The Good, The Bad, and The Ugly in Shelby County Home Sales

The Good, Bad, and Ugly of Shelby County Property ValuesYou may wonder what I am referring to when I state “The Good, The Bad, and The Ugly in Shelby County Home Sales”.  I am referring to new home sales, foreclosure sales, and the percentage of foreclosures compared to total sales activity in the  Shelby County, Alabama area.  By looking at these figures we can get a better idea of how the market is performing in this area.

New Home Sales (The Good)

From January 1, 2011 to June 30, 2011 there have been approximately 1,119 single family home sales in Shelby County.  Of these sales there were 143 new construction homes,  representing 13% of the total home sales.  The majority of the new home sales were in the following subdivisions:  Waters Edge at Bent River (16 sales), The Enclave (16 sales), and Holland Lakes (14 sales).  The homes range in sales price from $99,900 to $273,515.  These are more modestly priced homes, which you might expect in today’s subdued market, however it is still good news that there is new construction activity.

Foreclosure Sales (The Bad)

Of the aforementioned 1,119 sales in Shelby County, approximately 353 were foreclosure sales.  Prices range from $6,100 to $1,237,500.  This type of activity is expected to continue into the foreseeable future.  I have written before about shadow inventory.  In my my blog post titled “Shadow Inventory-What It Is And How It Affects You“, I reported that the Wall Street Journal predicted it would take close to 9 years to sell off this inventory.  They have revised there numbers since that article to a shorter period to sell off these homes, however more of the homes are still entering the market and continue to affect sales prices.

Property Values (The Ugly)

The ugly part of this article has to do with the overall affect of the market on property values.  The 353 foreclosure sales mentioned above account for 32% of all sales.  The average and mean sales price of foreclosures are significantly less than that of traditional sales and the foreclosures have continued to have a negative impact on the “normal” sales.  One of the questions I get asked the most is why do the foreclosures have to be considered.  I tell clients that it is because the foreclosures account for such a large part of the market they have to be considered.  Not all areas are the same though, some areas have less of this type of activity.  It has to be analyzed on a case by case basis.  Your area may be different.

Conclusion

While there is some bad news I believe that we also have to look at whatever positive signs we can find.  The Birmingham Association of Realtors reports that the average sale price of a foreclosure in the overall Birmingham market has increased.  Whatever the case, it seems the journey back will be slow rather than quick.

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.

 

Comments

  1. 13% of homes being new construction is not too shabby compared to the Sacramento area. I’d have to look at stats, but my guess is that it is nowhere near 13%.

    • When I speak to people and they complain about foreclosures and declining values I always tell them there are other places worse off than ours.

  2. Tom, Yes, the foreclosure activity has and will continue to impact values for the foreseeable future. On a positive(the good), it looks like you have an active market at 1,100+ sales. How does the current sales volume compare to prior periods ?

    • This year had a similar number of sales that 2009 and 2010 had (in the 1,100-1,200 range), however before that, typical sales volume was in the 2,000-2,300 range. Sales started falling off in 2008. It is hard to compare with those “boom” years though, I think it will be some time before we catch back up to those numbers.

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