Sales: According to the Tuscaloosa MLS, Tuscaloosa-area residential sales totaled 124 units during January, down 25.7 percent from 167 homes sold during January 2017. Existing single-family homes accounted for 80 percent of residential sales, while condos represented 9 percent and newly constructed homes accounted for 11 percent. Two more resources to review: Quarterly Report and Annual Report.
For all of the Tuscaloosa area’s housing data, click here.
Forecast: January results were 31 units or 20 percent below the Alabama Center for Real Estate’s monthly forecast. ACRE’s 2018 sales forecast projects 572 closed transactions during the first quarter of the year and 2,724 closed transactions for the Tuscaloosa area during 2018.
Supply: Tuscaloosa’s January housing inventory totaled 839 units, a decrease of 15 percent from January 2017. January inventory increased 3.5 percent from December. Inventory has now declined 56.5 percent from the January peak (1,930 units) reached in 2008.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of housing supply. The market is considered to be in balance at approximately 6 months. The Tuscaloosa area currently has 6.8 months of housing supply, up from 4.3 months of supply during the previous month and up from 5.9 months this time last year.
Demand: January residential sales were 34 percent below the prior month. Historical data indicate that January sales on average (’13-’17) decrease from December by 21.9 percent. Tuscaloosa-area homes selling in January averaged 58 days on the market, a decrease of 25.6 percent from 2017. The five-year average for days on the market for January home sales is 113 days.
Pricing: The Tuscaloosa median sales price in January was $175,500, an increase of 17.1 percent compared to January 2017. The median sales price was up 5 percent from December. Historical data indicates that January median sales prices on average (2013-2017) decrease by 8.8 percent from December. It should be noted that differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. Consult with a real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
Industry perspective: The recent headlines in the real estate world have revolved around rising interest rates. As of Jan. 31, the interest rate on a 30-year fixed-rate mortgage was 4.38 percent. This is up from 4.18 percent on Jan. 10 and up from 4.08 percent on Dec. 6, 2017. The stock market has rebounded somewhat from its large selloff on Friday, Feb. 2, and Monday, Feb. 5, as investors adjust from an accommodating monetary policy to one with some inflation and higher interest rates. The recent market decline is a signal of a return to normalcy and higher debt costs. Rising interest rates, however, do not cause housing activity to come to a halt, in the same way that rising rates do not cause businesses to go into hibernation. In the spring of 2006, the Federal Reserve stopped raising interest rates after raising rates 16 times over a three-year period. The economy was performing well during this time (2004-2005) of rising interest rates. The Great Recession happened, interestingly enough, at a time when interest rate increases were halted.
Home ownership rates increased to 64.2 percent during 2017 after falling to a post-1965 low of 62.9 percent in 2016. Not surprisingly, home ownership rates peaked during 2005 at approximately 69 percent. Millennial home ownership rates are also on the rise as their employment situations continue to improve. Millennials, in fact, have been recently credited with an improvement in suburban housing markets as not all are city dwellers. This rise in home ownership was highlighted recently at the annual TrendLines 2018 program in Washington, D.C., with an analysis of Census Bureau housing data presented by Sage Policy Group, Delta Associates and Transwestern. The following excerpt is from the closing paragraph from the home ownership report, and is encouraging news for residential real estate markets across the nation:
“This year, the most common age in America will be 26 years old. There is also an abundance of 25- and 27-year-olds. All of these people are millennials, America’s largest and most educated generation. As more of this demographic block marches into their 30s, demand for ownership opportunities will rise. While there may be downturns that occasionally suspend these demographics, the next decade stands to emerge as a period of rapidly expanding home ownership and single-family homebuilding in America.”
Click here to generate more graphs from the Tuscaloosa Monthly Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.