Is The Entire Birmingham Real Estate Market Hot?

Are All Areas of The Birmingham Real Estate Market Hot?

In today’s real estate market it’s easy to make the mistake of assuming that every home and every area of town are red hot. While the Birmingham real estate market is certainly more active than a couple of years ago we have to keep in mind that not all areas or price ranges are at the same level.

Are All Areas of The Birmingham Real Estate Market Hot

Just because some homes are selling over list price days after they are listed this does not mean that is true for every area of town. Some sellers may think that they can price their home for an unrealistic amount and still sell it with no problems but that may not be the case.

As we all know, real estate is location-specific. In addition, homes within certain price ranges also have different characteristics. We need to keep this in mind when pricing a home. It’s important to factor in the price range the home is in as well as where it is located. We don’t want to focus only on the “hot” areas of town.

To illustrate this I thought I would first share what is happening in the different price ranges. Here is what I found:

Birmingham Area DOM and SP to LP Ratio





As you can see, both the Days on Market and Sale Price to List Price Ratio vary depending on the price range of the home.

To show the differences in the Birmingham real estate market I have included several charts that show not every area of Birmingham is performing at the same level. There is a difference in the number of days it takes to sell a home and for how much it sells as a percentage of the list price (Sale Price to List Price Ratio).

Birmingham Top 10 Areas With Lowest Days On Market (DOM)Birmingham Top 10 Areas With Highest Days On Market (DOM)Birmingham Top 10 Areas With Lowest Sale Price to List Price RatioBirmingham Top 10 Areas With Highest Sale Price to List Price Ratio

So you can see that the entire Birmingham real estate market is not at the same level. As I will note below, this is good information to know when pricing a listing in a hot market.

Listed below are some things to consider in the current market we are in.

Key Takeaways When Pricing A Home in Today’s Hot Market

1) Don’t assume all homes are selling above list price- Everybody is talking about how hot the market is but we need to keep in mind that not all houses are selling above list price. As you can see in the charts that I have included the SP/LP ratio fluctuates between different locations of the Birmingham market.

Some listings in specific sub-markets or subdivisions sold over list price, however, this is lost when you start combining the different areas.

This means that not everyone can expect their home to be part of a bidding war among buyers which can drive the contract price above the listing price. Pricing the home to what the other nearby neighborhood sales are going for is the best bet to price it accurately.

2) Don’t assume all homes are flying off the shelf as soon as they are listed- While many homes are selling more quickly than they have in the past this is not true for all areas. The Days on Market (DOM) range from 14 to 57 days depending on what part of town the home is in.

This should be factored into the pricing strategy. If the home is in a “hot” area with a low DOM then you can be a little more liberal in your pricing because it will most likely sell quickly and for a good price.

You should use a different approach if the home is in an area with less demand. Pricing the home more conservatively would probably help it to sell in a more reasonable amount of time.

3) Use comps from the subject’s Competitive Market Area- It is very important to use comparables from the same competitive market area, which you can read about in my prior post. By doing this you will be using sales with similar characteristics which will contribute to a higher sale price to list price ratio and decrease the days on market.

If you do not use comps from a similar area you run the risk of making apples to oranges comparison. This usually plays out by overpricing the property.

When the home is overpriced it will stay on the market longer than typical and the price will then need to be dropped and this results in the SP/LP being lower.

4) Make sure you have accurate square footage information- The only way you can price a house correctly is if you have the most accurate information possible. This starts with having accurate square footage.

In the past, I have written how important this is by describing how listings that have the most accurate square footage information sell more quickly and for a higher SP/LP ratio. In the Greater Alabama MLS there are various sources that you can use for square footage information.

The most accurate source of square footage information is from the plans, from a prior appraisal, or from measurement by a qualified home measurement expert. In my study, the homes using this source of information sold in less time and the closed price was closer to the original list price.

5) If you’re not sure about pricing get a pre-listing appraisal- Of course, if you are not sure what to list your home at then it is very important that you seek the advice of a certified and licensed appraiser. Again, pricing the home accurately will reduce the time it takes to sell it, and most likely it will sell for an amount close to what it was listed for.

If you feel confident about pricing and just need to have accurate square footage you can always start with a floor plan measurement. This will be a similar sketch to what you would receive in a full appraisal, however, it will just be the sketch.

This will give you accurate information to work with when pricing if you have good comparable sales. This will help you make an apples-to-apples comparison.


We all know that the characteristics of a hot real estate market include low days on market and a high sale price to list price ratio. Not all price ranges are equal even in a hot market because we see that some homes in different price ranges sell better than others.

We also know that not all areas of town sell the same. It is because of these irregularities that it is very important to have accurate information to use when pricing a home.

Do you have any other questions about pricing a home in a hot market? Leave a comment below and as always, thanks for reading.

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  1. Very useful!

  2. Love reading everything you write! You have helped me be so much better at what I do on a daily basis and be so much more effective at explaining these concepts to my clients. Thanks so much for taking the time to do this!

    • Thanks, Allison, that made my day! I appreciate the kind words and I am glad that the information is helpful to you in the performance of your job.

  3. Love the visuals Tom. That’s a cool idea to report on DOM by neighborhood or area.

    • Thanks, Ryan. I thought it would be helpful in understanding how well the market is doing. It is one of the main metrics that help us to understand that not all segments of the market are selling in the same amount of time.


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