Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Remember when it felt like you were the only person in Atlanta who wasn’t trying to get rich in real estate? When half the cocktail party talk was about who made how much when they sold their place?
Those days are long gone. Atlanta’s residential real estate market has been spiraling downward since 2007. Our city had the nation’s worst big-city residential market in 2011, finishing 20th among the nation’s top 20 cities as measured by year-to-year price declines.
Atlanta home prices slid almost 13 percent last year –- while other markets saw modest price upticks (Detroit) or only small declines (Phoenix). The average home in the 28-county Atlanta metropolitan area is now selling for about what it cost in March of 1998.
But there are some signs that we might finally be nearing the bottom.
One reason our housing market looks so bad compared to other cities is that we were late to the housing price carnage. Atlanta housing prices peaked in spring 2007, about a year after they hit the ceiling in places like Phoenix, Detroit, Miami and Las Vegas. So prices here are playing catch up to the downside. Similarly, local real estate values have only recently fallen to 35 percent below their peak, which roughly equals the established national average.
The 2011 stats might also be a statistical byproduct of a positive development –- increased sales activity. Every time a house is sold, the transaction creates a record of old price vs. new price. In this economy, the new price is almost always lower. So, ironically, Atlanta’s significant uptick in sales during 2011 actually made us look worse than markets where sales were flat.
The market might be flushing out the excessive inventory. It appears more homeowners are getting over the psychological barrier of losing money on their house and realizing while they might have to sell low, they can also buy low. Prospective buyers, meanwhile, seem to be accepting that prices won’t go much lower and that it’s time to jump in.
Barring another gut-punch from the economy, these new attitudes could fuel a slow but steady recovery for Atlanta home values.
How are you feeling about the housing market? Are you ready to buy or sell a primary residence? How about a rental property?
– By Wes Moss, for Atlanta Bargain Hunter