As a real estate appraiser in the Birmingham, Alabama market I am very interested in how the housing market is performing. While we still have a long way to go to reach the levels we attained years ago, I do believe 2012 will turn out to be a year that shows positive trends in that direction.
Clients frequently ask me how the market is, and over the past several years I really didn’t have a lot of positive news. I hope my response will change this year. So far in 2012 I am beginning to see positive trends. The Alabama Center For Real Estate (ACRE) publishes great information on housing statistics for the state, so I decided to take a look at their findings and how our current situation compares to the market when it was red hot. The four statistics I decided to look at include: median sales price, total number of sales, days on market, and the absorption rate. I will cover the first two in this post and the last two in my next post.
Chart courtesy of Alabama Center for Real Estate
Median Sales Price: Because real estate appraisers report on home values, and that is tied to price, the median sales price is a statistic I am very interested in. I believe the median sales price is a better statistic than average price because it is not influenced by extremes like the average price is. Over the past 10 years the highest median sale price of $129,317 occurred in February of 2007. As of February of this year (2012) the median sale price was $109,214, which is 15.5% less than the peak. These number reflect the whole state of Alabama, however the Birmingham area has actually showed a 3.5% increase from one year ago. This trend in median sales price is slow in showing increases, which is likely caused by the influence of foreclosure sales in the market. In addition, more stringent credit requirements is affecting the number of potential buyers. With the pool of buyers being reduced sellers have to continue to drop their price until they get an eligible buyer. This will probably be one of the last statistics to show a positive upward trend until the foreclosure inventory has been depleted.
Chart courtesy of Alabama Center for Real Estate
Total Sales: Total sales is a good reflection of activity within the market, however it does not consider other important factors like the aforementioned median sales price or type of sale such as foreclosures and short sales, however it is still a statistic that needs to increase if the market is to return to its peak years. The February sales volume of 2,685 is at about the same level it was in 2002, when 2,640 homes sold. The peak year within this 10 year time frame occurred in February of 2006 when there were 4,266 sales. We are currently at about 63% of our peak year. The state, as well as the Birmingham area is headed in an upward trend since last year, with Birmingham showing a 26.7% increase over February 2011. An increase in sales will help reduce existing inventory, including foreclosures and short sales, which is necessary if we are to return to a healthy market.
Do you study the real estate market in the Birmingham, Alabama area or where you live? What do you see occurring in your market? Leave me a comment below, I would like to hear your take on the state of the market.
If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.
Great resource, Tom. I like the graphs.
Thanks Ryan.