Smith, who

is a first vice president of Suntrust Bank, began by outlining the current

state of the national economy. Noting that the economy stalled in the

fourth quarter of the past year, he stated his belief that the business

decline had bottomed out and that a rebound seems to be beginning. Business

has been holding the line on spending and using a smaller worker force

to handle production. Consequently, the job growth rate as been down as

employers have been squeezing more work out of their employees, and Atlanta

has been one of the hardest hit areas in job losses.

The threat

of war and rising oil prices are threatening the economy, said Smith,

but he also told of some bright spots, including the fact that business

capital spending is improving slowing and that record low mortgage rates

have stimulated the economy and created a very strong housing market.

"The housing market has been the healthiest part of the economy,"

he pointed out.

On the minus

side, he told the group, consumer confidence has been the lowest in nine

years, even though disposable income increased 5.8 percent last year.

"The savings rate increased to 4.3 percent in the fourth quarter

of 2002, but consumer spending slowed. Credit card debt fell $8.4 billion

in December, and there has been a much lower level of cash out refinancing,"

he added, explaining that he feels that consumers are just now starting

to follow the lead of business.

"Consumers

are starting to do what business has been doing. They're starting to get

their house in order," he explained.

Smith said

the recession the nation has experienced is actually the weakest yet,

since it has been a business-related recession as opposed to a consumer's

recession.

What's ahead

for the nation's economy? Smith sees the return of moderate job growth.

Consumer spending will hold up, business capital spending will inch higher,

and the economy will return to a long term growth path. He believes interest

rates will move higher as the economy strengthens, and the housing market

will cool but remain strong.

Presenting

his 2003 Atlanta housing forecast and basing his conclusions on housing

data provided by MetroStudy, Smith said the local housing market "is

not a bubble." He feels new home starts will decline six percent

to 39,400 for the Atlanta area and that mortgage underwriting will tighten.

He predicts that the prime rate will rise to 4.75 percent by the fourth

quarter of the year, and the mortgage rate will increase to from 6 to

6.25 percent.

In the area

of employment, Smith believes the Atlanta area will have a net gain of

25,000 jobs this year.

Breaking down

the Atlanta area housing market, he informed the group that the North

Atlanta new home market has been down 6 percent, while the South Atlanta

market has been up 32 percent, with affordability being the driving force

behind this movement.

Among Metro

South counties, Smith described Henry County as the "800-lb. gorilla"

with some 2,000 new homes on the ground. Many of these are townhomes,

and the Locust Grove/Hampton area is currently getting a lot of attention

from developers and builders.

Clayton County,

which Smith termed as basically a starter home market with most of the

homes under $200,000, has approximately 1,200 homes either completed or

vacant.

according to Smith, Fayette County lacks housing under the $200,000 level

and won't meet housing demand because of the scarcity of affordable housing

and county restraints.

Saying that

Coweta County has a good housing product range, with a good share of this

in the $200,000 to $350,000 range, he said the county hasn't been a growth

market principally due to the minimum lot size limit of 1.6 acres in its

unincorporated areas.

South Fulton

County was described as a "brand-new market" with many of the

new homes being well under the $200,000 level. Smith said that 13,000

lots have been approved to come on the market in South Fulton. "There's

a tremendous land rush on here," he told the builders.

The home builders

association's February meeting was sponsored by SunTrust Bank Atlanta

and the Coweta-Fayette EMC.

The Home Builders

Association of Midwest Georgia serves builders in Fayette, Coweta, Spalding,

Meriwether, Heard, Pike, Upson, and Lamar counties. More information about

the group can be obtained by calling the association office at 770-716-7189.

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