CASE SHILLER COMPARISONS
The index uses resale data to create a monthly score for metro areas. Here are metro Atlanta’s highs and lows:
Price peak: July 2007
Low point after bust: March 2012
Change since then: up 53 percent
Comparison to peak: down 7 percent
Source: S&P/Case-Shiller Home Price Index
Metro Atlanta’s housing market headed unsteadily toward the end of the year with prices still rising — though more slowly than before — and a stubbornly tight supply of homes for sale.
Prices for the region in October were 6.1 percent higher than a year earlier, according to the closely-watched Case Shiller monthly home price report, issued Tuesday.
That put metro Atlanta right in the middle of the pack in price growth for the year, at 10th among the 20 large metros included in the index. The 20 metros averaged a year-over-year increase of 5.5 percent.
“Generally good economic conditions continue to support gains in home prices,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Prices did better than they usually do during autumn’s normal chill in housing demand: Adjusted for that seasonal trend, the Atlanta price was up 1.2 percent from September, vs. 0.8 percent for all 20 metros.
Case-Shiller’s index focuses on re-sales and doesn’t count new homes. It is not adjusted for inflation.
Metro Atlanta remains highly fragmented with some northside suburbs and intown areas seeing high demand that boosts prices, while other areas languish. First-time homebuyers in some areas have been priced out of the market.
Some builders now are aiming more at the more affordable end of the spectrum. Meritage Homes, for instance, has some homes listed at less than $175,000 in a development west of I-285 and south of Camp Creek Parkway in south Fulton County.
The gap between prices for existing and new homes is wider than usual, “something like 25 to 30 percent for similar homes,” said Richard Whiteley, chief financial officer of FrontDoor Communities, a 4-year-old builder. “That gap is way too high and it needs to close.”
After the housing bubble burst and the economy crashed, many homebuilders shut down and home starts plunged. The short supply of homes for sale — especially new construction — pushed prices up, especially for the relatively few new homes.
That widened the price gap, and buyers become reluctant to pay so high a premium to have a new home, making re-sales more attractive.
“It makes sales tougher for us,” Whitely said. “It makes the gross margins tighter and makes us choosier when it comes to the land deals we make. We have to go out farther.”
Metro Atlanta was a national leader in home building during the housing boom of the mid-2000s, and prices here didn’t rise as high as in other cities where construction was constrained.
Prices rose an average of about 20 percent in five years before peaking in mid-2007. In the next five years, prices fell nearly 40 percent, erasing more than a decade’s worth of gains. Tens of thousands of homes were lost to foreclosure and a majority of mortgage holders were – at least temporarily – “underwater,” owing more than their homes were worth.
Much of the region has made a slow, if halting, recovery since then. While still 7 percent below the peak, average prices now are more than 50 percent higher than in the 2012 trough.
But a high share of homeowners remain underwater – and that trouble is concentrated in certain areas, especially on the south side of the region.
The outlook for the coming year is upbeat. The economy has been adding jobs, distressed areas have been making progress and, while the Federal Reserve has started raising its benchmark interest rate, the effect on mortgage costs is expected to be modest.
“I would expect that the spring selling season will be strong,” Whiteley said. “I expect new home prices to increase 5 percent in the new year, and I could see re-sales accelerating at a faster rate.
“We are gearing up for a record year for our company.”
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