WHY IT MATTERS
Home values mean more than just 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 houses and stocks rises, people spend more, boosting the broader economy. When values drop, spending tends to dry up. The improved housing market has helped reduce metro Atlanta’s jobless rate and aided the overall economic recovery.
HOME PRICE JUMPS
Metro Atlanta continues to have steeper home-price increases than most other major cities, according to the S&P Case-Shiller Home Price Index.
City … Year-over-year 1st quarter increase
Las Vegas 21.2%
San Francisco 20.9%
San Diego 18.9%
Los Angeles 16.9%
Miami 16.2%
Atlanta 15.7 %
Detroit 15.7%
Portland 11.8%
Seattle 11.6%
Chicago 11.5%
Minneapolis 11.5%
Phoenix 11.1%
Tampa 10.7%
Dallas 10.0%
Denver 9.1%
Washington, D.C. 8.5%
Boston 8.2%
New York 6.6%
Charlotte 4.9%
Cleveland 3.9%
20 city composite 12.4%
Home prices across metro Atlanta continued their robust, post-recessionary rise during the first quarter of the year, according to the S&P Case-Shiller Home Price Index released Tuesday.
The 15.7 percent increase, compared to a similar period a year earlier, kept Atlanta ahead of the 12.4 percent uptick in home prices for the nation’s 20 major cities. The March increase was the 16th straight month of double-digit growth across the region.
The supply of homes on the market influences home prices. Metro Atlanta’s supply is currently below normal levels, which contributes to higher prices.
Atlanta’s average home sales price should return to its historically peak level in 19 months, according to an AJC analysis of Case-Shiller data, unless a surge of home construction drives prices down.
“Atlanta would be in a great position if we could get back to peak prices in less than two years,” said Todd Emerson, president of the Atlanta Board of Realtors. “But it’s no cause to set off the alarm bells if it doesn’t happen. We don’t want to get ourselves back in the same situation as seven years ago when we looked around and said, ‘Something doesn’t feel right.’ “
While still relatively high, the rise in home prices has been moderating since last spring. The price increase between February and March of this year, for example, was only 1 percent.
In addition, builders are racing to catch up with the demand for single-family homes.
“Really good supply will temper the price increases pretty quickly,” said David Blitzer, managing director with S&P/Dow Jones Indices. “In a market where the supply is adequate or more than adequate, prices will likely settle at a cost of buying the land, building the house and a little bit for profit. That’s where most of the country was in the year 2000 before the housing boom really took off.”
Atlanta was something of a national poster child for the housing industry’s success leading to excess and, eventually, duress, foreclosure and the ensuing harm to the region’s economy. No house no matter how far into Atlanta’s exurbs was considered too far as developers planned thousands of single-home lots an hour’s drive north of the Perimeter.
In July 2007, for example, S&P’s home price index for metro Atlanta hit a record 137. (The index measures the total value of all single-family housing stock in the region.) Then the recession hit, buyers disappeared, home lots grew weedy, builders went bankrupt and the region’s housing-fueled economy headed for the Dumpster.
By March 2012, the index had dropped to 83.
A resurgent economy has since triggered a 38 percent increase in the index. Still, metro Atlanta remains 17 percent below the peak reached almost seven years ago.
“Most markets have definitely not gotten to where they peaked in 2007, but some areas are almost back to that level and it’s scary,” said Janice Overbeck, an agent with Atlanta Fine Homes Sothebys International Realty. She mentioned Brookhaven, Midtown, East Cobb, Roswell and the Smyrna Market Village as particularly “hot” areas.
“You’re seeing a lot of new construction coming up and they’re able to price it at where homes 10 years and older are selling,” Overbeck said. “New construction is selling like hotcakes.”
Metrostudy, a national housing information firm, reported Tuesday that Atlanta builders started 3,401 homes during the first quarter of the year, up 28 percent from the same period last year.
“We still have a limited supply of homes, not a huge shortage, but supply is certainly below what we would equate to a balanced market,” said the Realtors’ Emerson. “There is still good buyer demand and prices continue to rise. (But) when we get to a seven, eight or nine month supply of homes, we’ll transition back to a buyer’s market.”
Metro Atlanta had a 4.1 month supply of homes at the end of April, according to Smart Numbers, a real estate analysis firm. Overbeck, nonetheless, doesn’t expect to see any great diminution in prices as supply increases.
“So many people I know who were too scared to buy in the down market aren’t scared anymore and are buying,” she said. “People that short-sold in the down market are now buying. And I’ve got a ton of repeat clients who are buying again. It’s just crazy. Pricing is not, all of a sudden, going to magically even out.”
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