Nope, we don’t have a crystal ball.
But we do have a sense for what the residential real estate market here in the Birmingham and Shelby Co. area will probably be like during 2014.
We are optimistic that more homes will sell, and that values will continue to rise.
We base this on how the market is performing, as seen through the eyes of lenders, appraisers and other Realtors here in the area. Also helping is being familiar with the local economy and standard of living that central Alabama residents enjoy.
You can read all sorts of expert opinions on what the market will be like, but few of those seem to touch down to the community level, or have a clear idea of the inclinations of Sellers and Buyers in this market.
What’s happening in this market is important, because real estate is a very local industry. Home sales in San Diego, Las Vegas or Lexington, KY, may not be the same as what’s happening in Shelby Co. and Birmingham. In fact, most of the time, the trends are not the same.
To be sure, the Buyer’s market that existed here (as in other cities) only a couple of years back is a thing of the past.
The number of homes for sale in many Birmingham area neighborhoods continues to be down significantly, compared to even a year ago. This doesn’t necessarily mean that Sellers will be able to get full asking price for their home, but they may sometimes have a little more clout in negotiations. Sellers are finding it easier to say ‘no’ to so-called ‘low ball’ offers, because they know that people looking to buy don’t have as many properties to choose from.
Some of the lenders we know reported at least a temporary drop in business late in 2013. It’s difficult to pinpoint any single cause, although we did hear speculation that the increase in health care premiums hitting many people due to the Affordable Care Act could be one reason. Having to suddenly pay several hundred more dollars each month, on top of a new house payment, might have been enough to convince some potential home Buyers to hold off—at least, for a bit.
But people’s needs, business and personal lifestyles still go on, and so does the need to change housing and locations. Some folks want to downsize. Others with growing families need more space. Still others want to be closer to work, church or school. All of these reasons came into play with people Colleen and I helped during 2013. And based on the calls we have received so far in 2014, these requirements don’t seem to be going away.
Values have stabilized. In some cases, they appear to be starting to creep up. But it’s not a fast or extreme trend, so if you’re thinking you can sell your home for 10% or 15% more than a year or two ago, you’re likely in for a surprise.
Economically, the central Alabama area continues to enjoy overall good health. We are also seeing some homeowners, who, though previously deterred by low values, are now coming forward, wanting to sell.
We see these factors as likely to have a positive effect on home sales in the Shelby Co. and Birmingham area during 2014:
- Shelby County’s economy
Shelby Co. has enjoyed a healthy economy for many years, and that’s showing no signs of change. Confidence in the area remains high. One sign of this is the expansion planned for the Colonial Promenade in Alabaster. Businesses wouldn’t be making the investment if they didn’t see the potential. If you’re not familiar with the Birmingham area, Shelby Co. is a popular place to live among many people who work in the greater Birmingham metro vicinity. This is because of how much more home you can get for the money, and because the county has such a good quality of life and so many desirable neighborhoods.
- New construction
The new home sales market is picking up. In Shelby Co., new homes are selling well in several areas, in part, because Lenders are starting to make loans to home builders again, and because demand is increasing.
New construction is growing in Pelham and, especially, in Helena, where families want to locate, because of Helena’s new high school, set to open this fall. When the sale of a newly built home in Helena fell apart just before closing during October, 2013, a new Buyer showed up and put the home Under Contract seven days after it was to have sold to the first Buyer.
Agents who sell homes in new construction developments see the change.
“There’s strong interest among Buyers in new construction,” according to Greg Arcara, of Arcara Residential, LLC. “More builders are starting to get funding, including some smaller builders. Money is freeing up a bit, so that’s helpful,” Arcara said.
In Pelham, 119 permits for new homes had been issued as of just before Christmas, 2013. That’s a 40% increase over the previous year.
- Increased emphasis on education
The cities of Alabaster and Pelham have both recently decided it’s time to run their own schools. In July of 2013, Alabaster’s new city school system officially began operation with Dr. Wayne Vickers as its new Superintendent. The City of Pelham is following suit; at its September 9th 2013 meeting, council members voted to form a school system that will be supported by a one cent sales tax increase approved a month earlier. We have no doubt that demand for homes in these cities will increase, as these areas’s school systems’ reputations grow.
- Jefferson County’s economy
Once pronounced DOA, Jefferson Co. is starting to get back on its feet. Thanks to the county’s December 3rd 2013, exit from a record $4.3 billion bankruptcy, civic and business leaders are optimistic that—given a little time—the stain of a default that drew nationwide attention will start to fade, opening the way for new economic development within the county.
Also benefitting Birmingham area home owners is the fact that—while the negative trends that affected other parts of the country were felt here, as well—they were not as extreme. This makes rebounding an easier and shorter process.
It’s true that getting a loan isn’t as easy today as it was a few years ago. While the national news media has portrayed this as a negative development for people looking to buy homes (we remember one network report suggesting that getting a loan was virtually impossible in the Birmingham area), these reports typically don’t provide a balanced view.
Birmingham area home sales during December, 2013 totaled 887, compared to 776 one year earlier, according to the Greater Alabama MLS. That’s an increase of 14%.
Homes are selling for more money, too. Average sales price for the same period stood at $203,043, a 9% increase over the previous year’s average price. Inventory for the month stood at 7,439, a 2% decrease from one year before.
All of these reasons—coupled with the fact that the Birmingham area is considered a good place to live—leave us excited about 2014.
We think it’s going to be a good year!Tags: 2014, agent, alabama, alabaster, arcara residential llc, bankruptcy, birmingham, colleen black, david black, Economy, greater alabma mls, greg arcara, Helena, home for sale, home sales, homes for sale, inventory, jefferson county, keller williams realty metro south, market, mortgage, new home sales, pelham, quality of life, real estate agent, realtor, schools, shelby county, wayne vickers