Metro Atlanta home prices continued to climb in the third quarter, and interest rates are on the rise, both good and not-so-good signs for the local housing market, according to industry experts.
The rising home prices and short supply of homes indicate a strong demand among metro buyers. Sellers in highly desirable areas are able to demand top dollar, according to Eugene James, Atlanta regional director of Metrostudy, which tracks local real estate trends.
The rising rates, however, can place more homes out of buyers’ reach because loans are becoming more costly. Lenders are also laying off thousands of workers because of a drop-off in refinancing.
In just-released figures, James told The Atlanta Journal-Constitution on Friday that the median price of a home in the 28 counties surrounding Atlanta was $168,000 in the third quarter, up 34 percent from the same period a year ago.
Metro Atlanta continues to carry only a four-month supply of available homes for sale, a factor driving prices higher and making the search for homes difficult, James said. A six- to seven-month supply is considered a normal level for the area.
“Even though things have loosened up a bit, it’s still a seller’s market,” he said.
Sales activity is heaviest in the northern part of metro Atlanta, in areas such as Buckhead, Decatur and Brookhaven, and on the southside in counties such as Coweta and Fayette, according to Metrostudy’s latest analysis.
“The (housing) recovery is spreading,” James said. “But first and foremost, home sales are hottest in better school districts, where buyers are more likely to encounter a shortage of houses for sale and more rapid price appreciation.”
Zillow.com, the online real estate listing service, also reported Friday that metro Atlanta’s home prices were up sharply in the third quarter, compared with the year-earlier period, although Zillow uses different variables to arrive at its conclusion. Zillow projects the average metro home price will be up an additional 5 percent by third quarter 2014.
While prices are higher, the rate of increase has slowed, according to Zillow’s chief economist, Stan Humphries.
“This is more proof that the market recovery is entering a new phase, transitioning away from the bounce off the bottom we’ve been experiencing and finding a more sustainable level,” Humphries said in releasing the third-quarter report.
Higher interest rates
Interest rates in metro Atlanta rose this week, to 4.39 percent from 4.28 percent the previous week, on the average 30-year mortgage offered by major lenders, according to Bankrate.com. Rates had held steady for the popular loan for several weeks before the sudden rise.
The rising rates have thrown cold water on the recent refinancing boom, and that has prompted major lenders to lay off thousands of workers tied to handling mortgages. Wells Fargo announced Friday it was cutting 925 mortgage jobs on top of more than 5,000 trimmed in the third quarter.
Atlanta-based SunTrust Banks Inc. said this week it will cut 800 in the months ahead because of a downturn in refinancing. Citigroup and Bank of America also are trimming related jobs.