What Happened to the Birmingham Housing Market in 2019?

A Closer Look At Birmingham Housing Market Trends

Birmingham Housing MarketIn last week’s post, I took a look at how the Birmingham housing market in 2019 compared to 2010 when I started my appraisal blog. That gave us a good visual of how much the local real estate market has improved.

This week I want to look at some key metric trends that have occurred over the past 5 years because it will help us to see what 2020 might look like.

Number of Home Sales

It’s always good to start with a down and dirty look at basic unit sales. Sales activity is a key metric that can explain a lot about the market. Check out the trends from 2015 through 2019.

Birmingham Number of Home Sales

There has been a slow and gradual rise in the number of sales over the five year period. Looking beyond that you will also see definite signs of seasonality. It’s important to remember that the real estate market is seasonal so we don’t get freaked out when sales start to drop off during certain parts of the year.

Median Sales Price

The second thing we’ll look at is the change in the median sales price. I’ve chosen the median sales price instead of average sales price because it is not influenced by the highs and lows like the average sales price is.

The Birmingham market is relatively stable when compared to other larger metropolitan areas across the country. We don’t have the extreme highs and lows like other cities do.

Birmingham Median Sold Price

As you can see there has been a definite upward trend in the median sales price. This is most likely caused by the drop in inventory as you’ll see in the charts below.

Housing Inventory

Birmingham is not unlike most other areas in the country when it comes to the number of active listings. Inventory has slowly declined over the 5 year period.

Birmingham Active Listings Trend

Part of the decline in inventory is the drop off in new construction, especially entry-level housing. The uncertainty in the 2020 election could also cause people to hold off on selling and moving up, which would also contribute to the decline in inventory.

Months of Housing Supply

The months of housing supply metric is a measure of how long it would take to sell off all of the existing inventory if no other listings were added. It takes into consideration the rate of recent sales so if sales over the past 12 months have been slow then the months of housing inventory would be longer than if sales were brisker. The following chart shows the past 5 years of trends in housing inventory.

Birmingham housing months of supply

Due to the decline in housing inventory combined with a steady to slight increase in demand the months of housing inventory have slowly declined. This is advantageous to sellers but not so much for buyers.

The supply and demand chart below shows a combination of active listings and unit sales:

Birmingham real estate supply and demand

Looking Ahead to the 2020 Birmingham Housing Market

Some things that may affect the 2020 Birmingham housing market:

Opportunity Zones- I wrote about opportunity zones back in 2018. This program provides various tax benefits to investors that would allow underserved communities to be revitalized with new businesses and infrastructure.

This could indirectly affect residential home values thereby increasing sales and bumping up the median price across the city. It will all depend on how investors feel about the program and whether it can help them make money.

Interest Rates- As you might expect interest rates have a direct impact on home sales. The chart below shows how Birmingham home sales have been favorably affected as a result of lower interest rates. Rates are expected to remain reasonable throughout 2020 which should at least not make it a significant factor for buyers.

Birmingham home sales vs interest rates

What impact will millennial buyers have?- This segment of the population is expected to make a big impact in the housing market in 2020. They will be approaching the age when most people buy their first home. Due to their large number, this could significantly affect sales numbers. Click here for more appraisal information for millennials.

Low Inventory- If the trend in active listings continues (and it is expected to) then inventory levels could reach there lowest point in quite some time. Any new construction that occurs is not expected to contribute much to the housing supply. Entry-level homes have some of the lowest levels of inventory among the different price ranges which can hurt new home buyers and keep them out of the market. The graph below shows the percent change in sales by price range year over year.

Percent change in Birmingham home sales from previous years

The lowest price level of homes up to $149,999 saw a slight increase in the number of sales from 2015 to 2016 but every other year was a decline. All of the other price ranges have positive increases in volume except the highest range did show a decline from 2014 to 2015 but all other years showed increases.

Housing Affordability- This will continue to be an issue as home prices trend upwards and there is little new construction for entry-level homes. The decline in sales of homes in the lowest range shown in the graph is no doubt caused by the lack of inventory for this price range.


So there you have it. A recap of how the 2019 Birmingham housing market performed in comparison to the past 5 years and how this may impact the market in 2020. If you have any appraisal questions feel free to contact me and I will do my best to answer them. As always, thanks for reading.

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  1. Nice job Tom. I love the visuals. I think you added a few new ones too. You are doing an excellent job telling the story of the market. I agree with Joe too. Our inventory is about half in Sacramento. It just goes to show the market isn’t the same everywhere.

    • Thanks, Ryan. Yeah, that is interesting about the inventory levels but based on the graphs you share your market does seem to be more sensitive to the highs and lows of market demand whereas ours is relatively stable.

  2. Tom,

    Great recap. Very interesting to see how high your inventory is compared to our region. We’re typically around 2 months in the suburbs.

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