Housing slump uneven but wide

With homes sales up 200 percent and home values up 29 percent, folks living in the Carroll County community of Waco would seem to have defied the odds in this housing slump.

Before you declare this housing bust over, know this: You can’t always trust the numbers. Waco is in the 30182 ZIP code, which had a total of six home sales last year.

Metro Atlanta’s housing market was so slow last year that in some areas the slightest movement in the market inflated —- or deflated —- home sales and values.

The sale of one luxury home or the development of a couple of condo projects, for instance, could drive up the value of homes in an entire ZIP code. Hanover Place subdivision in Forsyth County, completed last year, accounted for about a quarter of the homes sold in the 30004 ZIP code. Values there were up almost 6 percent.

Conversely, some metro Atlanta neighborhoods saw a flurry of home sales due to foreclosures. Bargain hunters snapped up the foreclosed properties, driving down the average sale prices of homes in the surrounding area.

This year’s Atlanta Journal-Constitution Home Sales Report shows the vagaries of the weak housing market.

The report was compiled by Marietta-based real estate research firm SmartNumbers. It looked at home sales and prices in 20 counties for 2008, compared with the previous year, and examined trends among 300 metro Atlanta ZIP codes.

While there were rare instances where home prices climbed based on healthy sales, those could not eclipse the fact that all 22 metro counties in this year’s report were awash in negative numbers.

“Things were pretty bad,” said SmartNumbers president Steve Palm. “We have never seen a price drop from year to year like this since the Depression.”

Metrowide, home prices fell 13 percent, although new homes held their value better. The average price of a new home last year was $231,320, down less than 2 percent from the previous year.

And the trend of falling home prices seems to have continued into this year. The median price for a home in metro Atlanta in the first quarter was $115,600, down from $154,000 in the same period in 2008, the National Association of Realtors reported recently. Home sales in the first quarter also were off 6 percent, the group noted.

Last year, Clayton County had the region’s largest price drop with homes falling 43 percent in value, according to the AJC home report. Homes in Rockdale were a distant second. They saw a 20 percent drop.

And sales were off even compared with a slow 2007. Home and condo sales across the region were down 27 percent overall. Sales of new homes were off by half.

Experts say the fluctuations in values have implications for homeowners when it comes time to sell. In most communities, homeowners trying to sell today have to contend with depressed prices and may not receive the former value of their homes. Of course, factors such as the home’s condition and location play a role as well.

Drill down into the report and another pattern emerges: ZIP codes inside the Perimeter but north of I-20 and east of I-75 held steady or even saw increases in home prices. The largest declines were inside the Perimeter, but west of I-75.

In Buckhead’s 30305 ZIP code, a $3.5 million home built on Tuxedo Road, along with some new luxury high-rise condos, Terminus and The Gallery, helped push overall home values with that tony address up 20 percent.

About 20 miles south of Buckhead is 30354, a Fulton County community where home prices fell 60 percent. Near Hartsfield-Jackson International Airport, it is a jumble of fixer-uppers mixed in with body shops and storefront churches. The area, which includes Hapeville and East Point, enjoyed tremendous gains in 2007, thanks to strategic economic development. Homes back then sold for nearly $134,000. Last year, existing homes were the only thing moving in the area, and they sold for about $53,000. Foreclosures have wiped out any gains the area saw during the housing boom a few years ago.

New federal banking requirements now require foreclosures to be a part of each residential appraisal report, and that information can drag down values.

For a better understanding of how varied the differences between neighborhoods can be, let’s take a ride in DeKalb County.

Two streets, two patterns

Shepherds Lane and Bernadette Lane are separated by a few tenths of a mile and LaVista Road, which runs between the two streets. On paper, homeowners there should appear to benefit equally from their location near Emory University and Lenox Square. But cruise through the two tree-lined neighborhoods and the difference becomes apparent.

Homeowners on Bernadette live in LaVista Park, a 30329 ZIP code where home prices soared last year nearly 31 percent. In contrast, home prices on Shepherds Lane, part of 30324, fell 7 percent.

Fewer homes sold in both ZIP codes last year than in 2007.

Two radio and cell towers rise above Shepherds Lane like a giant pitchfork hovering over small, older bungalows wedged into this Woodland Hills neighborhood. Not especially good selling points. Many of the two- and three-bedroom homes have one bathroom. Some homes in the area go for $200,000 to $300,0000 and sit on third- to half-acre lots, while others could do with a fresh coat of paint and a good lawn manicure. Between busy roads, Shepherds Lane has become a shortcut for drivers looking for a way around rush hour traffic. Speed bumps line the street.

Nearly 30 percent of the homes on and around that street are for sale.

On Bernadette, brick ranch homes sit back from the street on half-acre to three-quarter-acre manicured lawns. Homes here sold recently for $100,000 more than those around Shepherds Lane. On nearby Beechhaven, mid-century ranches sit next to hulking mansions that carry an asking price of close to $1 million.

Larry Parr, who owns a 3,000-square-foot, four-bedroom, three-bath brick ranch on Bernadette with his partner Luke Callaway Jr., was elated to learn home prices in his neighborhood might have defied the odds. Parr and Callaway bought their home in 1983 for $160,000. A Realtor suggested they list the house at $400,000 a few years ago when they thought about selling. The pair has watched the neighborhood transform from an enclave of mostly Jewish and Greek families to one that has become “gay-friendly,” Parr said.

“Houses in our neighborhood sell pretty well,” he added, crediting the proximity to the expressway as well as Emory and Lenox Square. “Houses here don’t sit on the market too long.”

Real estate experts credit new homes for the dramatic increase in the 30329 ZIP code. Places like The Bristols at Briarcliff, townhomes selling in the high $300,000 range, helped boost home values.

As for 30324, the 7 percent drop may not sound so bad considering that only four units sold in 2008.

Rebound likely, but when?

Despite the bad news, housing experts see something of a turnaround this year even as home- buyers deal with tight lending conditions.

In fact, this could very well be the bottom of the tough housing market. While experts differ on when metro Atlanta reached the bottom and when it will begin to climb back up, they agree that home prices will rebound. That could be anytime between the summer and this time next year.

But in the short term, prices will be nowhere near the heady days of a few years ago.

“It’s going to be a real challenge,” said Eugene James, director of the Atlanta market for Metrostudy, a national housing research firm.

But he’s encouraged by the shrinking housing inventory and what he sees as a turnaround in home closings.

“Every month, it seemed like we were selling fewer and fewer (existing) homes since mid-2006, but in the last six to eight months, we’ve been selling and closing at a steady rate.”

James sees the revived activity in the resale market as a sign the market is leveling off. In the past eight months, existing home sales have been hovering at a pace of 45,000 a year.

What we don’t need, Palm said, is a repeat of the second half of 2005 and the first half of 2006.

“We did too much of everything. Too many subprime loans were given, too many houses were built and the prices were jacked up too high.”

At that time, there were more than 60,000 new home closings.

“We will never get back to those numbers.”