Atlanta Named a ‘Housing Market to Watch’ in 2015 – Really?

The Atlanta, Georgia real estate market has come a long way over the last few years. This transformation is most apparent when viewing home-price trends from 2008 to present (think of a deep valley followed by a steady upward slope).

It has been a dramatic turnaround, to be sure. And here’s an exclamation mark for that sentence: Realtor.com chief economist Jonathon Smoke recently named Atlanta, Georgia one of the “Top 10 Hot Housing Markets to Watch in 2015.”

According to a December 4 article on Realtor.com:

“One of the cities hit hardest by the bubble bursting a few years ago, Atlanta took longer than other markets to recover from the housing crash. [That’s true enough.] But now, the sprawling metropolis is showing signs of rebounding. [This is also true.] Over the next five years, the Atlanta market is expected to see 7% growth in total households, Smoke says.”

But let’s slow down for a minute. The National Association of REALTORS® is known for issuing rosy predictions about the housing market. After all, their members rely on consumer confidence for their very livelihoods. So is this a legitimate forecast for the Atlanta real estate market, based on cold, hard facts? Or, is Realtor.com trying to excite home buyers about mediocre conditions?

Let’s take a closer look at the current state of things, and the possible future of Atlanta’s housing market in 2015.

Outlook for the Atlanta Housing Market in 2015

A brief history is in order: In November 2011, we were writing about how bad things were for Atlanta’s housing market. In 2012, home prices in the metro area finally found a bottom, after falling sharply for several years. By spring 2013, home prices had clearly rebounded and were rising steadily due to increased demand and healthier levels of supply.

That brings us up to the present, and the recent forecast by Realtor.com.

According to the aforementioned Realtor.com article, home sales in Atlanta are expected to rise 11% in 2015, when compared to 2014. This prediction is based on job growth and housing affordability, among other factors.

Personally, I wouldn’t brag about job growth within this metro area. According to the U.S. Department of Labor, Atlanta’s unemployment rate has been hovering above 7% all year, with a brief spike into 8% territory in August. By way of comparison, the national unemployment rate is currently at 5.8%. Among U.S. metropolitan areas, Atlanta was recently ranked near the bottom by the Labor Department (it came in at 324, out of 372 metros). Nothing to boast about there.

According to Freddie Mac’s Multi-Indicator Market Index® (MiMi), the “Atlanta housing market is weak and declining.” MiMi looks at a handful of indicators to assign a score to different metro areas across the country. The mostly negative assessment for this market is “largely due to the 7.89% decrease in the Employment indicator over the past three months.” Among the top 50 metro areas tracked by MiMi, Atlanta was ranked 49th in September of this year.

In terms of home prices, 2014 was a strong year for the Atlanta market. According to the real estate information service Zillow, home prices in the metro area rose by 14.5% over the last year or so. But you have to remember this comes on the heels of a serious crash in house values. So it’s a return to normalcy, more than anything. Zillow’s prediction for Atlanta housing prices in 2015 is more modest by comparison. They expect to see a gain of around 5% over the next 12 months — roughly a third of the current year gains.

This mirrors the broader expectation for the U.S. housing market next year. Analysts and economists are predicting smaller gains next year, for most cities across the country.

According to the S&P/Case-Shiller Home Price Index, house values in Atlanta dropped 0.3% from August to September of this year. That was the most recent data available at the time of publication.

The Realtor.com article stated that Atlanta will likely see an increase in home sales in 2015. This is the one element I would agree with, and it too matches broader expectations for the U.S. housing market. Sales are expected to rise across the board next year, partly due to rising consumer confidence and job gains.

But to single Atlanta out as one of the hot housing markets to watch in 2015? That’s a stretch.