Wes Moss: When will Atlanta real estate prices stop crashing?

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

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

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19 comments Add your comment

Hare

March 12th, 2012
6:31 am

I am noticing that there are spec homes going up in my neighborhood and where there were always one or two short sale/foreclosures on the market at all times, there aren’t anymore……maybe we are near a bottom…….

Mark Smith

March 12th, 2012
6:39 am

The banks have been slow to release Atlanta foreclosures to the market.
There is a lot of inventory yet to be put up for sale.

Litt

March 12th, 2012
7:58 am

Sanity has still not returned to the housing market and won’t for a few more years. Prices are still dropping in my neighborhood and the number of houses for sale is climbing and yet some bank must still be lending money, because there is new housing being built even though there is excess inventory.

Fannie Mae and Freddie Mac need to be eliminated and we need to go back to requiring 20% down payments with loans that are written by the local bank loan officer in order to drive speculation out of the market.

Monday

March 12th, 2012
8:03 am

9 years ago I paid $130K for the home I’m in now. I financed 100K. My home is now valued at $65K….I’m less than $20K upside down.

My question is, why are the property taxes still outrageous? If the value of my home has dropped by half, why haven’t the taxes?

Litt

March 12th, 2012
8:06 am

And another thing, Mark Smith in the above comment is correct. There is an enormous amount of properties that banks are keeping off the market.

My neighbor was given a loan by Bank of America in 2004 for $180,000 on a no doc loan, even though he hadn’t held a job in over 8 years. He had not made a payment in over a year, when he died. It has now been 3 years, the loan somehow ended up with Chase who have been sitting on the property and paying the taxes for 3 years. They have paid almost $8,000 in taxes alone. The house is now worth about $80,000 which is mostly the value of the lot and yet Chase will not foreclose on the property.

Housing property prices in Atlanta have another 15% to 20% decline before moving sideways for a decade.

katz

March 12th, 2012
8:11 am

I get ready ot buy some property for investment and then the gummint says it’s gonna rent properties. I can’t compete with the gummint. I make an offer on a place for my kid and am told my bid is too low and I’ve been outbid. Two months later, the place is still for sale, claimed to be owned by the same bank, and the agent won;t return calls. I have called about many other deals and been give BS stories. I strongly suspect that some agents are screwing the sellers by not relaying offers. I tried direct offers on some of the gummint owned property that the agent told me had been sold. The gummint said they could not talk to me. Six months later, the same agent is advertiing the same property as gummint owned. WTF. Yes, these were steal properties, but I’m ready to steal now and I’m sure the sellers would like some $.

Belno

March 12th, 2012
8:15 am

One of the biggest problems is that houses in Atlanta have been built so cheaply that there is very little value to them after they have been lived-in for ten years. Part of it is cheap, poorly-skilled labor but a lot of it (as I have been told by many architects) is that much of the design makes little sense and makes it vulnerable to problems (foundation issues, water damage, etc.).

Northsider

March 12th, 2012
8:56 am

To me it seems the north side of Atlanta is starting to come back. My house is on the market and we have had dozens of people come and a few decent offers, many are relocs. I think if you are in a good school district things will rebound quickly. Listings of nice homes are low and demand for quality nice homes seem to be growing, supply and demand will prevail!!

Sold in 2011

March 12th, 2012
10:48 am

I sold my home in the fall of 2011 for just a few thousand dollars less than I paid for it in 2003. I was able to buy a larger home for a great price, making the loss I took on the sale of my home much less painful. While it is a difficult time to sell, but a great time to buy. Hopefully we are at the bottom and the market will start trending upward in the next few years.

Susan

March 12th, 2012
11:25 am

Many intown markets are sellers markets. Virginia Highlands, Midtown and Morningside have multiple bidders and higher home prices. I am buying intown myself and not in those neighborhoods and there is some definite competition for homes.

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Nancy

March 12th, 2012
4:19 pm

Many intown markets are sellers markets….amen to that! You guys had to have thought in the back of your mind that buying a house in Villa Rica to work in Atlanta was a bad idea. Instead you went ahead and bought it and now you’re upside down and commuting to and from Atl paying 5.00 for gas. Lucky you. I’ll take my 1000 square foot house ITP any day.

MoveHomeAtlanta Team, Paula Parker Williams of Keller Williams Realty First Atlanta

March 12th, 2012
5:14 pm

Love the Article! I have worked two huge distressed markets in my career. Houston, TX in the 80’s and now Atlanta (I am native Georgian). I dealt heavily in REO’s in Houston. Here I stay plugged in to my many clients keeping them on top of the local economy and mostly consulting with best challenges they face. I am blessed to have the most accurate numbers every quarter thanks to the Rawls Group of Keller Williams Realty.
The entire north 400 corridor is hopping. ITP and OTP both in that area are doing well. The main message I continue to send to my followers is: “Get it right the first time” when listing your home. Buyers want it all – Condition, Location and Pricing – if you meet these criteria – you will be gone in less than 90 days – that has been the trends from 2007 til now – the big “AHA” is “what is right”? One of your comments reminds me of a phrase we use – chasing the market. We do feel we are at the bottom. When the market changes over again it will be “fast and furious” and we are seeing that now. I am grabbing onto every serious seller and marketing the heck out of their home with “ethics and proper value”! Multiple offers are prevalent right now.

stevejames

March 13th, 2012
5:50 am

Atlanta foreclosures to the market Well as you know i am buying in town myself in those neighborhoods and every serious seller and marketing check out of the home towards competition for homes property declaration that banks are keeping off the market.

Milton

March 14th, 2012
12:51 am

Lot of poor comments by many who simply do not understand the market and are paying too much attention to the media. The bottom line is this… if you own a single family home inside the perimeter and are located in a good neighborhood you will be fine. Gas prices will continue to rise, Atlanta population will continue to grow, and people will continue to come back into the city. The demand will be there and therefore prices will remain relatively firm. If you are outside the perimeter you may be at risk.

OTP North Fulton

March 14th, 2012
10:32 am

Am starting to see new construction in North Fulton and decreasing amount of homes for sale. The strong school system and high occupancy rates for commercial bldgs bode well for the housing stock. I would be leary on ITP housing given the recent B of A skyscraper foreclosure and 25% Buckhead office vacancy. Contrast that to Alpharetta office parks that have 5% vacancy rates and are looking to build a pre-leased 14 story bldg. Businesses vote with their feet and have moved to suburbia in order to attract employees that have tired in living ITP. Downtown is dead.

Milton

March 14th, 2012
11:06 am

Post another comment again in 10 years and let us know how your investments in Alpharetta did. Alpharetta has peaked and is past its peak life cycle. And 5% vacancy in commercial in Alpharetta… better check those numbers again. I think your agent told you that just to make the sale. I agree that condos ITP are not the best investment. SFR is the ticket. Understand the trends of larger, older cities. Atlanta will follow the same path with due time. The higher dollar properties will be inside the city, the burbs will become more run down and depressed with time. We are a young city compared to the cities of the north/northeast…

Technology changes everything

March 15th, 2012
6:51 pm

Don’t forget that the reason for dense urban cities is being undone by technology. Look at NYC, Wall Street was once the place for money mgrs, now its cluttered with high end retail stores. Meanwhile the bankers have fled to Greenwich and Darien for suburban living, low crime, high quality of life, and strong schools (public and private). Atlanta is on the same trajectory.

gordon

March 18th, 2012
11:18 pm

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