I think that Si, the crazy uncle from Duck Dynasty, would say “Birmingham’s on its way back Jack!” He would realize that while we are not out of the woods yet we are headed in the right direction. My family loves to watch Duck Dynasty and we can’t get enough of Si’s catchphrases, especially the ones ending with Jack!
During my preparation to speak at a local real estate office recently I was doing some research to see how the Birmingham, Alabama real estate market was doing. These statistics are for the entire Birmingham, Alabama area so keep that in mind. I realize that each city, neighborhood, or subdivision may be different, however it can give us a general indication of the market as a whole. While we are not where we were at the peak (who really is?), according to data published by the Alabama Center For Real Estate (ACRE) there are positive signs in key statistics that I wanted to share with you today.
Total Residential Sales- Sales for August were about the same as the previous month, however they were 4.4% more than a year ago and 20% more than the average in August from 2008 to 2012. An increase in total sales is good for the market because it shows that buyers are confident in the economy, and especially their jobs, to purchase a home. More jobs are created when homes are sold so it has a direct impact on unemployment.
Median and Average Sales Price- These two statistics are both moving in the same direction- up! As I have noted in previous posts, the average sales price is affected more by the high and low sales price while the median is not. Both of these indicators were down slightly from the previous month, however this is typical in the month to month cycle of home sales. The are both up from last year and also from the previous four year average. I believe the decrease in distress sales (foreclosure and short sales) has contributed to the increase. With less of the low dollar sales the average and mean has increased and many neighborhoods that were shown as having declining values has moved into the “stable” category. I think we still have a ways to go before we see a trend of increasing values.
Days On Market (DOM)- The days on market peaked between August of 2010 to August of 2011 at around 110 days, however since then it has declined to it is lowest level since 2004. Days on market was 84 for August of 2013. An increase in demand will cause the DOM to drop because there are more buyers competing for the available listings. The lower DOM is expected with an increase in total residential sales, as long as inventory does not rise to quickly.
Total Units Listed For Sale- The number of homes listed for sale in the past 10 years peaked in 2007 at 13,582 and for August of 2013 it was at 7,920. As you might expect, a reduction in the number of homes listed for sale can create a sellers market because there are not a lot of homes to choose from. In addition to less distress sales, this reduction in inventory can result in higher average and mean sales prices because there is more competition for them. Listings are at their lowest since 2004 or 2005.
Months Of Housing Supply- This statistic reflects whether supply and demand is in balance or there is a shortage or over supply of homes. A market is typically in balance if there is 4-6 months worth of inventory, meaning that if no more homes were listed for sale it would take this amount of time to sell off all of the supply given the current rate of sales. At the current time the Birmingham area has 6.7 months worth of supply. This is down from last month, August of 2012, and the past 5 year average. We have a slight oversupply of homes, however it continues to drop and will be in a balanced state soon. The only thing I can see changing this is if a large supply of foreclosures are released into the market, which I have heard rumors about. As I mentioned previously, this increase will effect other key statistics as well.
So as you can see from the statistics I have mentioned here we are moving in the right direction. Are there any other key indicators you would include? If you are seeing anything different where you live please leave me a message I would like to hear from you.