In today’s release of June data, the widely followed S&P/Case-Shiller Home Price Indices showed year-over-year improvement for the national index as well as both the 10- and 20-city composite indices.
There was a brief period two years ago of year-over-year nationwide gains, but those were entirely attributable to the misguided homebuyer tax credits, which temporarily inflated prices and pulled some buyers off the sidelines too early. Aside from that brief stretch in 2010, this is the first month in six years that the Case-Shiller data has shown a year-over-year increase.
Atlanta is still down from a year ago, according to these numbers for June (actually a composite of April, May, and June). Way down in fact: 12.1% below June 2011. But Atlanta prices were up a not-seasonally-adjusted 4.0% from April to May and 4.4% from May to June. Adjusted for seasonality, those gains slip to 1.8% and 2.3%, but those are still strong numbers largely offsetting Atlanta’s precipitous declines at the end of 2011.
And all this is good news for the Georgia economy, especially in light of the sobering forecast last week from Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business. More on that in a future post.
With Atlanta home prices likely having bottomed, the following dynamic is in place:
- If they anticipate rising prices, potential sellers are less likely to rush properties onto the market.
- If they anticipate stable or rising prices, potential buyers are more likely to make offers.
- As prices stabilize or rise, fewer mortgages will be underwater.
- With a clear floor under prices, banks will be more likely to make loans to small business owners using their homes to finance business expansions.
There are other potential upsides too, as well as at least one clear downside: entry-level buyers are going to find fewer bargains.
And it’s important to note too that home price increases and existing home sales contribute very little to GDP growth. New home construction, which likely will continue to rebound slowly, is the big contributor to GDP.
There’s obviously good news here for both state employment and for state government revenues, both of which are mired far below their pre-recession peaks.