Atlanta home price rise slows, many still ‘underwater’

Metro areas by percentage of mortgage-holders ‘underwater’

Highest

— Atlanta 28.9%

— Las Vegas 27.4%

— Chicago 27.1%

Lowest

— Austin 8.3%

— San Francisco 8.2%

— San Jose 4.6%

U.S. Average 17.0%

Source: Zillow Inc.

Home price increases over past year

Highest

— Las Vegas 15.2%

— San Francisco 12.9%

— Miami 11.5%

Lowest

— New York 4.3%

— Charlotte 2.8%

— Cleveland 0.8%

U.S. Average 6.2%

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

Metro Atlanta’s home price rebound slowed sharply as the summer began, while the region posted the nation’s highest percentage of “underwater” mortgage-holders in the spring, two reports Tuesday showed.

The average price of a home in the metro area rose 8.6 percent in June from the same month a year earlier — the first time in 17 months the growth was below double digits, according to the S&P/Case-Shiller Home Price Index. Prices rose 1 percent from May to June, also a smaller increase than in previous months.

Despite the long stretch of price increases, 28.9 percent of Atlanta area mortgage-holders still owed more than their homes are worth in the second quarter, a separate quarterly study from real estate research company Zillow showed. That was slightly higher than Las Vegas, which had the top percentage in the prior quarter.

The U.S. average is 17 percent.

Hard-hit by the housing bust, metro Atlanta has had a relatively high percentage of underwater homeowners for the past few years.

The numbers everywhere are coming down, however. In early 2013, 42 percent of Georgia mortgage-holders were in that condition — and more than half in some metro counties — while the U.S. average at the time was 27 percent.

After diving from a peak in 2006, metro home values started rebounding strongly in 2012 and are now at about 2003 levels, according to the widely watched Case-Shiller report.

Eugene James, Atlanta-based regional director for Metrostudy, a national real estate research firm, said the recent slowdown in price appreciation is healthy.

“We are finally moving toward a more normal market, but we are not there yet,” James said. “It will still take us a while to get there.”

James puts the median price for existing home sales in metro Atlanta at $194,000. The median price of new home is about $275,000, he said.

The housing market ultimately depends on fundamentals of the economy, said Josh Moffitt, president of Atlanta-based Silverton Mortgage Specialists.

“The big factor (in slowing price growth), we think, is that the job market is still a little weaker than we expected. It’s awful hard to buy a house if you don’t have a job.”

On average, Atlanta prices are still roughly 12.4 percent below their peak, according to Case-Shiller. But since bottoming in 2012, the average price has climbed 43.6 percent.

Experts say the run-up was fueled by a market mismatch – a surge of buyers, a relative dearth of sellers. In many markets, that meant quick sales and rising prices – often for more than the seller even asked for.

As with most things in real estate, home price trends depend on location.

Joy Grant of Duluth started looking for a home in June and was surprised to find how competitive the hunt had become.

Grant, an executive assistant at a large company, made offers for a series of homes and was shut out. “I went to my max and then somebody would outbid me – higher than the listing price. It is just a seller’s market. The competition is extremely challenging.”

Finally, she hit pay dirt: a townhome she liked and her bid was best.

Grant put 5 percent down on a $118,000 townhouse and mortgaged the rest. Her closing is scheduled for Sept. 5. If all goes well, she’ll move in that same day.

Justin Seeby, director of sales for the Mark Spain Team, said the Case-Shiller data supports what he has seen, there are signs that the balance is shifting – at least in some areas.