Annual gains
Metro area………. percent increase in April vs. 1 year earlier
Las Vegas….18.8
San Francisco….18.2
San Diego…..15.3
Detroit….15.0
Miami ….14.7
Los Angeles….14.0
Atlanta….13.7
Seattle….11.2
Portland…..11.1
Chicago….10.7
Tampa….10.2
Phoenix….9.8
Minneapolis….9.4
Dallas….9.3
Boston….9.0
Denver….8.9
Washington DC….7.0
New York….5.4
Charlotte…..4.4
Cleveland….2.7
Overall … 10.8
Note: Case-Shiller index gives each area a monthly score based on resales. A score of 100 equals the price level as of January 2000.
Metro Atlanta’s home price recovery has outpaced gains in most American cities, and the region posted one of the strongest increases in the latest Case-Shiller home price report.
The price tag for an average home in Atlanta rose 2 percent from March to April, and by 13.7 percent compared to a year earlier, according to the S&P/Case-Shiller Home Price Indices.
It is a familiar trend, noted Eugene James, Atlanta regional director of the housing information company Metrostudy. “It’s not surprising – we expected another double-digit increase, and we are going to expect that will continue for another couple months.”
The Atlanta region, which suffered more than many metro areas from the housing collapse, has posted a string of strong price increases in recent months as the market seeks new equalibrium. One reason is low inventory; despite the rising prices many would-be sellers are staying on the sidelines.
The widely watched Case-Shiller composite of the 20 largest U.S. cities rose 10.8 percent for the past year, and 1.1 percent from March to April.
All metro areas posted higher prices during the past year, according to Case-Shiller. Las Vegas scored the largest year-to-year jump — 18.8. The smallest was Cleveland, at 2.7 percent.
“Although home prices rose in April, the annual gains weakened,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices, in a statement. “Overall, prices are rising month-to-month but at a slower rate.”
The Case-Shiller index score for metro Atlanta is up about 40 percent since the valleys of two years ago, putting prices at about the same level as in early 2003.
Still, metro Atlanta is more affordable than most cities. It has the 3rd lowest price level in the April index, ahead of only Cleveland and Detroit.
The basics of a healthy housing market are those of a growing economy and, while expansion has been modest, it has been fairly steady the past several years. Interest rates on mortgages have also been very low and bankers have generally grown less restrictive about making loans.
Yet the housing market remains somewhat unbalanced.
“We do have some concern about the lack of inventory,” James said.
Supply is measured by the amount of time it would take for current listings to be soaked up by current demand.
“A six-month supply is considered normal and we are still hovering around four months,” James said.
Robustly rising prices should entice many homeowners to put their houses on the market. And the list of homes for sale has grown – albeit slowly.
Listings expand by 1,100 to 1,200 homes per month, said Todd Emerson, president of the Atlanta Board of Realtors. “Each month, we add more inventory. I think we are on the trend curve towards balance.”
But for a range of reasons, progress has not been rapid.
Many homeowners remain “underwater,” owing more on their mortgages than a sale would bring. If they don’t have to move, they don’t. Others could sell at a profit but can’t find a home to buy at the right price.
The result: rising prices. “There’s strong demand and low inventory – that leads to a sellers’ market,” Emerson said.
Other factors also push prices higher.
For example, there has been a dramatic decrease in the epidemic of foreclosures and “short sales,” in which the price may not be enough to pay off the homeowner’s debt. Those transactions poured distressed properties onto the market and pulled down values.
But demand for houses is also much weaker than it used to be, partly because so many people in their 20s and even 30s are living with their parents or just too economically uncertain to buy a home.
“Many of them saw their friends and their parents lose homes,” said Bill Adams, president of Adams Realtors. “Or maybe they think they’ll move to Silicon Valley or New York and they don’t want to be stuck when they can’t sell a house.”
A truly recovering market will include both a spurt of first-time homeowners and a surge of new sales, Adams said. “The market is a little bit frozen and something has to happen to free up inventory.
“Now, if the baby boomers start to downsize, they’ll free up a lot of inventory.”
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