You have reached your limit of free articles this month.

Enjoy unlimited access to myAJC.com

Starting at just 99¢ for 8 weeks.

GREAT REASONS TO SUBSCRIBE TODAY!

  • IN-DEPTH REPORTING
  • INTERACTIVE STORYTELLING
  • NEW TOPICS & COVERAGE
  • ePAPER
X

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and bonus content- exclusively for subscribers. Starting at just 99¢ for 8 weeks

X

Welcome to myAJC.com

This subscriber-only site gives you exclusive access to breaking news, in-depth coverage, exclusive interactives and bonus content.

You can read free articles of your choice a month that are only available on myAJC.com.

Rising prices, loan rates seen for housing in Atlanta, U.S.


DENVER — Home price increases are likely to continue to outpace wage growth and inflation, putting greater pressure on housing affordability across the country because of a shortage of supply, forecasters said Friday at the National Association of Real Estate Editors convention.

Inventory remains near historic lows, while demand for new homes has risen for several years amid an improved job market. First-time buyers, once nearly frozen out of the market, have returned with gusto, but find themselves locked in bidding wars, said Lawrence Yun, chief economist with the National Association of Realtors.

That’s quite a reversal from the days following the financial crisis, Yun said, when the problem was a lack of buyers.

“Today we have a different problem: not enough sellers,” he said.

Home affordability — for owner-occupied and rental units — has become a challenge in many cities, including Atlanta, as housing costs eclipse wage growth.

Homebuilding is still well below levels of the early 2000s, and much of the new product is in the luxury segment. Some home owners still have negative equity, or owe more than their homes are worth, and that has kept potential would-be sellers and step-up buyers on the sidelines.

Overall, the nation’s housing market is much healthier than during the loose-lending days of the boom, Yun said, while homeowners have nearly doubled their equity in the past eight years thanks to price gains.

Metro Atlanta home prices rose 5.5 percent year-over-year in March, according to the latest report by the closely watched S&P CoreLogic Case-Shiller Indices. Atlanta area home prices are near pre-recession peaks.

Home prices locally have marched steadily, if slowly, upward since their bottom in March 2012. Investors paying in cash helped establish a pricing bottom, and sales since have been propelled by low interest rates, a rebounding economy and job growth.

But tighter lending standards and delayed purchases by would-be first buyers have been a headwind. For younger buyers, student loan debt and delays in obtaining jobs have delayed their entry into the market.

Yun said he expects to see price growth of 5 percent nationally next year, which will continue to outpace income growth.

“I think because of the housing shortage we are in for a further crunch in terms of the affordability challenge,” he said.

Frank Nothaft, chief economist at CoreLogic, said interest rates are bound to rise as the Federal Reserve tightens some of its fiscal policy. Higher interest rates also make monthly mortgage payments more expensive.

Nothaft said rates will probably approach 5 percent for a 30-year fixed rate loan by the end of 2018 or early 2019. That means, coupled with expected price increases, that buyers will get less house for the money.

Six months’ worth of supply is considered the norm, but the national average is about half that, said Nela Richardson, chief economist at real estate website and brokerage Redfin.

A family making the median area income could only afford 32 percent of homes for sale in the 30 largest U.S. metros, Richardson said, down from 44 percent of homes listed in 2012.

Those figures are lower for minority households, she said.

“There’s a lot going on that we still need to tease out but all of that points to a housing market that is rapidly changing and not serving the middle class in a way that it has historically,” she said.

MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.

AJC Business reporter J. Scott Trubey keeps you updated on the latest news about economic development and commercial real estate in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:

Never miss a minute of what's happening in local business news. Subscribe to myAJC.com.



Reader Comments ...


Next Up in Business

App lets kids, distant loved ones read together
App lets kids, distant loved ones read together

MIAMI — Helping military families enjoy story time together was the inspiration for Caribu, an app enabling children and their loved ones far away to read together. Caribu started out as a class project in London. Alvaro Sabido’s MBA classmates at Imperial College in London went their separate ways after commencement, and Sabido later decided...
‘WannaCry’ victims, stop being ‘lazy’ with updates, expert says

A high-profile “ransomware” attack that affected more than 200,000 worldwide could have been avoided if computer users would stop being “lazy” and update their computers, a local cybersecurity expert said. Florida Cybersecurity Center director Sri Sridharan says the growth of the digital currency known as bitcoin makes it easier...
S8’s only shortcoming is easy to put your finger on

Flagship phones are interesting. They are top of the line and expensive — and we can’t get enough of them. Every year companies like Samsung and Apple release a new model of their super deluxe smartphone, pricing them at $750 and up, and every year or two we line up around the block to buy the shiny new one. Last year was not a great one...
They predicted the ‘WannaCry’ cyberattack, so how come few listen?
They predicted the ‘WannaCry’ cyberattack, so how come few listen?

Misha Govshteyn and his colleagues at the cybersecurity start-up Alert Logic dropped all their projects earlier this year, except for one they deemed a graver threat than the rest. Someone had stolen never-before-seen hacking tactics from the National Security Agency and posted them online. Working in shifts for 36 hours straight, dozens of Alert Logic...
It’s a bird, it’s an … electric airplane?

The startup Who they are: Wright Electric, a startup backed by Y Combinator in Mountain View. What they do: Electric airplanes. Why it’s cool: Electric cars are commonplace around the Bay Area, Tesla is working on an electric semi-truck, and now Wright wants to take that technology to the sky. The founders say going electric will make air travel...
More Stories