I find myself a bit more upbeat about the prospects for Georgia’s economy in 2013 than some of the forecasts released so far. My main reason for that cautious optimism is the solid rebound in housing.
Over the last year here in Savannah, we’ve seen more home sales, significantly lower inventories, more building permits, and — according to Zillow’s latest home price index for various metro areas — stabilizing prices.
According to that same Zillow index, metro Atlanta home prices are still down 1.4 percent year-over-year, but up 1.6 recent for the most recent quarter compared to the previous one. (Atlanta prices cratered early in 2012.)
Today’s Case-Shiller data for October (a composite of August, September, and October) show the Atlanta metro area experiencing some predictable seasonal weakness in prices, but a solid year-over-year increase of 4.9 percent.
Seasonally adjusted, Atlanta’s October Case-Shiller index value was 95.11, a level first achieved in 1999. So, while it looks like the steep dive in Atlanta metro home prices is well behind us, it’s hard to argue that homes are still overvalued or that another bubble is inflating.
With reasonable and increasing prices, more buyers will come off the sidelines in 2012. Demand for new construction will increase (although probably slowly). The number of underwater homeowners will diminish. Banks will continue cleaning up their books. Construction employment should increase in 2013.
We’ve still got a long way before the housing bust is clearly in the rearview mirror. But things are moving in the right direction, and it would likely take several major economic shocks to reverse course.