Even with spring still hidden by blustery March breezes, Debbie Jones-Kelly sees the signs of a turbulent home-selling season.
Houses sell as soon as they hit the market — and sometimes before. Multiple offers are the norm. Inventory is at 20-year lows.
And prices keep rising.
“It all means that everybody’s out there scrambling, trying to find houses,” said Jones-Kelly, a broker with DJK-Realtors.
Metro Atlanta home prices rose 16.8 percent in January from the previous year, according to the S&P Case-Shiller Home Price Index, released Tuesday. It was the 14th straight month of double-digit growth, though price increases have been moderating since April, when the year-over-year gain was 20.8 percent.
Metro Atlanta’s price increase was stronger than the 20-city composite increase of 13.2 percent in January. Only Las Vegas, San Francisco, San Diego and Los Angeles saw larger year-over-year gains.
Private equity buyers, who pushed prices up, are scaling back. Other factors that led to large price increases — like consistent decreases in foreclosure activity — have faded, said David Blitzer, managing director of S&P/Dow Jones Indices.
Tight supply is the primary driver of price increases. Atlanta’s price trend remains strong, Blitzer said, though he expects the increases to be back in the single digits by the end of the year.
“The high drama in housing is somewhat behind us,” he said.
At the end of February, there were fewer than 22,000 homes on the market across the region, including new and resale homes, townhouses and condos. That’s the equivalent of three and a half months of supply, said John Hunt, a senior analyst with the real estate analysis firm Smart Numbers. Normal supply is closer to seven months.
Jones-Kelly said potential buyers may not be underwater, but they also might not have regained enough value to be able to afford a new house once they’ve sold their current one.
“To get into that next property, they need more cash,” she said. “We just need more inventory.”
Hunt said that means there is a strong opportunity for new home construction to pick up this spring, as it did last year. This spring, he said, “is not much different” from spring 2013, with the exception that price increases are healthier. Last January, they were up 13.4 percent from 2012.
Rising prices usually bring sellers into the market, but the consistent low supply may mean potential sellers are concerned that if they put their house on the market, they wouldn’t be able to find one to buy, Hunt said. Danielle Coats, an agent with Redfin, said she has had clients who have bought new houses before they even listed their homes. They wanted to make sure they had somewhere to live, she said.
Coats said more people are buying with cash, even as the investors who bought thousands of homes in bulk — and paid cash for them — are scaling back. Buyers are prepared to make up the difference in cash, if homes do not appraise. And with sales being conducted before houses have even been listed, there are again some issues with appraisals, which depend on listed sales.
Coats said she has been shortening the period of time buyers have to conduct an inspection, or make sure their financing is in place.
“This is not for the faint of heart,” she said.
Todd Foreman, who has been renting in Chamblee since his family moved to Atlanta last summer, called the home-buying process “really frustrating.” Foreman already lost out on one home in Decatur, where the winning bid was above the asking price.
Foreman — who talked about the areas he was looking in by the elementary school district, and not the city — said he feels like he’s missing out by renting as prices rise.
“I feel confident that we will find our house in the next week,” he said. “If you’re standing by as prices go up, it’s a lost investment opportunity.”
WHERE THE RECOVERY IS
As housing markets recover across the country, the S&P Case-Shiller Home Price Index shows how far prices in different cities have rebounded.
Note: Most cities peaked between 2005 and 2007. Prices in Dallas and Denver already have surpassed their high points during the boom.
Source: S&P Case-Shiller Home Price Indices
WHY IT MATTERS
Home values mean more than how much you could get for your house. They are a key ingredient of the so-called “wealth effect”: When the value of assets such as homes and stocks rises, people spend more, boosting the broader economy. When values drop, spending dries up. The improving housing market, and rising sales, have been a boost for metro Atlanta’s economy.
RISING PRICES
For more than a year, the S&P Case-Shiller Home Price Index has shown monthly housing price gains in the double digits in metro Atlanta.
Source: S&P Case-Shiller Home Price Indices
TOP U.S. MARKETS
Cities with the largest home price increases in Jan. 2014 versus Jan. 2013:
Source: S&P Case-Shiller Home Price Indices
About the Author
