Home prices stabilizing. So what's wrong with Atlanta?

Some of America's most closely watched housing numbers are starting to suggest that the big decline in housing is coming to an end, at least in some metros.

Home prices in Seattle, Minneapolis, and Denver have begun to trend upward in the past few months, according to the S&P/Case-Shiller housing indices. Even hard-hit metro areas such as Tampa, Fla., and Phoenix have seen a modest rebound.

But in Atlanta home prices not only continue to fall, the declines are accelerating. They now stand at a 14-year low.

That artifact should give homeowners pause, especially those who expect a quick rebound in housing. Nationally, prices haven't been this low since 2003. In Atlanta, they haven't been this low since early 1998.

"Atlanta continues to stand out in terms of recent relative weakness," said David Blitzer, chairman of the index committee at S&P Indices, in a statement. Of the 19 cities tracked in January, Georgia's largest metro saw prices fall 2.1 percent from a month earlier and a whopping 14.8 percent over the last year, the biggest year-on-year decline since the depths of the Great Recession..

So is Atlanta an oddity – or a troubling signal that other homeowners should worry about?

"Atlanta's a real quirky market," says Hank Miller, real estate broker and certified appraiser based in Roswell, Ga. With no natural boundaries, developers expanded wildly during the housing boom, so that outer suburbs in the south and near Hartsfield-Jackson Atlanta International Airport are awash in homes that are depressing prices. But in many suburbs north of the city, "it's actually a very tight and stable market, stable to the point that people are building new homes. I've got three new homes under contract for over $500,000 in the last two weeks."

Some other sprawling metros are also witnessing continuing declines, such as Chicago (down 6.6 percent over the past year) and Las Vegas (down 9.1 percent). Other sprawling centers, however, are seeing small declines, such as Minneapolis, or stabilization, such as Denver.

The 19-city Case-Shiller index (which this month was missing data from Charlotte, N.C.) stands somewhere in-between these cities and Atlanta. Prices are down 3.8 percent over the last year, on par with year-over-year declines seen in previous months and nowhere near the declines in the depth of the recession. 

Atlanta, for all its recent decline, has not seen prices fall half or more from their peaks, as Las Vegas, Phoenix, and Miami have. Its average home price would have to fall another 20 percent to reach their level of distress. So it's natural that these local real estate markets go through a period of volatile adjustment as buyers and sellers find the floor for prices.

But there are no guarantees that housing prices will go up. Mr. Miller, for one, isn't expecting any quick turnaround. He points to the huge inventory of foreclosed and other homes still waiting to come onto the market. "You still have a couple years to shake this thing out," he says.