Monthly home sales figures for metro Atlanta declined again in May for the 23rd time in the last 33 months, while prices declined for the 18th consecutive month.
Home sales in metro Atlanta’s most affluent areas continue to suffer disproportionately to sales for the rest of metro Atlanta, as sellers in areas with high average sales prices have been less inclined to reduce prices. Metro Atlanta home prices were down 20% in May from a year ago, but prices in the Beacham Bellwether index of Atlanta’s most affluent communities were down just 6%. As a result, sales were down 32% in the Bellwether index while metro Atlanta sales were down just 15%.
Some of the disparity in sales prices can be attributed to the higher foreclosure rate in the non-Beacham Bellwether areas. The foreclosure rate for metro Atlanta is around one percent according to RealtyTrac, while the foreclosure rate in the Beacham Bellwether index is substantially less than 1%. A tight credit market has also hampered sales in more affluent areas just as much or more than foreclosures, according to Dac Carver, managing broker at Beacham & Company, Realtors.
“It’s infinitely tougher to get a nonconforming loan than it was a year ago,” Carver said. “Cash reserve requirements are much higher and stated income loans are long gone.”
As a result, prices are expected to suffer for some time. Moody’s Investor Services predicts national home prices will slide well into 2011.
“It’s hard for sellers to accept the new pricing norm,” Carver said. “We are in a deflationary price cycle. Sellers who don’t reduce prices ahead of the downward trend are going to be chasing their final sales price for a while, maybe as long as 18 months.”
Carver said there are some reasons for optimism. Housing inventory continues to fall in metro Atlanta. In May, inventory was down 16,000 from the same month a year ago. Also, U-Haul ranks the city as the top one-way destination in the country. Finally, Georgia is projected to become the fifth most populous state in the country by 2050.
“When you consider the fact that metro Atlanta has a population of more than five million people, but our rate of home sales is roughly the same as it was in 1998 when we had two million less people, you know we have enormous pent-up demand,” Carver said.