2000 Opens Strong for Alabama Housing Market

TUSCALOOSA, Ala. – After three consecutive years of record sales, the residential real estate market in Alabama continues to show signs of slowing, according to figures from the Alabama Real Estate Research and Education Center (AREREC).

AREREC figures show January monthly home sales down for the second consecutive month, declining by 531 from December of 1999. Home prices, however, did rebound from the sharp fall in December when prices fell by almost $6,000. In January 2000, average selling price rose by $3,770. Average days on the market also rose in January to 143 days, up from 139 in December of last year.

January is typically a slow month for housing sales, and it is not unusual to see a drop from the end of the previous year, center staff members said. What may be a better indicator of early trends is a comparison with the previous yearís housing market activity. Housing sales this month were up 4.1% from January of 1999, or about 80 units. By this benchmark, Alabama housing is off to a good start in 2000, despite some recent signs of market softness.

The almost $3,800 increase in average selling price (3.4 percent) from last January was fueled by price increases in larger and smaller housing markets within the state. Particularly strong markets included Baldwin, Marshall, Mobile and Monroe County.

The number of homes sold declined in 17 local markets, rising only in two ‚ Lee County and Eufaula. The Tuscaloosa area saw significant growth from last year, nearly doubling the number of homes sold. Other areas of strong growth were Calhoun County (49 percent), Enterprise (45 percent), Lee County (61 percent), and the Lake Martin area (120 percent).

Although it changed little from a year ago, selling time did lengthen in January by four days compared to December. There was significant variation in selling time from one market to another during January. Average days on the market fell in 7 local markets, while rising in 10 markets. In some cases, the month to month variation in selling time was quite dramatic, declining by 81 days in Monroe County but almost doubling in the Lake Martin area.

Although the market in January showed additional signs of slowing, it was still ahead of last year at this time in terms of selling price, number of homes sold, and average selling time. Despite continuing strong economic fundamentals, such as rising income and continuing low unemployment, there are storm warnings on the horizon. Increased volatility in the stock markets, rapidly rising oil and gas prices, and the additional interest rate increases anticipated in the months ahead will all work to reduce consumer buying power, as well as erode consumer confidence. If the Federal Reserve tightens credit in the months ahead, housing will be the first economic sector to feel the effects, according to center staff members.

The Alabama Real Estate Research and Education Center is part of the University of Alabamaís Culverhouse College of Commerce and Business Administration, founded in 1919. The business school has been recognized repeatedly in the 1990s for offering high-quality, cost-effective education.

Contact

Bill Gerdes, UA Business Writer, 205/348-8318