A quick look at million dollar home sales in Birmingham, AL from 2004-2014

A quick look at million dollar home sales in Birmingham, AL from 2004-2014

It’s no surprise that due to problems in the real estate market over the past several years that marketing and selling luxury homes over $1 million dollars has been a challenge. As a natural extension of this situation it has also been difficult to appraise these homes because of the lack of comparables. I thought I would take a quick look at million dollar home sales in Birmingham, AL from 2004 to 2014 to see what has occurred with this segment of the market and to see if there were any noticeable trends.

 A broad look at overall sales

So if we take a broad look at all sales over this 10 year period for all single family home sales over one million dollars this is what we see:

Birmingham AL Million Dollar Home Sales

What trends do you see? It appears that sales started to diminish at the beginning of 2009 and has only started to pick up slightly from the beginning of 2013 to present. Over the 10 year period there was only one home that sold over $4 million, and none have reached that level since.

What price ranges are the sales occurring in?

There were approximately 662 homes that sold for over one million dollars during this time period. The highest priced home was sold at $4,200,000 and occurred in October of 2008. Here is a quick look at how many homes sold in the different price ranges.

Birmingham AL Million Dollar Home Sales Price Distribution

As you can see most of the homes sold in the range from $1,050,000 to $1,200,000 with the next most numerous range being $1,200,000 to $1,350,000. There were a total of 336 sales in these two ranges for a total of 51% of all the sales. The number of sales in the upper price ranges started dropping off from $1,200,000 on to the upper limit of $4,200,000.

Types of financing for the luxury home market

So what type of financing is used for these luxury homes? There are two main types as you can see from the following chart:

Birmingham AL Million Dollar Home Sales Financing Type

Conventional financing makes up the bulk of financing types at nearly 61% with cash sales being a close second at almost 29%.

Sold price to list price ratio

The last metric that we will look at is theBirmingham AL Luxury Homes Sold Price to List Price Ratio sold price to list price ratio. A higher percentage (closer to 100%) will reflect a smaller gap between what a home was listed for and what it eventually sold for. This figure can be skewed if the home was listed for a higher amount, then re-listed at a lower amount, and then it sold. The entire listing history should be taken into consideration when calculating the sale price to list price ratio to get better accuracy.

Homes in the lower price ranges normally hover in the 96-97% so this is lower than typical, however it makes sense because higher priced homes can stay on the market longer with more price adjustments.

Current inventory of million dollar homes

At the time I wrote this post there were 110 homes over $1 million dollars listed for sale in the Birmingham Multiple Listing Service. They range in price from $1,040,000 to $13,900,000. Based on the rate of of this price range of sales over the past 12 months this equates to a little over 13 months of inventory. This means that if no other homes were listed for sale it would take this amount of time to sell off all of these luxury homes.

Question

What are your thoughts on these statistics for luxury homes in the Birmingham, AL area? How about your own area? As always if you have any appraisal related questions feel free to contact me and have a Happy Thanksgiving.

 

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Comments

  1. While the million-dollar home in southern Utah are somewhat of anomaly — when we get them they are generally along Entrada golf course on the outskirts of St. George. On annual basis we might see 15 or 20 homes over $1 million find their buyer.

    • We do have those areas in the Birmingham, AL are where most of the sales occur also. Most of the time they are either in the Mountain Brook area or Greystone. Thanks for sharing!

  2. Tom…great info….Do you have more specifics in Columbiana area? I have property that originally listed for 1,275,000…reduced to 1,100,000…currently 900,000. Have invited ALL reasonable offers. Curiosity inquiries, but no offers. Seller ready to move…any suggestions, please?

  3. Great appraiser’s look and analysis of the upper end market in Birmingham over $1M. It is interesting to me that there were less $900k sales than $1M sales. Am I reading the Price Distribution Graph correctly, because it is different in my area? Maybe the lower number of $900k sales is a result of how the search was performed, because they are not the focus of this article? Could it be that the search was by list prices over $1M and the $900ks are remainders that listed over $1M and sold in the $900k range or are there actually fewer sales in the $900k range in Birmingham?

    • Gary, I think that is the way the graph was laid out. My search only included homes that sold for over $1 million dollars. The spreadsheet included that as a reference point for the lower end of that axis but there were no sales under $1 million because I did not include them in the search criteria.

  4. Excellent breakdown and on the details of Luxury Market in Birmingham, Tom! I’ll have a write up one on Greater Baton Rouge as well. Sounds like an oversupply right now of luxury homes if there’s 110 listed and only 336 sold over a 10 year period. During same period in Greater Baton Rouge, there’s been 261 home sold over $1,000,000 and 67 listed, which is an oversupply. However, in Baton Rouge as well as your market, these sellers generally aren’t in a dire need to sell and can wait for the right price. Great insight, Tom!

    • Thanks Bill, I look forward to seeing what’s going on in your market. You’re right, there is an oversupply since these homes move slower than the lower priced ones. I think you are right about this profile of seller and due to this fact the sale price to list price ratio tends to be lower because they start out at a higher value that is not realistic for the market and then have to drop.

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