Fueled by a relative shortage of homes for sale, the steady rise in Atlanta real estate prices has continued, with the sharpest increases coming in lower-priced residences.
Atlanta’s average home prices have risen 6.2 percent in the past year, the 11th largest increase among 20 metropolitan areas, according to the monthly report released Tuesday by the S&P CoreLogic Case-Shiller Indices. Price increases in all of the largest metro areas out-paced inflation and income, said David Blitzer, chairman of the S&P index committee.
The market is unbalanced in favor of sellers, meaning there’s been more demand for homes than supply.
In a healthy, balanced market, the number of houses available for sale at any given time is equal to the average sold over a six- or seven-month period, Blitzer said.
But currently, the number of listings nationally is equal to 3.8 months of sales. And the shortage is even more acute here, where the total inventory represents less than two months of sales and even less in the lower price ranges that often attract first-time buyers, said Cheryl Young, senior economist for online housing site Trulia.
Some real estate experts say that’s because the faster prices rise, the more owners worry that, if they sell, they will not be able to afford their next home. “The people that are being squeezed are the first-time homebuyers,” said Young.
The lower third of the market saw a 42 percent plunge in listings – “a huge drop,” Young said. Not surprisingly, prices jumped: “The median price of a starter home on the market in the Atlanta metro area reached $107,667 in the first quarter.”
That is up 31 percent from a year earlier.
Adjusted for inflation, metro Atlanta household incomes have been growing at 3.7 percent, according to the most recent data from the Census Bureau and the Bureau of Labor Statistics.
In the years leading up the disastrous burst of the housing bubble, home prices rose dramatically across the country.
Blitzer dismissed worries that the nation is sliding into that same pattern.
The national price was rising at an annual pace of 14.5 percent when it peaked in 2005, faster than even Seattle’s rise now, he said. “Compared to the price gains of the last boom in the early 2000s, things are calmer today.”
Aaron Terrazas, senior economist for the real estate database company Zillow, called the increase steady, “but – for now – largely sustainable.”
It still makes financial sense to buy rather than rent, he said. “But that advantage is starting to erode as mortgage interest rates rise alongside prices and income growth lags behind. This deteriorating affordability could begin to give some buyers pause and keep them renting longer.”
From metro to metro, there was a wide range of increases.
In the hottest housing market in America, Seattle, home prices were up 10 percent during the past year. In Chicago, prices edged up just 2.8 percent during the year.
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