Home price gains are reason enough to be thankful

The S&P/Case-Shiller Home Price Index for metro Atlanta was recently published, and it contained almost all good news.

Average home prices for the national 20-city index increased by 1.3 percent compared to last month and increased nearly 13 percent over the past year. The same index for metro Atlanta shows a 1.7 percent increase in home values from the previous month and an 18 percent increase over the past year.

While it is clear that we can’t count on gains like these going forward, it is refreshing when it happens, and on a variety of levels:

* As values rise, fewer homeowners with mortgages find themselves owing more than their house is worth, allowing them to sell instead of going into foreclosure.

This is a huge benefit to neighborhoods. Instead of seeing abandoned houses being looted for copper and occupied by vagrants, those homes are now being fixed up for sale, looking their best in years and sprucing up the community.

* Discouraged owners who thought about moving several years ago are now reconsidering their options, and putting their homes on the market. Recent inventory of homes in metro Atlanta hit the five-month mark, indicating a healthy mix of buyers and sellers.

* Buyers have finally come to the conclusion that a renewed price dip is unlikely anytime soon, and are actually getting off the fence. Buying activity in many parts of metro Atlanta can only be described as “brisk.” And it certainly doesn’t hurt that interest rates continue to be held down by Washington. I know that can’t last forever, but we need it right now.

* Mortgage defaults are way down. The worst was the early part of 2009, when 5.5 percent of first mortgage loans were in some stage of default, according to the S&P/Experian First Mortgage Default Index. That number is now down to 1.28 percent — still high from a historical perspective, but much closer to a normal rate of well below 1 percent.

In addition to rising values, defaults have been slowed by lenders changing attitudes toward the short-sale process. Allowing an owner to sell a home, even for less than is owed on the loan, avoids a “foreclosure and resale” and resolves the delinquent loan immediately.

Let us not forget that metro home prices are still down about 18 percent from the peak of July 2007. But overall there is reason to be optimistic that this broad upward trend will continue.

I am painfully aware that not all parts of our metro area are experiencing the same boost in home values. In particular, it will likely take years to absorb some of the remarkable overbuilding that occurred in the past.

But even in those areas, I see light at the end of the tunnel.

The metro Atlanta home price index has risen in 16 of the past 17 months, and that is reason enough to be thankful as we approach the holiday season.