Atlanta home prices rising, but not as fast as many cities

Metro Atlanta home prices have climbed 5.6 percent during the past year, reinforced by a strong economy and a worsening shortage of houses for sale, according to a national survey measuring the value of residential real estate in 20 major metropolitan areas.

Atlanta is one of many markets where prices are outpacing wage increases.

Nearly all large American metros have seen solid – or spectacular – prices increases, as a growing economy feeds demand for housing, according to the S&P CoreLogic Case-Shiller Index.

The average national price was up 6.4 percent for the year, the 22nd consecutive month with prices rising higher than 5 percent, according to David Blitzer, chairman of the index committee at S&P Dow Jones. "Home prices continue to rack up gains two to three times greater than the inflation rate. Not only are prices rising consistently, they are doing so across the country."

At the same time, adjusted for inflation, average hourly pay nationally hasn't changed during the past year, according to the Bureau of Labor Statistics.

In Atlanta, the median pay in Atlanta has inched up only 1.9 percent during the past year, according to Glassdoor.

Still, efforts to add to the inventory of modestly priced homes are relatively limited. Lower-priced homes exist, but many are in less desirable or dangerous areas.

“Affordability – a measure based on income, mortgage rates and home prices – has gotten consistently worse over the last 18 months,” Blitzer said.

Fewer homes are being listed for sale. Fewer homes are being sold. And construction is not picking up the pace to handle demand. That means most new houses here are far too expensive for first-time buyers. Experts say the price of land in desirable areas forces builders to put up expensive houses.

Case-Shiller tracks only homes that have been previously sold. But other surveys, like that of Re/Max Georgia, show even more acceleration in home prices.

As long as the economy is creating jobs, the trend will continue, said Ruben Gonzalez, chief economist for Keller Williams. "The current shortage of existing homes for sale, particularly in the entry-level price ranges, is likely to maintain upward pressure on price appreciation," he said.

Yet the problem seems to be worsening faster in other cities: Atlanta's price hike was only the 13th strongest among the nation's 20 largest metros, according to the S&P CoreLogic Case-Shiller Index.

Seattle prices rose 13.6 percent during the past year, Las Vegas prices were up 12.6 percent; and San Francisco’s were up 10.9 percent.

The weakest price increases were in Washington, D.C., where prices edged up 3.1 percent during the past year, and Chicago, which had an increase of 3.3 percent.

Change in Atlanta’s average home price:

From 1997 to 2007: up 59.4 percent

From 2007 to 2012: down 39.5 percent

From 2012 to now: up 76.7 percent

Source: staff research, S&P CoreLogic Case-Shiller Index

Now: $251,250

Year ago: $234,000

Source: Re/Max of Georgia