What it means for you
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.
Metro Atlanta home prices rose nearly 10 percent during 2012, the largest annual increase since a widely watched survey began tracking them.
The gain is both a sign of an improving metro housing market and a reflection of how far it had fallen.
The S&P/Case-Shiller Home Price Index for December showed a 9.9 percent rise for the region vs. December 2011. The increase was higher than the average gain of 7.3 percent nationally.
But of the 20 metro areas the index tracks monthly, only Atlanta and Detroit had average sale prices that remain below 2000 levels.
Still, the survey showed progress. In March of last year, metro Atlanta home prices were at mid-1996 levels. In the December index they had risen to mid-1999 levels.
“It’s very encouraging,” said Nancy See, president of the Atlanta Board of Realtors. “Consumers are tired of waiting on the sidelines. This activity is driving prices up.”
Foreclosure notices are lower than they have been since mid-2007, and there are fewer homes on the market than any time since the 1990s. New-home construction has also started to pick up. Sellers are more often receiving multiple offers on their houses and sale prices are rising. See said in some cases, buyers pay more than a seller’s asking price.
“Signs point to continued pricing increases in the next 12 months,” she said, though she added there is no guarantee the upswing will continue into the spring selling season.
Even with higher prices, the numbers mean anyone selling a home purchased after 1999 may be selling it now for a loss, said Craig Lazzara, senior director at S&P Dow Jones Indices, which publishes the Case-Shiller report. The index uses 2000 home prices as a baseline.
Atlanta’s index peaked in mid-2007, then fell sharply before bottoming out last winter at almost 40 percent lower. Even with gains since then, the December index remains about 30 percent lower.
Lazzara said recovery will likely be more subdued in 2013 than in 2012.
“The sharpest rebound comes immediately after the decline,” Lazzara said.
Higher home prices are important even for homeowners not interested in selling. When the value of a home rises, people feel wealthier, and are more willing to spend on other things. And rising values help the entire metro area, said Bill Adams, president of Adams Realtors.
“We’re all basically in the same huge real estate market,” he said.
January and February prices and sales figures are staying strong, Adams said.
Peggy Morehouse, who lives in Sandy Springs, said she’s seeing more people move into her neighborhood. As a whole, she said, people are more comfortable spending money again — including on houses.
“I don’t think we’re back to where we need to be, but we’re much better,” Morehouse said.
But sellers like Buckhead resident C.J. Lynch are not convinced Atlanta has seen the worst of it.
Lynch, who wants to downsize from his four-bedroom, five-bath home, first listed his house in 2008. He took the Peachtree Battle home off the market a year ago after seeing very few interested buyers. Lynch thinks the housing market is going to get worse again before it gets better. He doesn’t plan to try selling his house again for several years.
“I believe it’s just a fluke,” Lynch said. “It’s a false rise.”
Kim Lewis, a Realtor with Dorsey Alston, said she worries that when they hear about rising prices, sellers will start to list their homes for more than they’re worth to test the market. That could lead to a slowdown in sales, she said.
But Lewis said she’s optimistic about about the trajectory of home prices.
“We jumped three years in a very short period of time,” she said. “It’s really exciting.”
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