Home prices rise, but more slowly

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Home prices rise, but more slowly

Top 10 metros for May home price gains

Metro area ……… change from May 2013

Las Vegas ……………. 16.9 percent

San Francisco ………. 15.4 percent

Miami …………………. 13.2 percent

San Diego ……………. 12.4 percent

Los Angeles ………… 12.3 percent

Detroit ……………….. 11.9 percent

Atlanta ……………….. 11.2 percent

Tampa ………………… 10.2 percent

Portland ……………… 10 percent

Seattle ………………… 9.3 percent

Source: S&P/Case-Shiller Home Price Index

Home prices continue climbing in Atlanta and around the nation, but the rate of the rise is slowing, according to a widely watched survey.

The S&P Case-Shiller housing index for May shows metro Atlanta prices staying ahead of the national trend, with prices up 11.2 percent from a year ago, compared to a 9.3 percent increase for all 20 cities in the index.

Price trends differ by neighborhood and school district. But in hot markets, low inventory means sale prices can end up higher than what the seller was asking, said Colette Barnett, a Gwinnett-based real estate agent for Redfin.

“It is often a multiple-offer situation,” she said.

Barnett said she put up a for sale sign at a home in Lawrenceville, went to the office to enter the information in the computer system and received a call from a potential buyer.

“That sign was only in the yard about 15 minutes. We had a contract in less than a week.”

Other metro agents, however, said they see signs of buyer hesitation creeping in amid rising prices, especially among higher-end homes.

The average Atlanta home price is now roughly at the level of early 2003, according to the Case-Shiller index.

Largest gains in May from a year earlier were in Las Vegas, where prices jumped 16.9 percent; San Francisco, where they were up 13.2 percent; and San Diego, with a 12.4 percent hike. The smallest increase was Cleveland’s 2.4 percent.

Gains showed signs of slowing, however: Atlanta prices were up 1.2 percent from April to May, compared to a 1.9 percent hike from March to April.

“We’ve seen some prices steadily increasing, but I don’t think we are increasing at nearly the same rate as before,” said Jamie Mock, vice president of sales at Engel and Volkers in Buckhead.

And when data is adjusted for seasonal variations and inflation, 16 cities had declines from April to May. Metro Atlanta’s was sharpest: down 0.9 percent, according to Case-Shiller.

If there is a weak segment, it starts farther up the price ladder where buyers are fewer, said Bill Adams, president of Adams Realtors in Atlanta.

“I think the upper part of the market is starting to slow down a little,” he said. “North of $250,000 – there is a significant part of the market that can’t afford that, so it may be an affordability issue.”

The market’s change in tone is visible in the length of time homes stay on the market in many areas, said Collette McDonald, an agent with RE/MAX Around Atlanta.

“We are seeing buyers become more hesitant and prices are starting to level off,” she said.

Long-run, the market is going to move only with the fundamentals, she said.

“It’s all going to depend on where the economy goes in the next six months or nine months.”\

Some broader headwinds are working against the market. For example, slipping median household income has eroded the buying power of young people, according to a report by the Harvard Joint Center for Housing Studies.

The home ownership rate has fallen this year to 65.1 percent, the ninth straight year of decline, and the sharpest decline was among younger adults, according to the Joint Center.

On the economic upside, foreclosures are steadily falling. So is the share of homeowners who are “underwater” – that is, whose home values are below what they owe on their mortgages.

Credit remains tight for some kinds of buyers, such as those who are self-employed, for instance, said Josh Moffitt, president and founder of Silverton Mortgage Specialists. “Someone can have $5 million in the bank, but a business that doesn’t have a lot of income, they might have trouble qualifying for a mortgage,” he said.

But most experts say lending is less an obstacle than it was a few years ago.

Steve Kish, for instance, was moving back to metro Atlanta after more than seven years in Charlotte and looking for a home.

A software engineer in Alpharetta, he decided he wanted a townhouse in nearby Milton. He put down 10 percent and quickly got a 30-year mortgage for $245,000 at 4.25 percent interest, he said. Closing is set for August 27.

“It was perfect for me,” he said. “Everything I was looking for.”

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