by: Richard Elliot Updated:
ATLANTA,None - Home prices continue to fall in the Metro Atlanta market, and according to one price index, they fell further than in any other major city in the U.S.
According to the Case-Shiller Index of 20 major cities, home prices in metro Atlanta fell
12.8 percent from December 2010 to December 2011. That means prices here have dropped close to 37 percent from the peak of the housing market in July 2007. If you bought a $200,000 home at that peak, it might be worth, on average, about $124,000 today.
"It's probably just going to get worse," real estate analyst Steve Palm of Smart Numbers LLC said.
Palm said the continued drop in housing prices has become a vicious cycle difficult to break. Dropping home values means potential buyers would rather purchase existing houses rather than more expensive new construction. But Palm said that means fewer new homes are being built, which translates into fewer construction
jobs, which means higher unemployment and a weaker overall economy.
"We led the nation in new construction year after year," Palm said. "Traditionally, in a downturn, the ones that grew the most are the ones that are going to hurt the most."
But Gwinnett County realtor Peggy Slappey disagrees. She's been in the metro
Atlanta real estate business for more than 30 years. She said she's seen the supply of existing housing fall from a Great Recession high of 24 to 36 months to less than four months today.
"It's a matter of supply and demand," Slappey said. "Right now, the demand is increasing and the supply is decreasing. A six-month supply is normal, so we're below that. That's why we're seeing a lot of multiple offers."
She believes the metro Atlanta housing market is still three to four years from seeing prices reach close to pre-recession levels, but she does believe prices are close to stabilizing. She also said she's seen more home sales in the first two months of 2012 than she's seen in a January or February in nearly four years.
"There is more optimism in the air among everyone in my industry," said Slappey.