Case-Shiller Index For March 2010

The March Case-Shiller Index was published on Tuesday, March 30th 2010.  As always, the index reports on data 60 days in arrears.  Therefore, the index reports metro Atlanta home values for January 2010.  So what does the latest index show and what does that mean for home values in metro Atlanta? 

Before we provide the answer, we want to make two caveats.  First, the Case-Shiller index of home values is very different from average sale prices which reflect the average prices of what is being sold in the market.  Right now, the heavy volumes in the market remain on the lower end for 1st time home buyers and short sales/ foreclosures.  The luxury market is slower so that makes the average sales price lower than a normal market.  Second, real estate is local and every market is different.  Your local agent expert can help you understand the specific metrics in your local market. 

Now for the news….  The January index shows the 5th drop in a row after 5 positive months in a row.  The January index is 107.04  which is 1.45% down from last month.  Click on the link below to open the Excel spreadsheet that shows the details of the latest index.

Case Shiller Index – Atlanta – January 2010 Index

The peak of our market was July of 2007 according to the Case-Shiller index.  The most recent bottom was March of 2009.  In August of 2009, we had seen 5 months of increasing values and were 5.8% above the bottom of March 2009.  Since then, we have slipped and are now only 1.87% above the March 2009 bottom and still down 21.57% from the peak of July 2007.  We expect to see a slight drop in the February and March indexes.  The spring selling season driven by the expiring tax credits in April plus the lower than normal levels of inventory will start driving home values back up this spring.  Therefore, we predict that metro Atlanta home values will have seen a bottom for 2010 in February or March and we will see slight gains for the spring and summer months.  We may see slight declines later this fall and winter but do not expect to test the lows of March 2009 or February/ March 2010.  We expect a slow but sure increase in values for 2010 and beyond.  Remember, you will not know the bottom of the market until it is passed.  If you are considering buying, do not wait!  

If you look at the average annualCase-Shiller index for each year, here is how homes purchased in recent years would compare to the current index: 

• Homes Bought in 2000 – Gain of 3.69%
• Homes Bought in 2001 – Loss of 1.81
• Homes Bought in 2002 – Loss of 5.45%
• Homes Bought in 2003 – Loss of 8.43%
• Homes Bought in 2004 – Loss of 11.55%
• Homes Bought in 2005 – Loss of 15.79%
• Homes Bought in 2006 – Loss of 19.61%
• Homes Bought in 2007 – Loss of 20.15%
• Homes Bought in 2008 – Loss of 12.72%

Homes values are essentially the same as the spring of 2001 right now.  Yes, we are slowly climbing our way out of this unprecedented housing crisis – but we are not there yet.  So where will home values go from here?  The key factors that will impact our home value include the following: 

1. Demand From Buyers (We expect to see improving demand through spring driven by the tax credits, great deals and low mortgage rates!)
2. Mortgage Rates/ Credit Availability (We expect to see low mortgage rates for an extended period.  Although the mortgage fees on FHA and certain other loans will be increasing this summer.)     
3. Competition from Short Sales/ Foreclosures Entering the Market  (We expect to see significant numbers of short sales & foreclosures for the next two years.  That will be the main competition for most properties.  You need to know the details and trends to compete.)  

You and your agent should be carefully watching the trends for short sales and foreclosures.  It is clearly a great time to buy and we expect many buyers to take full advantage.  The expiring tax credits will create a flurry of sales in April.  However, great deals and low mortgage rates will keep demand strong for an extended period.  Check back for our next posts with the latest facts and insight that can make you money!