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.
Cities with the largest home price increases in July 2013 versus July 2012:
City, percent increase
Las Vegas, 27.5
San Francisco, 24.8
Los Angeles, 20.8
San Diego, 20.4
Phoenix, 18.9
Atlanta, 18.5
Detroit, 16.9
Miami, 13.7
Tampa, 12.6
Seattle, 12.5
Portland, 12.2
Source: S&P/Case-Shiller Home Price Indices
Home prices in metro Atlanta are still rising at double-digit rates, though the pace of the increase is slowing.
Prices for the region rose 18.5 percent in July compared to the same month of 2012, according to the widely watched S&P Case-Shiller Home Price Index, released Tuesday. The increase means home prices, which fell to 1996 levels after the housing bust, have returned to early 2002 levels.
July was the eighth straight month of double-digit growth, with easing foreclosures and significant buying by investors fueling the recent surge.
But it also was the third straight month of smaller year-over-year increases. The June increase was 19 percent, while May’s increase was up 20.1 percent from the prior year. Prices were up 20.8 percent year-over-year in April.
David Blitzer, managing director of S&P/Dow Jones Indices, said the moderating price rise is good for the market.
“If it keeps going up 18 percent a year, it will price most people out of the market,” he said. “Most people don’t have their income go up 18 percent.”
Thousands of homes purchased by institutional investors who intend to rent the houses out helped drive Atlanta’s rising prices, Blitzer said. As purchases slow, he expects smaller monthly changes to persist.
Aaron Edelheit, CEO of Atlanta-based real estate investment company The American Home, said a decrease in foreclosures means the pipeline of homes for investors is drying up. While some institutional investors continue to buy here, Edelheit said his company has stopped. The American Home owns about 1,700 houses locally.
Edelheit said he expects a lull or slowdown in prices this fall and winter, but to see prices rise again as supply remains low. Prices that continue to rise are not bad, he said. If home prices increased 3 percent a year, instead of spiking then dropping, Atlanta’s prices would be far higher than they are now, he said.
“We have a long way to go to get back to a trendline,” he said. “A lot of people see these gains and they don’t realize the magnitude of the drop.”
Atlanta’s drop was later and deeper than most other markets, Blitzer said. He said buyers who came into the market in a hurry to buy up bargains have largely spurred Atlanta’s turnaround.
There hasn’t been a lot of institutional investor activity in the intown neighborhoods where Bill Adams sells, the president of Adams Realtors said. In some markets, he said, sales are as brisk as ever. In others, sales have slowed.
In Decatur, he said, homes are almost sold by word of mouth before they’re listed. Adams said the slowdown in sales in other markets may be because people who were waiting for an improved economy to buy a house have largely done so.
“There’s less pent-up demand,” he said. “It’s not white hot, like it was.”
Mortgage applications have also dropped off slightly as rates have risen, Blitzer said. Refinancing has slowed even more.
Nancy See, president of the Atlanta Board of Realtors, said she has seen fewer multiple offers on a single home. Sales were up slightly in July but have decreased in August.
“It’s creating a more balanced market,” she said.
The S&P Case-Shiller Home Price Index is based on a three-month moving average, and tracks both local and national sales to follow prices of typical single-family homes in the metropolitan area. In Atlanta, home prices were up 2.2 percent in July, from June.
In a 20-city national composite, prices were up 12.4 percent year-over-year in July. The monthly increase from June was 1.8 percent.
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