Sales: According to the Multiple Listing Service of the Shoals Area Association of Realtors, there were 105 residential sales in the Shoals area during December, up 23.5 percent from the same month in 2017. The 10-year peak for January sales was reached in 2013 with 107 residential sales for the month, while the January trough was in 2011 with 60 total sales. Two more resources to review: Quarterly Report and the Annual Report.
For all Shoals-area real estate data, click here.
Forecast: January’s 105 home sales were nine units or 9.4 percent above the Alabama Center for Real Estate’s monthly forecast. ACRE forecasts a total of 1,688 residential sales in the Shoals area during 2018; there were 1,723 actual sales during 2017.
Supply: Shoals area housing inventory totaled 873 units, a decrease of 9.4 percent from one year ago. January’s inventory has declined 23.8 percent from the 10-year peak of 1,146 listings in January 2010. January inventory decreased 1.7 percent from the previous month. This trend is consistent with historical data indicating that January inventory on average (2013-17) decreases 1.7 percent from December.
Demand: January sales in the Shoals area decreased 3.7 percent from the prior month’s total of 109 sales. This drop is consistent with historical data from 2013-17 indicating that January sales on average decrease 16.9 percent from December. Homes selling in the area during January averaged 89 days on the market, 5 days faster than one year ago. The five-year days-on-market average is 129 days for the month of January.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of housing supply. The market equilibrium, or balance between supply and demand, is considered by most real estate professionals to be approximately 6 months. The Shoals area has 8.3 months of housing supply, down from 11.3 months one year ago. In other words, at the January sales pace, it would take 8.3 months to absorb the current inventory for sale.
Pricing: The Shoals area median sales price in January was $110,250, a 17.1 percent decrease from January 2017’s median sales price of $133,000. The median sales price was down 6.6 percent from the prior month. This trend goes against historical data trends that indicate the January median sales price on average (2013-17) increases 7.1 percent from December. Pricing can fluctuate from month to month as the sample size of data (closed transactions) is 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 Shoals Area January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.