- Michael E. Kanell The Atlanta Journal-Constitution
Metro Atlanta home prices held flat last month, while still up modestly from last year, according to a nationally watched report issued Tuesday.
However, the increase was still strong enough to add to concerns about metro Atlanta’s affordability – especially for first-time homebuyers.
With strong demand for homes meeting a shrinking supply of homes for sale, the price of the average home sold in the metro area has risen 5.2 percent from a year ago, according to the S&P CoreLogic Case-Shiller Indices.
Nationally, prices were up 6.2 percent in the past year and 0.2 percent higher than the previous month, said David Blitzer, chairman of the index committee at S&P Dow Jones Indices, which issues the report.
“Home prices continue to rise three times faster than the rate of inflation,” he said.
Prices have been steadily rising, outpacing the more modest increases in the income of most Atlantans. That uneven advance has raised flags for many experts who worry that Atlanta housing is becoming ever-less affordable – especially for first-time homebuyers.
With the economy growing and the pace of construction slow, home prices have been rising much faster of late than metro Atlanta rents, said Sydney Bennet, senior research associate at Apartment List.
The median rent for a two-bedroom apartment is about $1,160 a month, an increase of just 2.2 percent during the past year, she said.
Yet the monthly struggle to pay for housing is – on average – more of a burden for renters than owners.
Among area homeowners with a mortgage, a little more than 25 percent are spending 30 percent or more of their income on housing. But 48 percent of renters are spending that share of their income or more on housing, Bennet said.
Yet the home price increases could be even sharper, suggested Nela Richardson, chief economist for Redfin, a national brokerage.
Inventory – that is, the number of homes for sale – has been declining for nearly three years. The shrinking pool of possibilities has meant fewer sales and a seller’s market, where buyers can find themselves bidding against each other.
Typically, that imbalance pushes prices much higher, but in this case there seems to be a kind of negative feedback loop, Richardson said.
Some potential buyers are getting discouraged, because they know they don’t have a surplus of choices, she said.
“Buyer demand is still strong, but wilted a bit in the face of low inventory,” she said. “There were fewer homes for buyers to tour and make offers on. Inventory will be the major factor shaping the housing market in 2018.”
Some experts have warned that Atlanta’s demand for housing — and the rise in prices — will accelerate should Amazon pick the city for its next headquarters.
Seattle had the fastest growing prices over the past year, jumping 12.7 percent. The slowest was Washington, D.C., where prices inched up 3.3 percent.
Last year, Atlanta’s home price increase was the fifth-slowest of the nation’s top 20 areas.
Price increases in Atlanta are not spread evenly, said Cheryl Young, senior economist for Trulia: Most of the price increases here are in “starter and trade-up” houses — the same tiers where inventory has dropped most dramatically.
“While Atlanta remains relatively affordable… lower and middle-income home buyers are taking the brunt of the squeeze,” she said. “First time homebuyers are going to remain frustrated in their home search.”