Sales: According to the Phenix City Board of Realtors Multiple Listing Service, Phenix City area residential sales totaled 65 units during January, down 3 percent from the same month a year earlier. Results were 4.8 percent above the five-year January average of 62 sales. Two more resources to review: Quarterly Report and the Annual Report.
For all of Phenix City’s area home sales data, click here.
Forecast: January sales were eight units, or 11 percent, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 73 sales for the month, while actual sales were 65 units. ACRE forecasts a total of 1,205 residential sales in the Phenix City area during 2018. There were 1,138 actual sales in 2017.
Supply: Phenix City area housing inventory in January totaled 432 listings, a decrease of 23.8 percent from January 2017. Inventory levels have reduced 66.5 percent from the 10-year January peak reached in 2008. The inventory-to-sales ratio in January was 6.6 months of housing supply. Restated, at the January sales pace, it would take 6.6 months to absorb the current inventory for sale. The market equilibrium (balance between supply and demand) is considered to be approximately 6 months.
Demand: January sales decreased 27.8 percent from the prior month. This direction is consistent with historical data indicating that January sales on average (2013-17) decrease from December by 14.1 percent. The average number of days on the market until homes sold was 115 days, down 10.9 percent from the previous year.
Pricing: The Phenix City median sales price in January was $126,900, a decrease of 10.6 percent from one year ago and a decrease of 8.7 percent from the prior month. This direction is consistent with historical data (2013-17) indicating that the January median sales price on average decreases from December by 4.9 percent. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local 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 download graphs from the Phenix City January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.