It’s a great time to sell a home in Alabama. Just make sure you have some place to move once you deposit the check.
The combination of an historically low number of homes on the market, coupled with pent up demand for housing has made for an especially interesting time in Alabama’s housing market.
Statistics from the Alabama Center for Real Estate (ACRE) at the University of Alabama show this.
The statewide median sales price in July was $218,374, a record high and an increase of 11% from one year ago. The median price jumped 0.8% in just one month’s time.
Homes sold in July averaged 43 days on the market, which is a record low and 38 days faster than one year ago.
Listings are down 29.3% from a year ago.
That tight market has been a fixture for a good while.
The last time Alabama saw a year-over-year gain in its available home inventory on the market was February 2015.
Right now, the available homes on the market represent about 1.5 months worth of sales. A year ago, there was two months worth of inventory out there.
That spells a sellers market.
Why are prices so high?
Stuart Norton, data analytics coordinator at ACRE, said the COVID-19 pandemic has played a large role.
“The importance of housing space has always been critical,” he said. “But it’s even more so, as people are working more from home, and now people are looking at it in a different light.”
But the pandemic isn’t the only factor at work.
Those who remember the Great Recession of 2007-09 recall the role that housing played in it.
An “overbuilt market” and loose lending led to the crash. In 2005, Alabama saw more than 30,000 building permits. Within five years, it was barely more than 10,000.
Last year, there were less than 20,000.
And the construction industry nationwide, as other sectors, has been dealing with a skilled labor shortage. That part of the equation seems to be improving.
The Associated General Contractors of America said that residential contractors have recently added 17,000 jobs across the U.S. in the last month, the fourth straight month of gains.
But at the same time, builders are struggling with a lack of qualified applicants, shortages of materials and long delivery delays.
Demand is elevated for any home product, Norton said, and has been for the past year.
“The builders are selling them as fast as they can build,” he said. “In the $350,000 and below range especially.”
Even prior to the pandemic, the U.S. housing market was already dealing with a very low number of houses on the market.
But the lack of inventory on the market may be improving.
Home listings were up 12 percent from June in Alabama, which matches up with national trends. That means that more people are bringing their homes to the market, perhaps in search of big money.
There is good news for buyers – price growth is starting to slow a bit. Prices saw an 11% year over year gain in July, which is still significant but down from the 15% logged last fall.
“That doesn’t mean that everybody’s house is worth 11% more than it was last year,” Norton said. “A lot of that sales activity is taking place at the upper end of the market.”
Norton said he believes prices will moderate into single digit increases by the end of the year. That’s an opinion shared by Lawrence Yun, chief economist for the National Association of Realtors.
“Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” Yun said.