Pockets of Atlanta Real Estate Industry Remains Stagnant for February 2015

The shortest month of the year saw a mix of positive and negative factors in the Atlanta residential real estate market; however, being focused on pockets of the consumer segment can return a 60% growth year over year as experienced at Southeast Mortgage in February. 

The Cal-Culator, Atlanta’s leading residential real estate index, will hold steady at 6.3 for another month due to a continued decline in mortgage delinquency rates and a long awaited increase in inventory offset by declining home sales and investment in the Atlanta market.

The February Cal-Culator

Let’s Start With the Bad
Investors’ Dollars in Atlanta & Home Sales: The Atlanta Business Chronicle reported that home sales in metro Atlanta fell 37 percent from December 2014 to January 2015 and were also down 9.7 percent year over year. The decline was attributed to investors buying fewer homes in the area.
Substantial Decline in First-time Homebuyers: The National Association of Realtors also released data that nationwide, existing-home sales fell 4.9 percent ­to the lowest rate in nine months. First-time homebuyers, a vital demographic in the housing industry, declined to 28 percent, the lowest rate since June 2014. According to NAR Chief Economist Lawrence Yun, “January housing data can be volatile because of seasonal influences.”

Now for the Good News
Inventory: According to the latest data from the Atlanta Board of Realtors’ latest Market Brief, Atlanta housing inventory increased 13.6 percent year-over-year and by a staggering 54 percent from the previous month. Last year’s local real estate industry was tainted by the Atlanta housing crunch, which seems to be easing thus far in 2015.

Mortgages: For the 12th straight quarter, mortgage delinquency rates (defined as the rate of borrowers who are 60 days or more late on their mortgages) declined, according to TransUnion’s latest mortgage report. The vice president of research and consulting at TransUnion noted that the mortgage delinquency rate “continues to be well controlled as it slowly recedes to pre-recession levels.”

It’s no surprise that the short month combined with multiple threats of snow around Georgia didn’t propel the real estate market as far as hoped. However, housing experts are still extremely optimistic about the remainder of 2015 and are not overly concerned with this brief bout of sluggishness.
“Low interest rates, rising sale prices, economic expansion and balanced inventory support my expectation that the market will continue its strong and steady growth,” said Atlanta Board of Realtors President Ennis Antoine. “I believe the dynamic economic recovery we are seeing is going to have a major impact on the 2015 Atlanta housing market.”

The next Cal-Culator will be released March 7. Stay tuned to see if next month will reflect a positive come back after a month of stagnation.

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The Cal-Culator Turns One !

We’re excited to share that it has been one year since Atlanta was introduced to The Cal-Culator, Atlanta’s first residential real estate index. The inaugural index was 5.1 when we began last summer. For comparison’s sake, in July 2007 when Atlanta home prices were at their peak, the Cal-Culator would have been a 9. Approximately 18 months ago in March 2012, the Cal-Culator would have been a 1.5. Now, the Cal-Culator stands at a very respectful 6.3, a 0.1-increase from last month. Increased inventory, increased new single-family homes and continued declining foreclosures contributed to the slight increase in the index.

 

Home Sales
Since August, sales of newly built, single-family homes have been at the highest level in six years. Sales of new single-family homes in August rose 18 percent nationally from July and 33 percent above 2013 levels, according to the latest data released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development on September 24. The South posted a 7.8 percent change month-to-month and a 27.2 percent increase from 2013.

“This robust level of new-home sales activity is a good sign that the housing recovery is moving towards higher ground,” said National Association of Home Builders Chief Economist David Crowe. “Historically low mortgage rates, attractive home prices and firming job and economic growth should keep the housing market moving forward in 2014.”

The data also reflected a slight increase in inventory, which now stands at a 4.8-month supply.
Unfortunately, after four consecutive months of gains, existing-home sales fell 1.8 percent nationally and 4.2 percent in the South in August, according to The National Association of Realtors.

“There was a marked decline in all-cash sales from investors,” said NAR chief economist Lawrence Yun. “On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”

Foreclosures
CoreLogic’s latest report on foreclosures revealed a 22.2 percent decline in foreclosure   nationally year-over year, though Georgia is still fifth on the list of states with the highest number of foreclosures. The 12-month sum of completed foreclosures is at its lowest point in nearly seven years.
Though August marked the 34th month of consecutive foreclosure decline, economists still have significant concerns about the current state of homeownership.

“Clearly there has been a large improvement in the market the last few years, but five years into the economic expansion the foreclosure inventory remains at nearly three times the normal level,” said Sam Khater, deputy chief economist at CoreLogic.

Home Prices
Though home price gains have eased, the S&P/Case-Shiller Home Price Indicies showed that the 20-City Composite (where Atlanta is included) had a small increase of 0.5 percent month-over-month, according to data released September 30. Atlanta also posted a 0.5 percent month-over-month increase and a 6.7 percent 1-year change.

Join us next month on November 11 for the October Cal-Culator as we hope to continue into the index’s second year with positive gains in the housing industry.

www.southeastmortgage.com