the first thing that comes to mind: the home of James Brown, Godfather of Soul. Right?

I guess there is that golf tournament that I got away with spending an entire day on the couch watching a couple weeks ago – the Masters. But there is another thing in August I’m becoming focused on that most of you have not heard of: Augusta is the headquarters of the U.S. Army’s Cyber Command. For the Army, this is ground zero for all cyber-attacks made against, and by, the United States.

The headquarters was built in 2016 and was followed up by a $60 million-campus that is the state’s “centerpiece for cyber security research and development,” according to an article in the AJC. The campus, known as The Georgia Cyber Innovation and Training Center, will help train the workforce for the Army’s headquarters, and will also incubate startups in the same field.

I am fortunate enough to sit in on the Greater North Fulton Chamber of Commerce’s Talent Coalition. We study workforce trends in the technology and healthcare industries in North Fulton, and then work with our universities and schools to make sure they are aware of the demands from our local businesses. The idea is to produce students who have the skills that the companies in our area require. There are several very smart CTO’s that have been involved on our committee and I’ve learned a lot. One of the things I learned is that the tech guys in the security divisions are typically the smartest of the bunch. Most tech guys only have to learn the kind of coding that their company considers standard. But those in the security side of things have to know every kind of coding, because hackers use whatever coding the criminal is an expert in.

In March we hosted a Cyber Technology Summit where our guest speaker was Ronald W. Pontius, Deputy to the Commanding General of U.S. Army Cyber Command. He said that his office fights off ‘hundreds of millions’ of cyber-attacks every month. He happened to be speaking the same day that the City of Atlanta announced an attack that ultimately shut the city down for 6 days. (We have a knack at the chamber for having guests at just the right time. We had the state transportation director speak the morning of Snowmageddon in 2014).

Pontius said that cyber-attacks are a bigger threat to our national security than terrorism.

Knowing all of that, it’s really pretty great for our state to have both that headquarters and that college campus in Augusta. It will bring some of the best talent in technology to Georgia.

When I was growing up, life was pretty simple. We didn’t like Russia and they didn’t like us. And everyone else kind of watched us maneuver each other and it all seemed pretty visible. Today there is so incredibly much information out there that it is hard keep up with what’s true, and to understand who our enemies actually are. Whereas most of the jockeying for power back then seemed to be done out in the open, today we are fighting three million little battles a day behind closed doors on computers. All while I’m Googling the stats of Georgia’s intra-squad spring day football game.

It’s a fast-paced and unknown world we are in. But give credit to our officials running this state. Georgia has once again positioned itself at the epicenter of one of the most critical industries on the planet.

Mortgage Rates Take One on the Chin

Mortgage rates shot up to 4-year highs this week before catching a little bit of a break yesterday. News that the 10-Year Treasury yield hit 3% rattled markets who were mostly expecting it to do so.

Mortgage interest rates are tied in part to the 10-Year Treasury, some say because that’s the average time a homeowner stays in a house before selling it. When bonds are bought in low volume, the laws of supply and demand say that their price will drop, which they have. Since they are originally bought at a fixed price with a fixed rate of return, when their prices drop in the aftermarket, the yield rises.

The stock market immediately tanked when the yield hit 3%. This was kind of strange because most experts expected the yield to do that and stocks are typically bought and sold on speculation. But it seems this was likely driven by automated trading where investors programmed computers to make specific trades once the yield hit 3%.

Usually the mortgage interest rate moves down when the stock market goes down and visa-versa. This was unique in that regard.

Hitting the 3% mark was a big deal because it’s a sign investors are comfortable enough with the economy to look away from the safety of bonds.

What this Means to You:

According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.64%.

By Geoff Smith

After returning from cities like Chicago and New York City, people always ask, “Why can’t we build a rail system like they have up there?”

The answer is simple: It’s insanely expensive.

Depending on who you talk to, expanding MARTA’s rail line costs somewhere between $150 million and $350 million a mile. And that’s not easy for MARTA to raise considering the only funding it gets, other than through ridership fees, is mostly from sales taxes in Fulton, Dekalb and Henry Counties. To make any real progress toward expansion, the agency either needs to expand its presence to more metro counties, or start receiving more capital subsidies from the state. This session under the Gold Dome, it got both.

State Senator Brandon Beach has been working doggedly for years to try to bring together all counties in the metro area in the name of mass transit. He once made a video showing how it took him almost a full day to travel from Cobb, through Fulton and Dekalb, to Gwinnett County using all the various transit options. His hard work paid off with the passage of a bill in the House and Senate that will bring together 13 metro counties and the various transit systems under one umbrella to be branded as “the ATL.” The bill would put all county leaders at the same table and give them the option to bring to a vote an increase in sales tax to fund transit expansion. This is a huge infusion of potential capital fundraising going from three counties to 13 – two of which are Cobb and Gwinnett, although it is unclear to some of the commitment of Cobb.

The re-branding would start to take hold in 2023, which is when you would start to see the name change from MARTA to ATL, and the creation of a new logo. But for now, it allows our planning agencies to start thinking bigger in their planning of where to expand.

It appears that the expansion of any heavy rail line further north up GA400 is however off the table. Fulton County helped facilitate a study that culminated in all the North Fulton mayors coming to the table to weigh options for future expansion of public transit. Many thought expansion of the rail line to Holcomb Bridge Road in Roswell was likely. But according to an article by Patrick Fox at the Herald, Fulton County Commissioner Liz Hausmann said there was only unanimous consent to go with a proposal that would add bus rapid transit service along GA400 and Holcomb Bridge Road, and arterial rapid transit along Old Milton Parkway, Medlock Bridge Road and Roswell Road.

Those civic leaders inside the perimeter seem to be more receptive to rail expansion. Especially since rail stations have become desired locations for corporate headquarters. Just recently State Farm and Mercedes-Benz settled on sites for new regional headquarters largely because of their close proximity to a MARTA station. Other large development projects have begun next to and around other stations throughout the city.

In addition to Beach’s bill in the Senate, Governor Nathan Deal allocated more than $100 million in his budget this year to go toward transit expansion. It may not equate to a mile’s worth of heavy rail expansion, but it is a good sign that the state is more focused on improving the metro area’s traffic problem.

Bills to create a Regional Transit Authority in Metro Atlanta have now both passed overwhelmingly out of their respective Chambers and were in transportation committee this week in the other Chamber for consideration.The expectation in committee is that both would substitute the other bill’s language for the original house or senate version, and then head to a conference committee for agreement. Both Bills are now in Rules Committee and are expected to be on each respective chamber floor for a vote this week, and head to conference committee for potential agreement.

Senate Transportation Committee Chairman Sen. Brandon Beach (R-21) proposed SB 386.

Major Provisions:

• Creates the Atlanta-Region Transit Link (ATL) Commission. The purpose of this Commission would be to coordinate the funding and construction of transit facilities in the 13 county metro-Atlanta area.
• Creates an optional T-SPLOST that counties which are apart of the system may adopt through a referendum. The money would be used to fund public transit expansion within the local jurisdiction. The jurisdictions are encouraged to enter into an intergovernmental agreement with MARTA for their transportation services.
• Authorizes the Georgia Regional Transportation Authority to oversee the creation of the ATL board to develop, manage, and execute regional transit strategies throughout the metropolitan Atlanta area. The ATL Commission will consist of the Georgia Commissioner of Transportation, Mayor of Atlanta, Chief Executive Officer of MARTA, and County Commission Chairmen from each member-county.
• The House Transportation Committee passed Senate Bill 386, but stripped it of all language from the Senate Bill and substituted all of the language for House Bill 930.

Rep. Kevin Tanner, Chairman of the House Transportation Committee, introduced HB 930 as a result of the work of the House Regional Transit Funding and Governance Commission. The bill was amended to remove the special tax district for Cobb County and allow the entire county to have the option to join the new Regional Transit Authority if created.

Major Provisions:

• Restructures GRTA into the Atlanta-Region Transit Link (ATL) Commission incorporating the 13 counties in the ARC region in the new authority governed by newly created districts.
• Identifies two new funding revenues to support transit: (1.) Adds a 50-cent charge per trip on rideshare, taxi and limo providers (2.) Creates a 1% airport tax on concessions at the Atlanta airport.
• Allows new counties to call for a referendum to levy a 1% transit SPLOST.
• The Senate Transportation Committee passed HB 930 by substitute with language from SB 386 and is now in Senate Rules Committee.

Leadership in both Chambers agree that metro Atlanta needs well-networked, efficient transit and both are committed to passing framework legislation. What that final piece of legislation will look like remains to be seen. Rep. Tanner and Sen. Beach have both indicated that House and Senate are working together but differences remain. This is likely to not be decided until the last day of the session, Sine Die on March 29.

by Geoff Smith

For at least three years now, inventory in the under $400,000-market here in Atlanta has been at record lows and buyers have been fighting each other for good deals. The result is a sharpened artform that many agents have crafted to be ‘the one’ chosen from the many.

I was reading a great article in the Wall Street Journal titled The Strangely Effective (and Easy) Way to Win a Bidding War. It details several methods agents and buyers used to win deals, and showed data collected by Seattle-based realty firm Redfin.

With inventory so low and competition so high, a listing agent’s job is to really find the buyer who can close with the best offer and with the least amount of fuss. I’ve heard of houses that have gone under contract the first day on the market and had more than 10 offers to sort through. I’ve been told of showings where the buyer had to wait for an hour outside the house while people before her were shown the house. If you are trying to by one of these houses, you have to make yourself stand out.

According to the article, the best way to stand out is to use cash. I would be a bad mortgage lender if I didn’t remind people that an average retirement account earns more than 7%, while mortgage interest rates are still in the mid-4% range. That said, using all cash nearly doubles your chances of being able to beat out the other offers. If you are using cash, that means you typically can close much quicker and without a bank having a say in your purchase. Listing agents like that.

Another method that appears to be highly effective, and one that I personally do not like at all, is waiving the financing contingency. This contingency basically gives the buyer in a contract a certain amount of time to get approved on their loan. If they don’t get approved in that time, they can walk away from their deal with the earnest money check(a deposit of sorts that is written and held in escrow just after signing a contract). This makes a listing agent comfortable because if there is no financing contingency, the buyer would have to kiss goodbye that check if they decide to walk away from the deal. This puts a lot of pressure on the lender to do a very thorough pre-qualification. Earnest money is typically 1% or more of the purchase price. But waiving contingencies apparently increases a buyer’s odds of winning the deal by 57.9%. So as an agent, you might earn their praise by initially winning the deal by waiving the contingencies. But if your lender doesn’t get the loan approved and they lose their earnest money, their perspective will very quickly change.

The method that came in third is actually my favorite: writing a personal letter. Having buyers write a personal letter to the sellers actually was a very close third, boosting your odds to win the deal by 52.2%. Selling a home can and should be an emotional endeavor. We live there and leave behind a lot of memories. Writing a letter telling the seller how you will live there, how you will maintain the house and what you love about the house seems to go a long way. The letter adds a personality to the offer and it also seems to let the seller know that the buyer is serious, according to the article. I have seen this method work on several occasions.

As a lender, my agents always make sure to let the listing agent know they can and should call me. This has proved to be a huge advantage. Our industry is a little wild-west and there are a lot of very inexperienced lenders out there. Giving the listing agent the opportunity to talk to me and, at the very least, find out that I am competent, experienced and that I did a thorough prequalification, goes a long way. Once the deal goes binding, everyone is to some degree at the mercy of the lender to get the money approved and bring the deal to close. So it is also important to make the listing agent comfortable with your lender.

With 90,000 people a year moving to the metro Atlanta area, it is hard to imagine that inventory will increase anytime soon. So sharpen your pencils and start writing some good stories.

Rates Push Further Up

Mortgage interest rates continued their steady march upwards this week. Economists are grappling with an economy that has no visible downside right now. As such, they are investing, the stock market is going up and so are mortgage interest rates.

What this Means to You:
According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.28%.

by Geoff Smith

The sun came up and another company has decided to move its headquarters next to a MARTA station – what else is new?

Insight Global, a staffing company for Fortune 500 companies across the United States and Canada, has decided to move 800 employees into a new, 16-story building that will be built between Perimeter Mall and the Dunwoody MARTA station. There has been a lot of talk over the last year of plans to build a high-rise here on the eastern side of the station, now they have a tenant. State Farm is currently building the second of its four high-rises on its new campus across Hammond Drive from the Dunwoody MARTA station. Their first building includes a walkway over Hammond Drive to the station. And there is already talk of more high-rises that could go up along the western side of the MARTA station.

It has become common knowledge that most company executives believe that to stay competitive for the future workforce, they need to be located near mass transit. Every major corporate move to the Atlanta area has been at or near a MARTA station. Along with State Farm, Mercedes-Benz is building their North American headquarters down the street from the Sandy Springs MARTA station. NCR Corp. just moved its large headquarters from Duluth to intown Atlanta to be near mass transit.

According to a recent article in the Atlanta Business Chronicle, Metro Atlanta Chamber of Commerce President Hala Moddelmog said that the recent corporate relocations were in part, because of MARTA.

“They would not have come to this market if it had not been for MARTA,” she said.

As the Georgia General Assembly heads into session, transit and expansion of MARTA is something that will again be a hot topic. It has only been in the last couple of years that state legislatures have seen expansion of the system as an issue they need to be concerned with. With these large corporations citing MARTA as a reason for their move to Atlanta, it has become more acceptable for legislatures from outside of the Metro Atlanta area to be open to conversation about putting state money aside for MARTA expansion.

State Senator Brandon Beach, who chaired the Transportation Committee in the Senate last year, said one of the big issues this year will be to try to bring Gwinnett and Cobb Counties together with Fulton, Dekalb and Henry counties in funding MARTA. Gwinnett and Cobb both have their own transit systems independent of MARTA. Even though their systems drop riders off into the MARTA system, they do not help fund it. Being two of the most populated counties in the metro area, bringing them together with Fulton, Dekalb and Henry would be a huge plus for transit in Metro Atlanta.

Here in North Fulton, the debate continues about what an expansion of mass transit would look like. Many officials seem warm to the idea of expanding rail up to Holcomb Bridge Road. But there is little consensus to go further north than that. State Senator John Albers is preaching another concept: autonomous vehicles and buses. Rail expansion is expensive and would take 5 to 10 years to build. By that time, Albers says autonomous vehicles will be in use and residents will be more used to taking Uber and Lyft. Instead of spending the billions of dollars it would take for full-rail expansion, a fraction of that money could be used to install a state-of-the-art system of autonomous buses, he argues.

With NCR’s move intown, North Fulton officials are taking the issue of mass transit expansion in North Fulton serious. Fulton County officials are in the middle of putting together a comprehensive master plan for transit it North Fulton. Called the “Fulton County Transit Master Plan,” it will have recommendations for how North Fulton should move forward with transit improvements. They hired a consultant to put together several options for local officials and residents to consider.

The options will be presented on January 23 at the Atlanta Mariott in Alpharetta from 6 to 8 p.m.

MARKET WATCH

Rates Jump on Tax Bill, Bond Market

Mortgage interest rates jumped Monday and Tuesday as investors sold off bonds to put money into stocks. When bonds are bought in low volume, or are not in demand, mortgage interest rates tend to rise. And they did – to their highest level in the last 6 months.

They could get another push upwards today if the numbers released for the Consumer Price Index rise. This would signal a rise in inflation – something economists and the governors at the Federal Reserve have been waiting to happen for several years now. Inflation has been the one sour spot in what has been viewed as an otherwise robust economy.

What this Means to You:

According to Mortgage News Daily’s Rate Survey, best execution rates for a conventional 30-year fixed are at 4.14%.