Alabama’s Housing
Market Remains
Strong
Existing home prices in Alabama rose
to an all time record average in May
2006 of $160,720. Despite rising interest rates, high oil prices, and flagging
consumer confidence, we are fast
approaching another record year for
housing in Alabama following the high
set in June 2005 when 5,905 properties
were sold.
Photo courtesy of Carolyn Goode of the Alabama Real Estate Research and Education Center.
The number of homes listed for sale
represents a very sizeable increase of
32 percent compared to a year ago.
This translates into an almost six
month supply of existing housing at
the current rate of sales. Year to date,
the number of homes put on the
market totals 151,381, compared to
only 120,218 during the same period in
2005. Despite this large increase in the
supply of available homes, the average
number of days a house spends on the
market has remained remarkably stable.
Baldwin County. The Baldwin County
market seems to be firming up after a
rough post-Katrina period. Prices have
been relatively stable for the first five
months of the year, in the neighborhood
of $295,000, but they are below the
record of $344,656 set in February 2005.
Year to date sales are still well behind
the pace set in 2005 (1,470 units sold
through May 2006 compared to 2,331
through May 2005) and the inventory
of homes has increased to a 19-month
supply at the current rate of sales.
Overall, the data indicate a period of
readjustment for Baldwin County real
estate while people reevaluate after the
devastating effects of Hurricane Katrina.
Birmingham. The Birmingham market
continues to be strong for home sales.
For the first five months of 2006 compared to the same period in 2005, the
average number of homes sold per
month increased by 100 to 1,392, with
the average selling price increasing by
$11,683 and the median selling price
rising by an average of $7,939. In the
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Alabama Business
Birmingham market, the average price
of a home sold during the months of
January to May 2006 was $199,270.
The average number of days on the market was virtually the same during this
period as the year before, while the total
number of homes for sale in any month
during the period increased by an average of 1,886 to reach a level of 8,640.
The Birmingham area remains a solid and
steadily growing real estate market for
the state.
Dothan. Dothan’s housing market, like
Birmingham’s, is seeing steadily growing
activity. The average number of sales
per month in the Dothan market rose
from 79 homes per month during the
first five months of 2005 to 114 per
month during the same period in 2006.
Average and median selling prices in the
Dothan market increased slightly in the
first five months of 2006. Homes appear
to be selling more quickly in Dothan
compared to the previous year, with an
average of 26 fewer days on the market.
Dothan’s strategic location provides it
with a sound and diversified real estate
market. Located a few miles from the
state lines of Florida and Georgia,
Dothan is one of the region’s most progressive cities. The Dothan area offers
affordable housing with low property
taxes and a wide variety of housing for
people from young families to retirees.
Huntsville. Huntsville remained a very
strong market between early 2005 and
early 2006. The average number of
homes sold per month in the Huntsville
market increased by 162 for January to
May 2006 compared to the same period
in 2005, to reach a monthly average of
854. In addition, the average selling
price increased by $10,091 in the first
five months of 2006 compared to 2005,
while the median selling price jumped by
$12,454. The average number of days a
home was on the market in the
Huntsville metro area decreased by six
days compared to the previous year,
while the number of homes for sale
increased by 503. Huntsville’s implementation of its regional growth initiative is paying off. Over 5,400 new jobs
have been created, which means an
increase in the number of houses
needed for new residents of the area.
Mobile. The Mobile residential real
estate market, like that of Baldwin
County, was significantly affected by
Hurricane Katrina in late 2005. The
real estate situation on the Alabama
Gulf Coast is still hard to read, but
seems to have more good news than
bad. The average number of homes sold
per month in Mobile County decreased
by 53 to 500 during the year over year
period, but the average selling price
climbed by $9,061 to $161,930 and the
median selling price grew by $8,950 to
$131,700. Amazingly, the average number of days on the market for a home in
Mobile County decreased by 36 days in
a year’s time. Over the first five months
of 2005, the average house was on the
market for 95 days. Over the same period in 2006, the average house was on
the market for only 59 days. Mobile’s
cost of living continues to rank as one
of the 10 lowest out of the 80 largest
metropolitan cities in the United States.
Rebuilding efforts are underway and
some residents of Baldwin County are
relocating to Mobile County.
Montgomery. The Montgomery market
is also proving to be a growth market
for Alabama. While the average number
of sales hasn’t changed much in 2006,
the average selling price increased by
$18,781 and the median selling price
rose by $20,525. Redevelopment of
the downtown convention facilities
and the presence of a five-star hotel
will continue to build Montgomery’s
Riverfront development as a thriving
retail, residential, and entertainment
district. With Hyundai and various
supporting businesses locating in
Montgomery, the city will see new
faces and new dollars supporting the
community.
Tuscaloosa. The Tuscaloosa market
continues to grow as well. The average
number of homes for sale increased during the first five months of 2006 compared to the comparable period of 2005.
The average selling price was up $6,736
to $162,053 over the period, and the
median selling price increased by $7,817
to $143,437. The average number of
days a house is on the market is longer
in Tuscaloosa than in Mobile, Huntsville,
or Birmingham, but the Tuscaloosa market continues to thrive. The plan to
attract an additional 8,000 students to
The University of Alabama, the recent
expansion of the Mercedes facility, and
new downtown revitalization and riverfront developments are providing opportunities for the area’s real estate market.
Outlook. It would appear that the
housing market is continuing
to expand in most locations within
Alabama, with both prices and sales
levels up. There seems to be a shift in
demand from higher cost markets to
locations where price appreciation has
been more modest, as buyers seek more
affordable housing. Add the strong
labor market in Alabama and all ingredients are in place for another good year
for housing.
speculation over the last few years are
cooling, with prices returning to more
sustainable levels. Interest rates have
been slowly, but steadily, rising for the
last year. May 2006 mortgage rates
were about 100 basis points higher
(1.0 percent) than during May of last
year and the Federal Reserve just
announced another 1/4 percent hike
in the federal funds rate. While fears
of a housing bubble are receding, rising
interest rates and declining housing
affordability, high gasoline prices, and
sagging consumer confidence will probably work to soften housing markets,
especially in higher priced communities,
as we move into the second half of the
year.
Suzanna Allaway
[email protected]
Leonard V. Zumpano
[email protected]
Research assistance from Junhua Yu
http://arerec.cba.ua.edu
Those markets that experienced doubledigit price appreciation and significant
Alabama Home Sales Report
Average Statewide Statistics
Total Homes Sold
Average Selling Price
Average Days on Market
Total Homes Listed
May 2006
April 2006
May 2005
Year to Date
May 2006
Year to Date
May 2005
5,695
$160,720
123
32,781
4,983
$157,905
117
32,188
5,550
$143,813
131
24,748
23,807
$152,302
127
151,381
23,097
$142,634
136
120,218
These statistics reflect residential sales of houses, condominiums, and townhomes by REALTORS® in the local boards/associations of REALTORS®.
This and more information can be found at http://arerec.cba.ua.edu
Alabama Business
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