Sales: There were 36 residential sales in the Lake Martin area during January, up 12.5 percent from 32 total sales in the area one year ago. January’s sales were 50 percent above the five-year average of 24 sales. Two more resources to review: Quarterly Report and the Annual Report.
For all of Lake Martin’s area housing data, click here.
Forecast: January sales were three units or 9 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE’s sales forecast projects a total of 684 sales in the area during 2018; there were 665 actual sales during 2017.
Supply: The Lake Martin area housing inventory in January was 311 listings, a decrease of 16.8 percent from a year earlier. January inventory increased by 5.4 percent from the prior month. This trend is consistent with historical data from 2013-17 indicating that January inventory on average increases from December by 10 percent.
Demand: Residential sales decreased 16 units or 30.8 percent from the prior month. This trend is consistent with historical data from 2013-17 indicating that January sales on average decrease from December by 29.1 percent. Listings selling in the Lake Martin area during January averaged 188 days on the market before selling. This represents an improvement of 12.6 percent from one year ago, when the average was 215 days.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. Most real estate professionals consider the market to be in balance at approximately 6 months of supply. There were 8.6 months of housing supply in January, up from 5.7 months in December 2017 and down from 11.7 months of supply one year ago.
Pricing: The Lake Martin area median sales price in January was $217,500, a decrease of 17.9 percent from one year ago. The current median price in the area is 8.6 percent above the five-year average for January sales. Pricing can and will fluctuate from month to month because of changing composition of actual sales (lakefront vs. non-lakefront) and the sample size of data (closed transactions) being subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional for additional market pricing information.
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 Lake Martin area January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.