Metro Atlanta home prices dropped for the second straight month in October, and have fallen below January 2000 benchmark levels, according to a key report issued Tuesday.
Home prices in metro Atlanta fell more than any other major U.S. market in October, tumbling 5 percent following a 5.9 percent monthly decline in September, according to the Standard & Poor's/Case-Shiller Home Price Indices, a nationally respected barometer of the housing market.
Prices in metro Atlanta, which like many others rode the new home construction wave until it crashed, have been driven down by a glut of foreclosures and short sales, metro real estate experts say.
The number of sales is trending up and interest rates on mortgages can't go much lower before banks practically pay buyers to borrow. Prices, though, continue to drift down.
"Confidence, or a lack thereof, is the biggest factor we're facing right now," said Gerry Rogers, a broker-owner of ReMax Unlimited in Kennesaw.
Even though home prices and interest rates are extremely attractive, a large chunk of the buyers aren't people looking for homes, but investors looking for a steal.
Investors want cheap distressed properties to rehab and rent out or flip when the market gets stronger and traditional buyers return.
The Case-Shiller index compares current prices with those in January 2000, and the index is based on a three-month moving average. The monthly data are not seasonally adjusted.
Would-be buyers remain reluctant to purchase homes more than two years after the recession officially ended.
Many are worried about their jobs and the possibility that home prices will continue to fall, Rogers said.
Unemployment is stubbornly high, the job market is stalled and historically low mortgage rates aren't providing the hoped-for lift in home sales, which would help boost prices.
Lender standards are stricter post-recession, making it more difficult for borrowers to qualify or meet high down payment requirements.
But given the lower prices and attractive mortgage rates, now is a good time to buy, said Rogers, whose firm has seen sales increase about 30 percent for the year, in part because of investors.
National home prices also stumbled for a second straight month, dipping 1.2 percent in October. Nineteen of 20 cities in the Case-Shiller composite index saw price declines, Phoenix being the only monthly gainer.
But Atlanta was the laggard, indicating a recovery in the metro housing market remains elusive.
Metro Atlanta home prices are down 11.7 percent compared to October 2010, a steeper drop than any other major U.S. city in that time, and the only major market listed that suffered a decline in the double digits.
Home prices in Las Vegas, another market decimated by the housing crisis, also fell below January 2000 rates in October.
The 20-city composite price is down 3.4 percent compared to October 2010. Only Washington and Detroit posted increased prices compared to October a year ago.
"Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness," said David M. Blitzer, chairman of the index committee at S&P Indices. Besides Atlanta, Detroit and Minneapolis posted the biggest monthly declines.
Rogers, the Kennesaw-based broker, said his territory, which includes parts of Bartow, Carroll, Cobb, Douglas and Paulding counties, has had a large percentage of foreclosures and short sales, which push prices down.
Rogers said his firm's brokers have retooled their training to help clients who want to acquire distressed properties.
"There's a flood of investors [buying] right now, and they're not your typical big money investors. They're mom and pops and retirees," Rogers said.
Individual investors have stepped in with cash, he said, because of turbulence in the stock market.
The national price declines reflect the typical fall slowdown after the peak buying season. Prices had risen modestly in April through August in at least half the cities tracked.
Still, home prices have fallen roughly 32 percent nationwide since the housing bubble burst five years ago and are back to 2003 levels, the report said.
Home values remain depressed despite some modest progress in the housing market. Residential construction is improving nationwide, though that's largely because of the boom in apartments, reflecting the surge in renting and weaker home sales.
Though prices as a whole have dropped, certain submarkets within the metro area have maintained values reasonably well.
Certain markets with highly ranked schools such as the northern Perimeter area and east Cobb have not seen the price swings of other regions, said Shea Zimmerman, senior vice president with Harry Norman Realtors in Buckhead.
"We always have to look at individual markets for an individual perspective," she said.
Tighter lending practices and wild swings in appraisals caused by the prevalence of distressed sales have also hampered non-distressed sales, further curbing prices.
Prices nationwide are likely to fall further once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.
The Associated Press contributed to this article.
Copyright 2011 The Atlanta Journal-Constitution