Metro Atlanta’s recent rebound in home prices continued into the summer, but the gains show signs of slowing.
Prices for the region rose 19 percent in June compared to the same month of 2012, according to the widely watched S&P Case-Shiller Home Price Index, released Tuesday.
It was the seventh straight month of double-digit growth, but also the second straight in which the year-over-year increase moderated. The May increase was 20.1 percent from the prior year, down from 20.8 percent in April.
“A year from now, we’ll be talking single-digit increases,” said David Blitzer, managing director of S&P/Dow Jones Indices. “It’s a slowing of the speed of increase.”
It’s still good news for homeowners in metro Atlanta, where the housing bust and foreclosure notices sent prices down to 1996 levels last year, by Case-Shiller’s measure.
This year, Atlanta has outpaced most other metro areas in the 20-city index, which had an overall increase of 12.1 percent for June. On the other hand, Atlanta had more ground to make up and still lags in historical terms: prices here are now equivalent to what buyers were paying in summer 2001, while the national average is equivalent to spring 2004.
People like Decatur resident Mona Mitchell are watching the increases closely. Mitchell, who bought a townhouse in February 2007, said she would lose $40,000 if she sold her home now.
That’s better than the $70,000 her neighbors lost when selling their home during the recovery. But Mitchell, who works part time and has delayed her retirement, said she thinks there is still a long way to go before she would be able to recoup what she put into her home when she eventually sells it.
“I will be happy if I can just get close to my equity,” Mitchell said. “I’d be happy to lose a tiny bit, or break even. We once saw our houses as money makers. Now, they’re places to live.”
As prices continue to rise, homeowners will start to feel wealthier, said Roger Tutterow, a professor of economics at Mercer University. Those who were “underwater” on their homes — owing more on their mortgages than their houses are worth — may finally be freed, giving them the option to sell.
They will also feel more comfortable spending money on their homes if they want to stay in them.
Judy Daniels, a Lawrenceville resident, finally plans to rip up the carpet in her house and replace it with hardwood floors. She’s wanted to for years, but her son graduates from high school this year and she’s decided it’s time.
Besides, Daniels recently refinanced her home. And seeing houses around her sell has made her feel “a lot better,” she said.
Among factors that have helped drive this year’s price increases in metro Atlanta: a sharp decline in foreclosures, which tend to depress values, and falling inventory as investor-buyers scoop up distressed properties and other buyers come off the sidelines.
Now, more listings are coming on the market as prices rise, said Nancy See, the president of the Atlanta Board of Realtors. That should help refresh inventory and temper rising prices. The year-over-year price increases are also narrowing because housing prices are now being compared to improving figures, and not falling ones.
See said she expects activity in metro Atlanta to remain strong for the next two years, but that 20 percent increases are unsustainable. She expects that they will gradually decrease to about 5 percent annually.
In some areas, prices are much stronger than others, said Marsha Sell, a Realtor with Coldwell Banker who works in north Atlanta. In East Cobb, she said, sellers often get more than list price. In good school districts, buyers may fight to win a home.
“It’s all seasonal and local,” she said.
Las Vegas, San Francisco, Los Angeles, Phoenix and San Diego had larger year-over-year increases than this region. Metro Atlanta’s monthly increase of 3.4 percent, which remained unchanged in June from May, was the largest monthly increase in the nation. The May-to-June increase for the entire 20-city group was 2.2 percent.
WHY IT MATTERS
Home values are important even to people who aren’t likely to sell or buy any time 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 June, vs. June 2012:
City, percent increase
Las Vegas, 24.9
San Francisco, 24.5
Los Angeles, 19.9
San Diego, 19.3
Source: S&P/Case-Shiller Home Price Indices