Are Atlanta area home prices at bottom?

Atlanta home prices fell in February to values not seen since early 2001, according to a widely watched measure, but experts say they may be at least leveling off.

The latest S&P Case-Shiller index showed Tuesday that metro Atlanta home prices dropped about 2.5 percent in February from the month before, and 15 percent compared to February a year earlier.

But March numbers should look a little better, said Steve Palm, president of SmartNumbers, a Marietta research firm.

“February was our bottom in price,” he said, basing the prediction on low inventory for this time of the year.

Lauren Holmes, managing broker for the Roswell office of Crye-Like Realtors, agrees February was the floor, but she’s not sure values are ready to rise.

“I think we’re still there,” she said of March and April values. “And I think we may be here for another six months. No further declines, but I’m not sure we will see values rise.”

Inventory is key: the more that homes-for-sale outnumber homebuyers, the more pressure there is for prices to fall. A flood of foreclosures has kept that pool surging.

Homeowners now can hope a turning point has been reached, Palm said.

“Inventory at the end of March was lower than in December and that has never happened since records have been kept,” Palm said. “Any kind of demand will get it going again. We have something like 25,000 fewer homes on the market than we did two years ago.”

However, Holmes said one reason inventory may have decreased is people haven’t re-listed homes that did not sell. “When those don’t go back on the market, it does look like there is less inventory,” she said.

After the financial meltdown started last year, home-buying was dampened by a one-two punch of consumer caution and tight credit. With so many mortgages going bad, many banks didn’t want to make more loans.

To bolster buying, the Federal Reserve has worked to reduce mortgage rates. Metro area rates currently range between 4.875 and 5.375 for a $200,000, 30-year mortgage loan with 20 percent down, according to bankrate.com.

Nationally, prices dropped 18.6 percent from the 12 months preceding February, according to Case-Shiller. That was slightly better than the previous 12 months.

The index, while given credibility by experts, smooths out the many different sub-markets in a region. In metro Atlanta, some areas have seen only marginal price declines or even some recent increases in value. Others have dropped dramatically.

Home construction in the metro area was at or near the top of the national charts during the past two decades. Because of that, prices never soared here the way they did in “bubble” areas such as Phoenix, Las Vegas, southern California or Florida. In those areas, the bursting of the bubble has meant a more dramatic deflation in prices.

Since cresting in 2007, metro Atlanta’s average price has dropped 20 percent, compared to Los Angeles, where prices have plunged 39 percent, or Las Vegas and Phoenix, where average prices have been nearly halved.

However, prices in Atlanta have gone further backward in time. The index shows prices here about where they were eight years ago, while prices are back to the levels of fall 2003 in Los Angeles and 2002 in Las Vegas and Phoenix.