Metro Atlanta home prices continued to lose ground in December, hitting a 14-year low as the languishing U.S. housing market ended 2011 on a sour note, new data shows.
Home prices fell for the fifth month in a row, slipping 1.8 percent in December, with thousands of foreclosures and short sales pummeling the local market. The decline followed a 2.5 percent drop in November and 5 percent decrease in October, according to the latest Standard & Poor’s Case-Shiller Home Price Indices released Tuesday.
Nationally, 18 out of 20 cities saw average home prices fall in December with 17 experiencing declines for at least three months in a row. Atlanta -- which continues to struggle with high unemployment -- saw the biggest year-over-year drop with prices declining 12.8 percent. Miami and Phoenix were the only two to post gains in December.
“The housing market ended 2011 on a very disappointing note,” said David Blitzer, chairman of the index committee at S&P Indices. “The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything, it looks like we might have re-entered a period of decline as we begin 2012.”
Case-Shiller uses a baseline home price index of 100 for 2000. So an index of 125 would reflect a 25 percent increase.
Metro Atlanta’s index at 87.30 in December marked its lowest point since the end of 1997 and was the second-lowest of 20 metros, with only Detroit lower at 68.39. The metro number peaked at 136.47 in mid-2007.
Atlanta’s drop in prices stems largely from increasing sales of foreclosures, which typically cost less than $100,000 and drag down surrounding home values, said Mitch Kaminer, president of the Atlanta Board of Realtors. The region’s median sale price -- the point at which half cost more and half cost less -- fell to roughly $108,000 last month, a nearly 10 percent drop from December, board data shows.
It’s crucial to get foreclosures sold off, Kaminer said. “That’s how we return to a healthy market.”
Atlanta’s housing market has been plagued by a host of troubles in recent months.
The region’s unemployment rate remains well above the national average at 9.7 percent -- spurred in part by the loss of tens of thousands of construction jobs. The influx of newcomers has fallen sharply since the recession. And even people with jobs who would like to buy are having trouble qualifying for mortgages under tighter lending standards.
Local real estate agents and home builders have reported seeing more interest from buyers in recent months, but that doesn’t mean Atlanta will see a corresponding increase in sale prices, industry observers say.
Sales of existing single-family homes were up last month at roughly 3,600, compared with less than 2,800 in January 2011, but the average home price continued to slide, data from Prudential Georgia Realty shows. Meanwhile, foreclosures made up roughly 60 percent of all sales last year in metro Atlanta, which will continue to see similar numbers in 2012, according to the firm.
Metro Atlanta home sales could increase by 10 percent or so this year, but the average sale price will likely continue to decline slightly, spurred by foreclosures, investors and first-time homebuyers looking for deals, said Dan Forsman, Prudential Georgia’s CEO.
Increasing employment and more young people forming households are critical to improving prices, he said. Atlanta is one of the nation’s youngest cities with a sizable population of residents ages 25 to 39, many of whom are struggling to find work and not forming new households, Forsman said.
“That’s what’s stalling our engine,” he said.
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