Metro home price rise cools off

Home prices in April rose 4.9 percent from a year earlier, the latest Case-Shiller index says.

Home prices in April rose 4.9 percent from a year earlier, the latest Case-Shiller index says.

Atlanta home prices continued rising through the height of the spring, but at a much slower pace than just a few months ago, according to a much-watched national report.

Average prices in the metro area increased 1.4 percent in April and 4.9 percent from a year ago, putting Atlanta a little below the middle of the pack among the largest cities, according to the S&P/Case-Shiller Home Price Index.

“Things are obviously better than they were four or five years ago,” said Ed Woodland, division president for Ryland Homes in Atlanta. “But I think it’s about the same as it was a year ago.”

Of the 20 largest metro areas, Atlanta had the 11th-fastest price growth during the past year, according to the Case-Shiller index.

The region was hit harder than most by the collapse of housing with average plunging more than 50 percent. Prices have made up much of that lost ground, but they are still 12 percent below the 2007 peak.

And while a recovery finally took hold, the promising rebound seems to have lost steam, Woodland said.

“It was getting better in late 2012 and 2013, but it has been relatively flat since then, even if there are pockets of good activity.”

Ryland, which expects to build and sell about 500 homes this year in metro Atlanta, sees the highest demand in South Forsyth, Cobb and Gwinnett counties, he said.

“It is just that the secondary markets have not responded.”

Hurdles to a stronger recovery have come on both supply and demand sides of the equation.

Weaknesses in the Atlanta market have become familiar: not enough first-time homebuyers, not enough homes for sale in the hot-selling areas and not enough hot areas.

Currently, the inventory, or supply of for-sale homes, represents less than three months of sales – less than half what experts consider to be a healthy number.

One reason: still-depressed prices in some areas mean a sizeable number of homeowners remain “underwater,” owing more on their mortgage than their homes are worth. That effectively prevents them from selling.

Even now, in wide swaths of DeKalb, Fulton, Clayton and Coweta counties, more than 50 percent of mortgage-holders are underwater, according to real estate firm Zillow.

But on the demand side, the usual flow of young people buying their first homes has been lacking. That pipeline typically helps float the entire market – as purchases by young buyers help the previous round of buyers move up to more expensive homes.

Explanations differ.

Some cite millennials’ preference for urban areas, walkability and mass transit, which leads them to rent. Others say lending remains too tight for job-challenged young adults with student loans to repay.

The loan climate is better, said Josh Moffitt, president of Atlanta-based Silverton Mortgage Specialists.

“It’s not the Wild West like it was (pre-recession), but it’s more favorable to buyers than a few years ago.”

And while the job market has improved, many young adults are under-employed, often stitching together part-time jobs. The proportion of adults living with their parents remains high.

So for many young adults – even with looser credit – the rise in home prices dampens their ability to buy a home, said Moffitt.

The average loan from Silverton to a homebuyer is about $205,000, he said.

“That has been creeping up and that’s a sign of rising home values. You start worrying because you are not seeing the same pace of increases in salaries.”

Among the largest metros in the Case-Shiller report, Denver led with a 10.3 percent in prices over the past year, followed by 10 percent in San Francisco. The slowest growth was in Washington, D.C., where average prices edged up just 1.1 percent over the year.