WHY IT MATTERS
Home values are important even to people who aren’t likely to sell or buy anytime soon. They contribute to the so-called “wealth effect” that helps drive the broader economy by making people more confident about purchases of all types.
RISING PRICES
For more than a year, the S&P Case-Shiller Home Price Index has showed monthly housing price gains in the double digits in metro Atlanta.
Month…..Year-over-year percent increase
Dec. 2012…..9.9
Jan. 2013…..13.4
Feb. 2013…..16.5
March 2013…..19.1
April 2013…..20.8
May 2013…..20.1
June 2013…..19
July 2013…..18.5
Aug. 2013…..18.4
Sept. 2013…..18.7
Oct. 2013…..19
Nov. 2013…..18.5
Dec. 2013…..18.1
Source: S&P Case-Shiller Home Price Index
Metro Atlanta housing prices rose more than 18 percent in 2013, though the upward momentum continues to slow.
Prices were up 18.1 percent year-over-year in December, according to the S&P Case-Shiller Home Price Index, released Tuesday. While still high, the year-over-year increase is down from the April peak, when prices were up 20.8 percent.
December was the 13th consecutive month of double-digit gains, but the pace began slowing last spring.
Nationally, prices were up 11.3 percent in 2013.
The increases mean houses in metro Atlanta are now selling at 2002 levels, by the Case-Shiller Index’s measure. They had fallen as low as 1996 levels in the recession, according to the widely watched index.
“Atlanta had a particularly good year, well above the national average,” said Craig Lazzara, senior director of index investment strategy for S&P Dow Jones Indices. “Is it decelerating? Yes. It’s not good to go up 18 percent year-over-year forever.”
The slowdown in price increases should continue throughout 2014, said Eugene James, Atlanta regional director of the housing information company Metrostudy. By next December, he expects the increases to be in the low double digits.
“Moderation is no surprise,” James said. “I expect to see the moderation continue.”
The number of homes for sale remains low, James said, and that will affect the spring selling season, typically the busiest time of year for people to move. While James expects prices to go up, the number of homes sold may decrease, he said, because there may not be enough available to meet demand.
Cleve Gaddis, managing partner at Gaddis Partners, RE/MAX Center in Johns Creek, said inventory will pick up in the spring.
Still, he said, sellers who see the low supply and rising prices are often trying to price their homes to meet the constant increases.
Home buyers are looking for good schools and short commutes, Gaddis said. While they may have looked at their house as a money-maker in the past, they’re now more likely to look at it as a home.
Lazzara, with the index, said that mirrors a national shift in buyer psychology.
“That’s good,” he said. “That’s realistic. You don’t look at housing as a long-term investment. You buy a house because you want to live in it.”
Robert Shiller, a professor at Yale University and one of the index’s creators, said because people don’t think of their homes as an “exciting investment,” there is now less enthusiasm for home purchases. Home prices will probably rise this year, he said, “but not like it’s been.”
“We’re just losing our general sense of optimism about housing,” he said.
Nationally, Shiller said, prices may even start to decline toward the end of 2014. The economy is still struggling, prices in many suburbs remain weaker than in the central city and as people downsize their homes, prices may not pick up as much.
James, with Metrostudy, said the overall outlook is positive.
“Even though there’s some negatives out there, there are more pros than cons,” he said. “I’m optimistic.”
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