Sales: According to the Baldwin County Association of Realtors/Multiple Listing Service, January residential sales in Baldwin County totaled 391 units, up 4.3 percent from last January. Current sales are 24 percent above the five-year January average of 315 total sales. The 10-year low for January sales in Baldwin County was in 2008, when only 132 residential transactions were recorded. Two more resources to review: Quarterly Report and Annual Report.
For all of Baldwin County’s housing data, click here.
Forecast: January results were nine units or 2.3 percent below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 400 residential sales for the month, while actual sales were 391 units. ACRE forecasts 6,593 total sales during 2018 for Baldwin County; 2017 actual sales totaled 6,592 units.
Supply: The Baldwin County housing inventory in January was 2,698 units, an increase of 7.3 percent from January 2017. The area’s housing inventory has declined 50.2 percent from the 10-year January peak in 2008, when 5,420 units were available for sale. There were 6.9 months of housing supply in January, representing an increase of 2.9 percent from the 6.7 months of housing supply available in the area in January 2017. The market reaches equilibrium at approximately 6 months of housing supply, with an even balance between supply and demand.
Demand: Baldwin County residential sales decreased 16.8 percent from December. This is consistent with historical data indicating that January residential sales on average (2013-17) decrease from December by 16.6 percent. Existing single-family homes accounted for 55 percent of total sales in the area, while 19 percent of sales were new construction. Condo sales accounted for the remaining 26 percent. The average number of days on the market in January was 101, representing a decrease of 36.1 percent from January 2017, when homes in the area averaged 158 days on the market.
Pricing: The Baldwin County median sales price in January was $229,500, an increase of 5.3 percent from January 2017, when the median price was $218,000. The median sales price was down 4.1 percent from the prior month. This is consistent with historical data indicating that January median sales prices on average (2013-2017) decrease by 6.5 percent from December. ACRE highly recommends consulting 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 Baldwin County January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.