Atlanta Housing Market Report: February 2012

First the bad news: Atlanta is one of the worst performing housing markets in the country, when compared to the other metro areas tracked by the Case-Shiller/S&P Home Price Index. Home prices in the metro area recently (Nov 2011) fell to their lowest point since 2000. There. Now we’ve got that out of the way.

But it’s not all doom and gloom in the Atlanta real estate market. If you squint your eyes and tilt your head just right, you might even see some positive signs. In fact, when you consider the recent improvements to the local economy, you could make an argument that price stabilization is on the horizon. Of course, you could make an argument for continued price erosion as well. So why don’t we just stick to the facts. You can make your own argument at your next dinner party.

Here is what’s happening in the Atlanta real estate market, at the start of 2012.

Atlanta Home Prices Continue to Fall

Homeowners will not like the latest data from the Case-Shiller / S&P Home Price Index, released on December 27, 2011. According to that report, home prices in Atlanta fell by 5% from September to October 2011. This followed a decline of 5.9% from the previous month. The annual data is even more bleak. Prices in the Atlanta metro area dropped by 11.7% from October 2010 to October 2011.

This marks the largest price decline of any city in Case-Shiller’s 20-city composite. In fact, the only city that came close to this level of annual depreciation was Las Vegas, with a price drop of 8.5% during the same period. It bears repeating. In terms of year-over-year price changes, the Atlanta housing market was even worse than Las Vegas, one of the cities hardest hit by the housing crisis.

What is causing this significant price shift in Atlanta? It’s certainly not a housing-bubble boom town, like some of the bedroom communities of Arizona and Nevada where prices have also plummeted. So what gives? Much of the blame could be placed on the foreclosure situation in the Atlanta area.

Previous update for this market: November 2011

Foreclosure-Driven Inventory a Major Problem

In January 2012, CNN Money published a story about the worst neighborhoods in the United States, in terms of foreclosures. It was a list of the 100 zip codes with the highest number of foreclosure homes. As you might imagine, many zip codes from Southern California, Arizona and Nevada were on the list. No surprises there. What’s more surprising is the number of Georgia zip codes that appeared on the list — 14 in all.

One zip code in the Atlanta area (30349) showed up at #10 on the list. Neighborhoods from elsewhere in the Atlanta metro area made the list as well, including some in Stone Mountain and Douglasville. By way of contrast, not a single Northeastern zip code made the list.

This is indicative of a broader problem in the Atlanta real estate market — current and pending foreclosures. This is a situation that will continue to plague home prices in the area, for the foreseeable future.

The Broader Economy Shows a Glimmer of Light

Bad news is plentiful. But is there any good news for the Atlanta housing market in 2012? That depends on who you ask. Local real estate agents might point toward the low cost of ownership (low mortgage rates and home prices). But these are not enough. As we have learned for the last few years, low mortgage rates alone are not enough to motivate buyers. Not when prices are still falling, anyway. But if you look in the right places, you can see signs of improvement for the Atlanta economy as a whole.

Take the unemployment rate for example. In November 2010, the unemployment rate in the Atlanta metro area was 10.3%. A year later, it had fallen to 9.2%. According to Mark Butler, Labor Commissioner for the state of Georgia, the region gained more than 13,000 new jobs in November 2011. Eventually, this will boost the housing market by enabling a larger group of home buyers. But there is still plenty of room for improvement.

There has also been a drop in the number of homes for sale, a trend that typically has a positive impact on home prices. According to Dr. Duru Ahanotu, an analyst from Ahan Analytics, LLC: “The number of homes for sale [in the Atlanta area] is tiny relative to the last few years.” This could help to stabilize home prices over the coming months. Or not. Time will tell.


The Atlanta real estate market has taken a beating over the last few months. Home prices have fallen more steeply than any of the other metro areas in the Case-Shiller 20-city index. But we are now seeing a light at the end of the tunnel, with regard to the broader economy. The only question we cannot answer at this point: How much longer until we emerge from the tunnel?