Home price declines: What’s the matter with Atlanta?

Nationally, it looks like home prices have bottomed or are bottoming now. I blogged earlier today about the Case-Shiller indices being at fresh post-bubble lows, but that’s for March and includes sales as far back as January.

Atlanta stands out, however, for having the nation’s worst current rate of decline. (For most of the rest of this post, I’m going to be using Case-Shiller’s seasonally adjusted data.)

Atlanta did not see prices rise as fast during the bubble years as most other major U.S. metro areas. Atlanta’s peak value was 136.07 in April 2007.

By April 2008, the index still was at 125.53. That’s a big decline but not a catastrophic one. Then it fell to about 107 by April 2009, but was virtually unchanged in April 2010, when it seemed to have stabilized. Of course, that was a false rebound brought on by the expiring homebuyer tax credits, which had also falsely boosted prices in the final months of 2009.

Atlanta home prices apparently stabilized again in spring 2011, with the index value above 103 in February, March, and April.

And then then the freefall began.

Atlanta’s seasonally adjusted index value stands at 85.17 in the March 2012 data, a level that Atlanta first reached in summer 1997.

Here’s Case-Shiller’s not seasonally adjusted chart showing how much worse Atlanta’s 17.7% year-over-year decline is than the other cities in the composite index:

The only good news is that Atlanta’s slide seems to be near a bottom, with a monthly pace of decline lessening.

Why is the Atlanta metro area faring so much worse right now than other cities?

There would seem to be a variety of answers, including:

  • a generally weak labor market (although Atlanta has looked better in recent data)
  • a banking industry under incredible stress as it recovers from a prolonged period of irresponsible speculation
  • the drag created by large numbers of underwater mortgages (click here for more)
  • a poor understanding of the depth of the state’s housing crisis by policymakers in the years since  the bust
  • an inadequate transportation system to support some of the sprawling suburbs and exurbs planned during the boom
  • cuts to state and local budgets that have further stressed labor markets

Still, for all this recent decline, other cities have seen worse declines from peak to trough (let’s hope it’s a trough), as you can see in this graph from Calculated Risk: