Case-Shiller Index – January 2010

The January Case-Shiller Index was just released.   As always, Case-Shiller is published the last Tuesday of the month and reports on data 60 days in arrears.  Therefore, the index reports metro Atlanta home values for November 2009.  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 to the news….  The November index shows the 3rd drop in a row after 5 positive months in a row.  In a more normal market, you would expect such a seasonal drop.  However, the previous $8000 First Time Home Buyer was expiring in November which should have positively impacted these numbers.  The new extended and expanded tax credits were not announced until December.  The market results for December were significantly down versus November.  Therefore, we should expect a more significant drop in home values coming for December.   Click on the link below to open the Excel spreadsheet that shows the details of the latest index.

Case Shiller Index – Atlanta – November 2009 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 the, we have slipped and are now 4.02% above the March bottom and still down 18.6% from the peak of July 2007.  We would expect to see some additional drops in the December and January reports but do not expect to drop below the March 2009 levels.  The early spring season driven by the expiring tax credits in April will likely drive home values back up prior to the normal seasonal patterns. 

If you look at the average annual Case-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 4.43%
• Homes Bought in 2001 – Loss of .93%
• Homes Bought in 2002 – Loss of 4.54%
• Homes Bought in 2003 – Loss of 7.51%
• Homes Bought in 2004 – Loss of 10.76%
• Homes Bought in 2005 – Loss of 15.11%
• Homes Bought in 2006 – Loss of 18.62%
• Homes Bought in 2007 – Loss of 19.15%
• Homes Bought in 2008 – Loss of 11.63%

Homes values are essentially the same as June 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     
3. Competition from Short Sales/ Foreclosures Entering the Market  (See the blog post on short sales & foreclosures – http://atlrealestatescoop.com/changing-trends-foreclosures-short-sales/)

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.  We will continue to keep you informed with the latest facts and insight that can make you money!