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Georgia Home Prices Remain Stable Despite Lower Sales Volume - 2007-11-17 |
Believe it or not, your home is likely worth more today than it was a year ago.
Two recent studies have highlighted the strength of metro Atlanta housing prices, even as most other parts of the nation see price declines of up to ten percent over last year.
The first study was the widely followed S&P/Case-Schiller Home Price Index, which claims to be the leading measure of U.S. home prices. It covered data through August of this year, and showed declines in the prices of existing single family homes in most areas of the country.
Of the twenty major metro areas surveyed, fifteen showed a decline in the past twelve months. The area with the largest decline was metro Tampa, with a double-digit drop of 10.1 percent since August of 2006.
In contrast, the five metro areas that managed to show positive price appreciation reported modest gains. Atlanta was among the gainers, but claimed less than one percent increase over the period.
Areas reporting the biggest price gains were Seattle at 5.7 percent, followed by Charlotte at 5.6 percent. Portland showed a 2.8 percent increase, while Dallas squeaked out a gain of half a percent for the past year.
The Case-Schiller team of economists is famous for its long term study of housing price movements. They first recognized in the 1980's that home prices tended to be "inflexible" downward. That's because many owners will refuse to sell at a price less than they paid for a property.
This inflexibility is observed most strongly in residential real estate and has been shown to have a strong stabilizing effect on home prices. This has tended to reinforce values over the years.
In addition to Tampa's weak performance, home price drops were seen in Las Vegas, Phoenix, Miami, and New York. In addition, both San Diego and San Francisco made the list of losers, leading observers to the conclusion that those areas hardest hit were the same ones which had experienced rapid price run-ups in recent years.
I suspect part of Atlanta's ability to retain even a minimum level of price appreciation is that our price gains over the past decade were modest compared to many parts of the nation. It seems that Atlanta's housing prices were fueled more by job growth and relocation than by the frenzy and speculation that drove some areas.
This conclusion is supported by a recently released study of America's metropolitan areas by the Brookings Institution, called Blueprint for American Prosperity. This study concludes that America stands in a position of economic strength, but that we need to leverage key assets such as innovation, human capital and infrastructure. The study suggests that these assets tend to concentrate principally in our nation's major metropolitan areas.
This study produced what it calls MetroNation Profiles, a sort of state-by-state review of the top 100 metropolitan areas, and gives statistics associated with those areas, highlighting the importance of these economic engines. In this study, metro areas often cross state boundaries.
For example, Georgia contains all or part of three of the nation's 100
largest metropolitan areas - Atlanta, Augusta, and Chattanooga - which alone account for 60 percent of the state's population, 62 percent of the state's jobs, and 71 percent of the state's gross domestic product (GDP).
All 15 of Georgia's metros constitute 81 percent of the state's population, 84 percent of the state's jobs, and 89 percent of the state's GDP.
The fact that most caught my attention is the employment ranking given to
metro areas.
It is a widely established fact that home prices tend to follow job growth, and if an area's prices are holding up well in the current real estate market, there should be a correlation with job growth.
The good news is that the study found metro Atlanta to be ranked tenth in job growth among all metro areas nationwide, with some 67% of all jobs in the state being Atlanta based.
We should all be committed to helping that job growth stay strong, because as much as any other factor, the future of Atlanta depends on jobs.
By the way, the fact that home prices in metro Atlanta are up will come as a surprise to most Atlantans.
I conducted a completely unscientific poll over the last couple of weeks, asking every one I talked with whether they believed home prices here were up, stable, or down over the past year. Perhaps the folks I come into contact with just happen to be unusually negative, but almost everyone was firmly convinced that real estate prices were down significantly over the past twelve months.
Stay tuned for the release of the Federal House Price Index coming up on November 29, 2007. This report is a study of price movements based on a much larger sample of homes than the Case-Schiller Index, and includes both resales and refinancings through the end of September.
The most recent Federal Index report was for data through June 30 of this year, and showed that homes in the metro Atlanta area had appreciated 3.4 percent in the previous twelve month period.
If third quarter data also shows metro Atlanta in positive price appreciation territory, then homeowners will have something to celebrate in the upcoming holiday season.
The entire Federal House Price Index can be viewed at the website of the Office of Federal Housing Enterprise Oversite at ofheo.gov.
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BUYING FORECLOSURES IN GEORGIA
NEW for 2008: Bank-Owned Home Bonanza
This seminar has been updated and revised for 2008 to reflect the dramatic changes in the Georgia foreclosure marketplace. We are literally facing a flood of foreclosure properties, and there is profit to be made in each and every one of these homes.
Whether you want to build a portfolio of homes for your retirement or you simply want to find a better home for yourself and your family, this program is for YOU.
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• Saturday, Oct. 11th, 2:00 P.M. until 5:00 P.M. - Renaissance Waverly Hotel in the Cobb Galleria
This COMPLETELY NEW SEMINAR examines the roots of today's foreclosure meltdown and explains how you can take advantage of this opportunity in your spare time.
Advance Tickets: $69; bring a friend for an additional $30.
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This course approved for 3 hours of Continuing Education credit by the Georgia Real Estate Commission.
The Real Estate Investor's Institute will be held at Emory University on
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Detailed information is
available under "Seminars."
This course is approved by the Georgia Real Estate Commission for 12
hours of Continuing Education Credit. Agents must bring license number.
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