The rise in metro Atlanta home prices slowed as the critical spring buying season got underway, which experts say could be a welcome cooldown that signals a more stable market ahead.
Average home prices in the region rose 0.8 percent in March from the month before and were 5.4 percent above average prices a year earlier, according to the widely watched S&P/Case-Shiller Home Price Index.
Some experts say price hikes over the past two years have threatened to lock out a critical part of the market: first-time buyers.
Prices have been getting ahead of consumers’ ability to buy homes, said David Blitzer, managing director and chairman of S&P’s index committee.
“Home prices are currently rising more quickly than either per capita personal income or wages, narrowing the pool of future home-buyers,” Blitzer said. “All of this suggests that some future moderation in home prices gains is likely.”
The moderation is already here in metro Atlanta. In March 2014, prices rose 15.8 percent from the same month in 2013, according to Case-Shiller.
Still, sellers continue to have the upper hand, as the supply of homes for sale is less than 3.8 months of sales. A healthy ratio is nearly twice that, according to the Atlanta Board of Realtors.
The board, which issues its own home sale stats, said sales volume in the 11-county metro area rose to about 4,339 in April, up from 3,995 a year before. The board said the median sale price in April was $229,000.
In the Case-Shiller report, Atlanta’s March increase was slightly above the 5.0 percent collective gain for the nation’s top 20 metro areas.
Rising prices have helped homeowners recover wealth lost when values tanked in the housing bust, and they make consumers more confident and willing to spend — the so-called “wealth effect.” Current prices are now back to the level of early 2004, according to Case-Shiller.
But Stan Humphries, chief economist of real estate firm Zillow, said the imbalance in inventory and demand is pushing prices up, adding, “Relative strength in one indicator shouldn’t be confused with full recovery.”
He said price gains may be slowing partly because they make housing less affordable for renters, “particularly for younger would-be buyers the market so sorely lacks and needs.”
The overall homeownership rate has fallen, and the rate among people 30 to 34 has dropped to an all-time low, according to the Census Bureau, reported by demographer Cheryl Russell.
Many potential young buyers emerged from school into an abysmal job market, faced immediate financial stress and are still getting traction on their careers.
Chris Glazier, 31, has been at his public relations job for more than four years and is still renting.
“Right now, I’m trying to pay off some debt. In six months or the next couple of years, I start looking to buy a condo or house. As a long-term investment, I think it makes sense.”
Rachel Wingard, 32, and her husband, think they’ve delayed long enough. They have been renting not far from Emory University and now are buying in East Lake.
“We definitely feel confident enough that we’ve gotten over the fear,” she said. “We always thought that we’d buy our first home at 26 or 27.”
She said she feels pretty good about the investment. But having seen the collapse of the market once, she says that nothing is for certain.
“There is still a feeling that the rug could be pulled out from under everybody. So I think you have to be comfortable with the discomfort.”
