Sales: According to the Valley Multiple Listing Service, there were 47 residential sales in the Gadsden area during January, a decrease of 27.7 percent from one year ago. Existing single-family homes accounted for 96 percent of all residential sales, with new construction making up the remaining 4 percent. This is almost identical to January 2017, when existing single-family homes represented 95 percent and new construction 5 percent of all residential sales. Two more resources to review: Quarterly Report and Annual Report.
Click here to view all of the Alabama Center for Real Estate’s Gadsden residential data.
Forecast: January sales were 14 units or 23 percent below the Alabama Center for Real Estate’s monthly forecast. ACRE forecasts a total of 927 residential sales in the Gadsden area during 2018. There were 896 actual sales in 2017.
Supply: A total of 444 homes were listed for sale in the area during January, a decrease of 22.6 percent from one year ago. Current inventory in the area is 35.7 percent below the five-year January average of 691 listings.
Demand: January residential sales decreased 28.8 percent from December. This trend is consistent with historical data indicating that January residential sales on average (2013-2017) decrease from December by 18.9 percent. Residential sales in the Gadsden area averaged 107 days on the market in January, down 17.1 percent from the 129 days on the market one year ago.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. The market is considered to be in balance at approximately 6 months of supply. There were 9.4 months of supply in the Gadsden area during January, up from 8.8 months one year ago. In other words, at the January sales pace, it would take 9.4 months to absorb the current inventory for sale.
Pricing: The Gadsden-area median sales price in January was $125,900, an increase of 15.5 percent from one year ago. The median sales price decreased 1.1 percent from the prior month. Historical data trends from 2013 through 2017 indicate that the median price in the area drops an average of 38.9 percent from December to January. 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 Gadsden January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.