Shelby County Luxury Home Market Update – 2021

Shelby County Luxury Home Sales Trends

The market is not the same in every location or for every price range. Recently someone posted that the market was up 18%, but what does that mean?

For data to be meaningful, it has to have context. By this, I mean that instead of saying that the market is up 18% it would be more helpful to say that the market for single-family homes, between 1,000 SF and 1,500 SF, built between 2000 and 2010, in the Classy neighborhood (made up name) of Hometown, Alabama is up 18%. Does that make sense?

If you aren’t more specific then everyone thinks that their home should be worth 18% more than it was last year or whatever time frame they are quoting. You have to take statistics with a grain of salt unless specifics are included.

One market I wanted to share with you today is that of luxury homes. In a recent assignment, I needed to study what was happening with the sales and inventory history of homes over $800,000 in North Shelby County, Alabama.

To narrow it down even more I wanted to make sure that no homes on lots larger than five acres were included. In the North Shelby County market, it is not uncommon to find homes in this price range located on large acreage tracts that can be 20 or 30 acres in size.

I did not want to include homes with larger land sizes because a large part of the sales price would be due to the land value. I did not want to have to make an adjustment for the land because the more adjustments you make the less comparable a property becomes.

This is where bracketing comes in handy. By bracketing the land size, we narrow down the comparable sales but the ones we do find are more similar and provide a more accurate picture of what is happening in the market specific to the type of property we are appraising.

The data I am sharing with you here has the following parameters:

Location: North Shelby County
School System: Oak Mountain and Spain Park
Time Frame: 2016 to 2021
Land Size: 0-5 acres
Price Range: $800K and up
Square Footage: Homes greater than 5,000 SF

Based on the above criteria here are some charts that illustrate the market (click on the chart to get a closer look):

Shelby County Median Sold Price for Homes Over $800K from 2016-2021 – Over the past 5 years, median prices have held relatively steady. Prices started to rise slightly in 2018 with a spike in mid-2020. After the spike, they returned to previous levels with only minor increases.

Homes within this price range are not as numerous as those below $800k. The sale of one home over what is typical can impact the overall median price and that appears to have been what happened in mid-2020.

Median home prices for luxury homes in Shelby appear to have followed the same trend as homes in the lower price ranges in 2020. The lowering of interest rates and limited supply have contributed to price increases.

Shelby County Number of Home Sales Over $800K from 2016-2021 – The inventory of homes over $800K is less than those in the lower price bracket, as you might expect.

From 2016 until mid-2020 the most sales per month have been at around ten. In mid-2020 there was a slight increase, and then again in mid-2021, we see a large increase to around 20 for one month before the numbers return to more normal levels.

Shelby County Months of Supply for Homes Over $800K from 2016-2021 – Again we see a trend in this price range of homes as we see in the lower levels. From 2016 to 2018 we see anywhere from 7 months to 66 months of supply, however beginning in 2019 the months of supply return to lower levels and it has continued to drop to where we are now.

Remember, the months of supply is a measure of the number of listings compared to the rate of sales. An increase in the number of listings without an increase in the rate of sales will result in a higher number for months of supply.

Over the past several months we have been closer to a balanced market due to a limited number of homes for sale along with a good rate of sales. The months of supply are very sensitive for this price range due to a limited number of listings and a slower rate of sale.

Shelby County Number of Active Listings for Homes Over $800K from 2016-2021 – The number of listings within this price range is cyclical as you can see in the chart.

Each year the number of listings peak around June or July because this is historically a good time to sell.

The number of listings has slowly declined and this year in 2021 we did not see the normal rise in June and July listings. Time will tell as to what the trend will end up doing. It may correct itself and then again it may end up doing something different.

With the low number of listings, this is a good time to sell a home in this price range if it is priced to the market.

Key Takeaways

• When pricing a home over $800K in the North Shelby County market it’s important to not price it out of the market. Prices are relatively stable so if you price it aggressively the home could stay on the market longer than it should.
• Because of the price range, and the limited number of qualified buyers, the number of sales occurring falls within a narrow range, approximately 1-10 a month. This is quite a bit lower than lower-priced homes.
• It’s important to keep in mind that while many homes in this price range are custom built with high price tags during construction this may not transfer to what you could sell it for now. The home must be priced to the market rather than to what it cost to build. These two numbers are not always the same.
• The months of inventory have decreased over the past 6-12 months. This is good news for sellers as the market equalizes with less competition.
• We did not see an increase in listings during the middle of this year, which has undoubtedly contributed to a decrease in the months of inventory and a better environment to sell.

Conclusion

Do you have any questions about the Shelby County luxury home market? If so leave a comment below and as always thanks for reading.

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