Wes Moss: What U.S. home prices mean for Atlanta

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.

There’s bad news and good news in the list below. Which is the good news?

A) The race for president is heating up.

B) Congress’ own accountants are warning lawmakers a recession looms in 2013 if they don’t head off an automated schedule of massive tax increases and spending cuts.

C) Europe is still an economic basket case.

D) The U.S. housing market appears to have hit bottom.

The answer is D. It is indeed good news if housing has finally crash-landed (or stopped going down). An industry can’t start recovering until that happens. And we need home construction, incredibly important to the U.S. economy, to bounce back.

In mid-2003, for example, residential investment contributed nearly one full percentage point to our gross domestic product. But in 2005, that investment — heavily dependent on new home sales — peaked and began a six-year slide that has repeatedly stolen nearly a percentage point from annual GDP.

That ended in the fourth quarter of 2011 when housing became a slightly positive GDP factor. It is currently adding 0.3 percent to GDP growth — not bad considering total GDP growth is running at only about 2 percent.

Some signs housing is about to dust itself off and rise up from the mat:

Flat prices: On a national basis, prices stayed nearly even from May 2011 to May 2012, and even rose 2 percent from April to May. That’s a huge improvement compared with the 34 percent drop from mid-2006 until the start of this year.

Inventory is down: Most real estate experts will tell you a balanced housing market will have about six months of supply available. Inventory levels exceeded nine months in late 2010, but now are much closer to the ideal six months.

The dream lives: While the number of renters has grown dramatically the past six years, a recent study shows 86 percent of current renters say they still plan on buying.

Demographic history: Since 1965, an average 0.8 percent of U.S. households have purchased new homes annually. That number has fallen in recent years to 0.35 percent.  If we do return to the long-term buying trend, demographic studies tell us we will need 1 million new homes annually by 2015 just to keep up with national demand. There are only 150,000 new units available now, so there is clearly room for improvement for new home sales.

How does this all impact Atlanta? Remember, we are about a year behind home price trends nationwide. (See my March 12 blog post for details.) Prices started climbing nationally at the beginning of 2012, so we could see local prices start to rise by the new year. We’re already seeing increases in certain parts of the Atlanta area. Metrowide, second quarter median sales prices were up almost 6 percent, year-to-year.

Further, metro Atlanta’s inventory has fallen by 42 percent — only a four-month supply.

Do you think the local housing market is turning the corner?

What are you seeing in your neighborhood? How will all this affect your financial planning?

– Wes Moss, for Atlanta Bargain Hunter

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36 comments Add your comment

Beck

August 27th, 2012
5:33 am

What happens to all the vacant houses? We can’t continue to do the same thing over and over!

John Ellison

August 27th, 2012
5:49 am

The value of my Buckhead condo is 50% lower now than four years ago.

Independent voter

August 27th, 2012
6:23 am

JOBS are the key to real estate values and home building.. if Romney wins business confidence and investment will improve dramatically !!

jwc

August 27th, 2012
7:09 am

No, “jobs” is not the key. Money is the key. Inflation, taxes, alternatives to ownership. Unlike gold or other hard assets, real estate can be taxed in perpetuity and variably by some of the biggest morons ever to hold public office. The property tax is onerous, misused, subject to outright theft, used for enriching the inept, the thieves of good ol’ boyism and their brothers in law, and like all other taxes is a natural brake to the flow of commerce. Inflation is a tax by another name and real estate used to be a useful defense. No longer. Alternatives include mom and dad, rental, homelessness and moving to Costa Rica. More jobs is not the panacea to the real estate fix other than more money sloshing around that might bid prices up and give the taxers reason to up their tax rates. It’s going to take a long time to get our heads around the problems we’ve made for ourselves. Meanwhile, we have to try to get in out of the rain….if we have the sense. I have doubts since we do indeed continue to do the same thing…over and over and over, somehow expecting different results.

Chris

August 27th, 2012
7:15 am

The Fed would love to blow another bubble to mask their own incompetence. Putting people back into debt and bankrupting them isn’t the answer, though. We’re becoming a nation of rent-croppers.

What a lot of folks also don’t realize is that we’re never going to go back to the sales volumes and pricing of the mid 2000’s. Calling bottoms is a fool’s errand.

Independent voter

August 27th, 2012
7:21 am

jwc.. if Romney wins taxes will go down too.. conservative values means less gov’t… I’m sure lots of ” renters, homeless, and living with Mom and Dad ” ( 86 % Wes says above ).. want to own homes…. a Romney win means lower taxes and more jobs !!!!

Progress

August 27th, 2012
7:52 am

Independent voter- No, there is a negative correlation between taxes and unemployment since 1948, meaning that when taxes are low unemployment is high and when taxes are high unemployment is low. The correlation is statistically significant and consistently negative. That’s what the numbers say and it’s a fact, so your comment about lower taxes coinciding with more jobs is a complete myth.

Independent voter

August 27th, 2012
8:15 am

Progress = Idiot…. DUH !!!! yes…. when tax RATES are high total tax REVENUE is low.. less people working and paying taxes ……

Destin Dawg

August 27th, 2012
8:20 am

YES SIR and unemployment plus under employment rates are up to 15 % and going up under Obama.. worse for women and minorities ( 20 % )

Will Jones - Atlanta Jeffersonian Exegesis

August 27th, 2012
8:39 am

JFK tried to restore constitutional money by issuing EO11,110. The Fed is a scam run by the Rockefellers, who, with the Bushes, built “Big Oil” on unredressed murder and arson in 1870’s Cleveland, and the Rothschilds, who promote ersatz “Israel,” for oil-grabbing in the Middle East, though the only prophecy on the subject, Isaiah’s, makes Our Nation the New Israel.

By Adam Smith’s basis for “Wealth of Nations,” “The Theory of Moral Sentiments,” and Paine’s “Common Sense,” which triggered our Revolution against toryism’s fascist plutocracy, then, only the Creator, G-d of the universe, matters, in Truth and Justice.

The People, sovereign under G-d alone, must follow Iceland in Righteousness: Bush and Cheney and their papist and Talmudic Khazar Zionist accomplices of the CIA/FBI and PNAC/Mossad must be brought to Justice for their 9/11 abomination against the Constitution and G-d.

Only Truth and Justice must rule in Our Land, by G-d.

Then, as with Iceland, with the banksters in jail and fascist plutocracy’s tories again expropriated, and placed on Tory Oaks, where appropriate, shall “Annuit Coeptis” again pertain, proper values restored.

Until then we are enslaved by tory treason.

G-d is not mocked.

Death for treason, that G-d may bless America once more.

[...] From Atlanta Blogs News Source: http://blogs.ajc.com/atlanta-bargain-hunter/2012/08/27/wes-moss-what... ____________________________________________________ [...]

Progress

August 27th, 2012
9:41 am

Independent voter- No, you’re wrong again. You apparently don’t understand statistics and your reading comprehension is weak as well. First, I didn’t say anything about revenue (although when tax rates are higher revenue is also higher). I did say that when tax rates are high unemployment is low, and somehow you interpreted low unemployment as “less people working”? Let me help explain a simple concept to you- a low unemployment rate means MORE people are working because FEWER people are UNEMPLOYED.

So let’s try this again, because you seem to be having trouble. When tax rates are low, unemployment is high (more unemployment = fewer people working), which suggests a weak economy. When tax rates are high, unemployment is low (less unemployment = more people working), which suggests a stronger economy. Again, those are facts. So in other words, when tax rates were lowest the economy has been weakest over the last 64 years, and when tax rates were high the economy has been at its strongest, unless you have a way of trying to argue that the economy is strong when there is high unemployment, a pretty silly notion.

Do you understand now? (And I love how the dumbest people are usually the ones calling other people idiots.)

Progress

August 27th, 2012
9:56 am

Destin Dawg-

The metric used to calculate unemployment is the same as it’s always been, so if you’re claiming it’s actually higher because there are a hidden number of unemployed, then you have to also say that the unemployment rate throughout our history was also higher because it wasn’t capturing a certain portion of the population. So for instance, when unemployment was at its highest ever, which was during Reagan’s term, instead of the unemployment rate being 9.7 and 9.6 in 1982 and 1983, respectively, you’d have to say that it was actually around 16-20% each of those years if you’re trying to count under employment or any other hidden variables. And actually, unemployment was higher under Reagan than any president ever over 8 years and averaged about 7.5% during his full tenure.

But by your standards (which are not the standards of economists) all you have to do is tack on 7% to the historic unemployment rate for any year to capture your suggested hidden variables. So unemployment was 17% under Reagan, 14.5% under Bush II, and 12.8% under Bush II. There, now we have a little more perspective for the mathematically challenged.

Destin Dawg

August 27th, 2012
10:13 am

Progress… who would you rather have running YOUR company … Romney and Ryan or … Obama and Biden ????

Independent voter

August 27th, 2012
10:15 am

Progress- after 3 1/2 years of Obama/ Biden unemployment is going UP !!

Independent voter

August 27th, 2012
10:18 am

Destin- Michael Moore is running Progress’ business- he’s unemployed !

Progress

August 27th, 2012
10:23 am

You’ve got to be kidding, right? You’re asking for an opinion when I just gave you factual numbers. Well, my opinions are informed by facts, in contrast to those of you who find “facts” to conform to your opinions. Romney would lower tax rates further, and the numbers show that unemployment is highest when taxes are at their lowest. Taxes are at historic lows now and unemployment is very high, so the numbers would suggest unemployment would get even higher under Romney’s plan. He left Massachusetts in shambles and created fewer jobs during his tenure there than all but 3 other governors (he was #47 in the nation). In his business life he made himself rich and everyone else he came in contact with much poorer. There’s nothing in his track record that would suggest that his policies would improve the nation’s economy; as a matter of fact, it suggests just the opposite- a return to GW Bush economics and another depression. Ryan’s plan would turn Medicare into a voucher program. Those vouchers would not cover the high cost of insurance for the elderly, so it would lead to an explosion of poverty and famine among retired people. No thanks. The nation is not a company.

Progress

August 27th, 2012
10:39 am

“Independent”- I see that at 10:15 you had no rebuttal to the facts I laid out at 9:41 so you changed the subject. Pretty spineless of you.

You are absolutely incorrect (again) that unemployment is going up under Obama. Unemployment was 9.3 in 2009, the year he took over, then 9.6 in 2010, then 8.9 in 2011, and will be somewhere around 8.1 or 8.2 this year. So are you saying that 8.2% is higher than 8.9 or 9.6 or 9.3? I’d suggest that you need to take one of my statistics classes, but from seeing your lack of ability in math and reading, I can say with certainty you’d never be accepted to the school.

Since his first 6 months in office he has created more jobs in 3 years than Bush did in 8 years. There has been something like 28 straight months of job growth. And no economist, not even the most conservative or the least intelligent (likely one in the same) would suggest that economic outcomes during a president’s first 6 months in office are due to that president’s policies, which would not have had a chance to take effect yet. The outcomes during the first 6 months of a president’s tenure are always due to the holdover effect of the prior president’s policies. And since that time we have had job growth every month.

At some point you should begin using actual facts because all you’ve offered so far is nonsensical and blatantly false rhetoric. I won’t call you a liar, though, because it’s more likely that you’re just not smart enough to understand the details (since you think that low unemployment means “less people working”).

In Search for a Home

August 27th, 2012
10:43 am

As a buyer we completely feel that the housing market is picking up. We have been looking to purchase are 1st home in the Smyrna/Vinings area the last 2 months and have run into multiple offers, higher prices, and little to choose from. When a house gets listed if it is in good condition and priced within comps it is undercontract in 1 – 10 days. As buyers we are finding that there is not much neogiating room and is almost more of a sellers market, different from what everyone has been saying. Its all a matter of supply and demand, when supply is short, price goes up.

Independent voter

August 27th, 2012
10:54 am

Progress…. What ?? you don’t understand when TAX RATES are high = TOTAL tax revenues are lower because fewer people are working ?? I have an MBA and a million net worth !!!

Destin Dawg

August 27th, 2012
10:59 am

household income is DOWN $4800.00 since Obama’s recovery began in June 2009 !! Hope and Change ???

Progress

August 27th, 2012
11:06 am

No, when tax rates are high unemployment is low. When tax rates are low unemployment is high. Once again, these are just the facts. You can pull the numbers on top marginal tax rates since 1948 and the numbers on unemployment since 1948, then run a Pearson product moment correlation and you’ll see that there is a statistically significant negative correlation with 98.7% certainty that what I have described is correct. But then, I have a feeling you have no idea how to run or interpret a correlation. And your online “MBA” from the University of Phoenix or DeVry or whatever means nothing to me, particularly since you’ve made it clear you cannot understand basic statistical concepts. Your writing and thinking make it apparent that if you have any degree at all you purchased it from a diploma mill.

Progress

August 27th, 2012
11:12 am

@ Destin (I won’t use the term “Dawg” because you sully the name of one of my alma maters)- That’s exactly what we would expect in an economy such as this. When unemployment is high businesses can offer the lowest wages possible for the best workers because the many unemployed workers are competing for few jobs. This is exactly the same principle the article above describes; the basics of supply and demand in the housing market work the same way as supply and demand in the labor market.- a high supply of available workers = low wages. Are you going to blame the fact that the sky is blue on Obama as well. Or that water is wet?

Destin Dawg

August 27th, 2012
11:43 am

it must still be Bushes fault ???? 3 1/2 years and Obama own it and Romney will win in a landslide !! then things will pick up !!

Independent voter

August 27th, 2012
11:47 am

Indiana University B.S. in business and marketing in 1967 … MBA in 1972 on the G. I. bill after a tour in Vietnam.. Do you have a job ??? you’re on here ALL DAY !!

Will Jones - Atlanta Jeffersonian Exegesis

August 27th, 2012
11:47 am

Only those of Romney’s ilk, his fellow draft-dodging closet-queens, would ever see any virtue in scum no-men such as he, who took Salvadorean death-squad money to begin his worship of Mammon. Romney is beneath contempt, and it is no mystery how the curse causeless has not come, manifest in his effeminate “sons.”

Progress

August 27th, 2012
11:54 am

“Independent”- If your reading comprehension was better you’d know what my job was, because I made it pretty clear earlier. Your “education” failed you miserably, unfortunately.

Destin: I left a comment in response to your 11:43, but it’s being moderated because it contains links. If and when it gets through you’ll find it at 11:48.

Ole Guy

August 27th, 2012
12:37 pm

Certified financial planners, like politicians, should be fully aware of their choice of words in attempting to convey critical issues. To be sure, a healthy housing market is one OF MANY issues necessary in anything resembling economic health. However, Mr Moss, as with many views of uninformed pontification, has fallen prey to the world of instant gratification…specifically, the US economy will NOT/NEVER simply ” bounce” back. I hear that term coming from so many quarters and, quite frankly, it pisses me off. The current state of fiscal doldrums took many years to develop; many many forces, independant of one another yet inter-related, were involved in this fiasco.

To simply “wave the wand” and insinuate “Go forth and buy a house, young man” is incredibly short-sighted and overly simplistic. This is tantamont to bringing the leaders of waring nations to the table and insisting “play nice and all bad things will go away”…unfortunately, Mr. Moss…good intentions notwithstanding, a REAL national economic recovery will require just a little more beyond wide-spread home ownership, like maybe a little in the way of political commitments which encourage economic initiatives, both at the private and business levels.

Nothing, sir, simply “bounces” back; certainly not when the damage was incurred over years/decades of idiocy and short-sightedness.

KBP

August 27th, 2012
12:40 pm

Progress . . . Interesting posts. You teach statistics, huh? Before you stated that I was guessing you were an economist.

Will Jones - Atlanta Jeffersonian Exegesis

August 27th, 2012
12:50 pm

Repatriating and expropriating the thirty trillion dollars America’s fascist plutocracy, profiteers of the Rockefeller-Bush Fifth Column’s multi-generational treasons and depredations, has “off-shored,” and a return to constitutional money, will go far toward healing Our Nation’s political economy.

ATL Home Owner

August 27th, 2012
7:51 pm

Can someone explain to me why, if the real estate market in ATL has bottomed, did my property tax increase by 26% this year? I do not understand how this is possible. Before you ask, my property tax has gone up/down every year, so it isn’t like it has been low for a while and corrected this year. My “Fair Market Value” literally went up 26% from 2011 to 2012. I never received the assessment letter, so I have no way of appealing it. Recent home sales in the area are nowhere close to the assessed value. No improvements..etc. I contacted the assessor’s office and they basically ignored me because the window of opportunity to appeal the assessment has come and gone. I feel like I am being gouged by the city, and there is nothing I can do about it. Any advice from anyone on what I can do?

Bernie

August 28th, 2012
12:25 am

To Atlanta it says…Taller Grass, for More Vacant Homes.

Will Jones - Atlanta Jeffersonian Exegesis

August 28th, 2012
1:09 am

@ATL Home Owner – My assessment was substantially over my purchase price but I’m just going to happily pay the tax as substantiation for a higher sale price to the hordes who are flooding into Atlanta, the New Jerusalem and Center of the universe, from all over America and the globe, looking to get a piece of Paradise by buying a house in the best city in the world.

NObama

August 28th, 2012
11:01 am

According to Zillow, my home is up$108K over the last 30 days to over $750K. Whaddup with that?

Wes Moss

August 28th, 2012
3:13 pm

Well, the Case-Shiller #s came out today…and the trend continues. On a national basis the 20 city index was UP 0.5% year over year (YoY), and Atlanta was only down 12% YoY (better than the 14% YoY drop recorded last month). Looking at just the May to June data, Atlanta was UP 4.4%…and from May to June 2012 all 20 cities in the 20 city index showed a gain. Again, the trend continues.

j.lin

August 28th, 2012
11:02 pm

Well at least the market is stabilizing and not plummeting anymore. It seems that with so many people renting out homes this is a great time to invest in housing. Here is a great site with tons of information on how to start investing. http://arixacapital.com/about-us/faq-about-investing-in-single-family-homes/