Home values creep up; not all areas share gains

By Michael E. Kanell

The Atlanta Journal-Constitution

Badly burdened with foreclosures and overbuilding, the metro Atlanta housing market has slowly and painfully started crawling out of the ditch, according to a real estate data firm.

Yet the gap between top and bottom is huge: Values in some areas are appreciating nicely, some are still in free fall.

Seattle-based Zillow tabulates sales data but also makes calculations based on homes that have not been on the market. But the firm’s conclusions for Atlanta are consistent with the much-watched Case-Shiller index , which tracks sales and has shown several months of modestly rising prices in Atlanta.

Compared with last year, median Atlanta home values are down 2.8 percent, but they have started edging up — rising 2.6 percent in the third quarter of this year, according to Zillow.

“The next several months will be critical to the housing market,” said Stan Humphries, the firm’s chief economist.

Zillow’s research echoes the mantra of real estate brokers that prices vary from town to town and neighborhood to neighborhood.

Oxford, for instance, was metro Atlanta’s best-performing market with a 25 percent increase in home values in the past year. Values in the Walton County town of Between were second with a 20 percent increase.

In stark contrast, values in Jonesboro, Forest Park and Lake City have plunged more than 37 percent.

Metro Atlanta itself finished the quarter in the middle of the national pack, coming in 53rd out of the 156 metro areas that Zillow tracked.

The hottest market was Fayetteville, N.C., where values were up 11 percent in the past year.

At the other end of the spectrum was Merced, Calif., where values plummeted 39 percent. The worst-performing big metro market — Las Vegas — fell 32 percent.

Nationally, values were down 7 percent.

The end of the housing bubble, followed by the longest recession since the 1930s, has meant a virtual epidemic of foreclosures, and that has in turn dragged down the housing market further. Even if well cared for, foreclosed homes add to inventories for sale and pull down prices.

Nationally, foreclosure resales made up more than one-fifth of all home-buying in September, Zillow said.

Extension of the $8,000 federal tax credit for home purchases should increase overall demand for housing, at least partly balancing out the foreclosures, Humphries said.

“The credits are likely to bring continued stabilization in prices over this period vs. the price declines that we almost certainly would see otherwise,” he said.

However, the credit is just spurring buyers to move up purchases they would have made anyhow, Humphries said.

And there is some danger that the wave of foreclosures has still not peaked.

An estimated 2.62 percent of homes in metro Atlanta are somewhere in the foreclosure process, according to a report issued Friday by First American CoreLogic. Many of those homes will never actually reach foreclosure, but many do, and the rate has been a signal of serious trouble for homeowners.

That rate has doubled since last year, but it is still lower than the national average, according to the California-based company, which tracks sales, prices and foreclosure activity.

Barely one out of five area homes increased in value during the past year, according to Zillow’s calculations.

That compares with 28.1 percent of area homeowners who were “underwater” in their mortgages last quarter — that is, they owed more than their homes were worth. And that was actually a slight improvement.