Sales: Lake Martin waterfront sales totaled 29 units during March, equal to sales one year ago. The 10-year peak for March waterfront sales was in 2015, when 36 units were sold, while the trough hit in 2008, with 12 units sold.
Forecast: March results were three units or 9.4 percent below the Alabama Center for Real Estate’s monthly forecast. ACRE projected a total of 62 waterfront sales through March, while there were 57 actual sales.
Supply: The Lake Martin waterfront housing inventory in March was 252 listings, an increase of 22.3 percent from the previous month and a decrease of 2.9 percent from one year ago.
Pricing: The Lake Martin waterfront median sales price during March was $387,500, a decrease of 25.5 percent from the previous month and an increase of 10.7 percent from one year ago. Pricing 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.
Demand: March waterfront sales increased 93.3 percent from the previous month. This is consistent with historical data indicating that March sales on average (’13-’17) increase from February by 132.9 percent. Waterfront homes selling in March averaged 131 days on the market, representing a 10.3 percent improvement from one year ago. Waterfront homes on Lake Martin are currently selling 28.4 percent faster than the five-year March average of 183 days on the market.
Seeking balance: There were 8.7 months of supply in March, down from 8.9 months of supply one year ago. Restated, at the March sales pace, it would take 8.7 months to absorb the current inventory for sale. The market equilibrium (balance between supply and demand on a non-seasonally adjusted basis) is approximately 6 months.
Industry perspective: Interest rates are likely to increase throughout 2018. The Federal Reserve’s Federal Open Market Committee (FOMC) met on March 21 and approved a quarter-point rate hike. As of April 5, the 10-Year Treasury stood at 2.83 percent, down slightly from 2.88 percent one month ago. Although daily yield curve rates have decreased slightly in the past month, many analysts are projecting that the 10-year Treasury will pass 3 percent in the months to come. According to Wells Fargo, the current interest rate on a 30-year fixed-rate mortgage is 4.58 percent (annual percentage rate).
As the overall economy continues to expand, it is not surprising to see growth in Alabama’s residential new construction market. February sales of newly constructed homes grew 22 percent month-over-month and 14 percent year-over-year. Statewide*, there were 507 new construction sales in February, up from 416 total sales in January and up from 445 total sales in February 2017. Year-to-date, new construction sales are up 6 percent from 2017.
February new construction sales in select Alabama markets
- Baldwin County – 100
- Birmingham Metro Area – 125
- Huntsville Metro Area – 112
- Lee County – 36
- Mobile Metro Area – 17
- Montgomery Metro Area – 35
- Tuscaloosa County – 15
New construction building permits and housing starts data are indicators of larger economic conditions. Generally speaking, the housing market is one of the first sectors to expand or contract during times of growth or decline. According to the U.S. Census Bureau, 1,225 building permits for new construction were issued in Alabama during February. Building permits increased 1.1 percent from January, when 1,212 permits were issued, and increased 10.1 percent from February 2017, when 1,113 permits were issued. ACRE projected 1,219 housing starts in Alabama during February. Housing starts decreased 2.9 percent from January (1,256) and increased 13 percent from February 2017 (1,079). Year-over-year increases in both building permits and projected housing starts are encouraging news, as they hint toward continued overall economic growth during the second quarter of 2018.
*ACRE receives new construction sales data from the following counties/areas: Baldwin County, Birmingham Metro Area, Calhoun County, Huntsville Metro Area, Lee County, Mobile Metro Area, Montgomery Metro Area, Tuscaloosa County and the Wiregrass Region. Combined, these counties/areas represent +/- 70 percent of Alabama’s total population.