ABRE Analytics: 2013 Forecast for Alabama Residential Sales

Last year, ABRE Analytics, a collaborative research partnership consisting of the Alabama Center for Real Estate (ACRE) and Tom Brander, began studying the correlation between unemployment rates and future real estate sales projections in selected markets across the State of Alabama.

View full sizeABRE Analytics: 2013 residential sales projections for selected real estate markets. All rights reserved.

With the release of the metro unemployment data for January 2013, ABRE Analytics is pleased to present our 2nd annual forecast stemming from this methodology and related commentary.

Area	Full year 2011 Actual	Full year 2012 Proj	% chg from 2011	2012 Actual	Err % Diff to proj	Act 2012 % Diff to 2011	Forecast 2013	2013 F’cast to 2012 Act	Method Unemp or last Q
Statewide	36965	41,992	14%	39280	-6%	6%	41,799	6%	Last Q
Huntsville	8610	9,050	5%	9189	2%	7%	9,835	7%	Unemp
Birmingham	12468	14,550	17%	13514	-7%	8%	14,571	8%	Last Q
Auburn	1132	1,138	0%	1233	8%	9%	1,338	8%	Last Q
Tuscaloosa	1743	1,826	5%	1735	-5%	0%	1,935	12%	Unemp
Montgomery	2774	3,679	33%	3111	-15%	12%	3,342	7%	Last Q

Note: the error bars are at +/- 10%

The above table summarizes last year’s results and our expectations for 2013. These predictions assume no “major events”. As expected with any new trends model in its inaugural trial run, the 2012 predictions were mixed. Alabama residential saleswere up 5.9 percent in 2012.

In Huntsville, the forecast was within 2% of the full year 2012 results. In the aggregate, the results pointed in the right direction right, but with some error so this led the team to explore some alternative approaches for this year’s predictions to improve accuracy. In the markets with the greatest error we revised our methods to use the last quarter of 2012 sales via straight line linear regression instead of the unemployment rate. This method appears to be more accurate in most markets historically and hopefully going forward.

With these adjustments, above is the overview of what ABRE Analytics think might happen in 2013. As for the projection of a 12% increase for Tuscaloosa that is out of line with the other markets, ABRE’s opinion is that this may be a little too optimistic, but we have yet to figure out a consistent method to arrive at a better projection for Tuscaloosa in 2013. Of course, the local market’s near-term response to the tornado of April 27, 2011 certainly has a role with the difficulty in identifying a projection that could be presented with more confidence. Last year we experienced a similar issue with Montgomery, which prompted us to develop the alternative methodology of using last quarter sales for predictions.

The method ABRE used for 2012 was based entirely on the January unemployment rate for a market area. The assumption was that the January unemployment rate eliminated the effect of holiday temporary work and would reflect the mood of the populace towards buying and selling a new home in the upcoming year. A standard linear regression line yielded a better than 80% correlation since 2004 in all areas. The standard error however is somewhat high. This method also has the benefit of using two longer term trends, unemployment and home sales, and only at a single point per year, which eliminates a lot of “noise” in both series.

The seasonal regularity of sales is such that if you know the total sales for a year, dividing the total by the average proportion of the yearly sales attributable to a month has shown to be remarkably stable. Exceptions to the regularity do occur, such as fiscal cliff drama and the tax credit for first time home buyers in 2009. ABRE eliminates this data when calculating the monthly spreads.

ABRE originally chose unemployment data as it is one of the more timely pieces of data released by the government, as well as being released by geographies that generally correspond to the reported real estate market areas. Other data from various government agencies are released so late as to not be timely enough for meaningful projections.

So, what ABRE presents is our best estimate of next year’s sales which specifically excludes the possible impact of unpredictable governmental action or inaction, although even this seems to be having less impact as both the populace and markets begin to ignore political histrionics. For what it is worth, ABRE did test everyone’s favorite housing predictor, interest rates, and could not find any useful correlation.

In each case ABRE experiments with prior years data to see how well the prediction methodology would have worked. We tried using the last quarter sales of the prior year to “regress” against the full year sales of the projected (next) year. This is based on the same premise that recent data may be indicative of future results.

In each case, except Huntsville and Tuscaloosa, this methodology (last quarter of the year to the following year) resulted in greater historical accuracy in predicting and considerably better correlation numbers. We did exclude 2010 from the analysis since the last quarter of 2009 had abnormally low sales, (although the full year sales were as expected), due to the 1st time homeowners tax credit that pulled sales into earlier quarters and depressed the year end.

Complete spreadsheets with all data are available as public Google spreadsheets, which also include month by month projections, at http://goo.gl/jtJGW. ABRE presents these projections as a “work in progress” and as a tool for assessing how well current sales are performing against some level of “informed” expectation. You should not rely on them, but nonetheless ABRE hopes the projections are found useful. ABRE welcomes comments and suggestions for improvement.

About ABRE Analytics: Strategic collaboration is one of the keys to accelerating the flow of insights in the 21st century. The Alabama Center for Real Estate (ACRE) and Tom Brander has been successfully collaborating since 2009. The flow of ideas stemming from this relationship have led to solutions to better serve the Alabama real estate industry and consumers. ABRE (ACRE/Brander Real Estate) Analytics is designed to foster future creative thinking while also providing hands-on experience for student interns of ACRE.

About ACRE: ACRE’s core purpose is to advance the profession of real estate in Alabama by providing relevant resources in the areas of research, education and outreach. The Center, founded in 1996 by the Alabama Association of REALTORS, the Alabama Real Estate Commission and the Office of the Dean at UA’SCulverhouse College of Commerce, also acts as an industry liaison for the benefit of business school students pursuing a career in real estate. To learn more, please visit ourwebsite.

About Tom Brander: Tom Brander is a prominent real estate publisher. He produces The Rudulph/Brander Monthly Real Estate Report in the Birmingham, Huntsville and Baldwin County markets. His company, OSWCO, LLC (Open Software Company) is an authorized Google reseller. He has earned the Google apps sales consultant certification and the Google apps deployment certification, from Google. Tom also co-produces the ACRE quarterly Real Estate Sentiment Index and report in conjunction with ACRE. He is a designated ACRE Education Instructor and serves as a member of the ACRE Board of Trustees. To learn more, please visit http://oswco.com.

Birmingham Real Estate Sales Flat in 2011, 2012 should be better

Birmingham Area MLS* Monthly Observations for December 2011

Year end summary:

	TOTAL	NEW	USED	New Avg price	Used Avg price	All Avg Price	Total $ Sales
2010	12,290	1,842	10,448	$219,462	$149,413	$159,589	$1,967,714,083
2011	12,468	1,392	11,076	$220,139	$151,429	$159,220	$1,998,732,347
% change	1.45%	-24.43%	6.01%	0.31%	1.35%	-0.23%	1.58%

As the above chart illustrates, 2011 was largely even with 2010, but that was a win compared to multiple years of decline. New Home sales were off due to lack of supply and the heavy competition with the used market.

Projections:

Using our newly developed projections, described here, we forecast total unit sales of 957 for the month vs the actual of 958. For all of 2012 we forecast total unit sales of 13,430 vs the 12,468 in 2011, which would be a 7.7% increase. This projection is still preliminary based on my estimate of the January unemployment rate. We expect that average prices will still be under pressure. We will be refining the methodology over the next few months. We expect that the projections will yield more interesting insights.

Monthly:

Sales in December declined 8% to $144,754,123 from November’s $158,165,809, up 10% from last December’s $131,046,122. The 12 month moving average line for total dollar sales remains tilted slightly upward.

Unit sales were down 1% to 958 in December from 971 in November, a decrease of 13. This is a 10% improvement from December 2010 at 868. New sales improved 22% to 130 homes this month from 107 in November, an increase of 23 units. Used sales declined 4% to 828 homes in December from 864 last month, a decrease of 36 (Sect E p.3).

This month total inventory is dramatically lower at 9,611 vs. 11,919 last year and 11,185 last month. The dramatic drop in the current month was undoubtedly caused by year-end expirations which will come back on the market shortly. Active New listings decreased to 816 in December from 1,135 in November, a decline of 319 units (Sect E p.3).Housing permits showed a decrease in Jefferson County to 77 in November from 78 in October. Shelby County was up to 19 from 18 (see website for details).

Absorption rate for New and Used homes last month remains high. New homes are at  7 months supply this month with a reduced sales pace, and even with last year at this time (Sect E p.3). New home supply seems to be stable. Under $100,000 New homes are at 15 months supply. The New home $100,000-$400,000 price range has an almost normal inventory level in the 6-7 month range. (Sect C p.1 and Sect E p.3.)

Absorption for Used homes in December shows 9 months, three months better than 12 months last year. Used Active listings at 8,795 lower than 10,777 last year (Sect E p.3), (Sect E p.3).

Birmingham area Average Days on Market for New houses was 209 compared to last month at 191 . The Used homes DOM was 141 in December, compared with 148 last month (Sect A p.18). NOTE: DOM for Used Homes indicates that well priced homes are moving in less than 6 months. The high months of inventory indicates that sellers, including bank owners, are still holding out for higher prices. Again: If the home is not selling, reduce the price, particularly since we are in the slower sales season of the year.

Average sales price for Sold New homes increased to $237,784 from $233,344 last month (Sect A p2). Average sales prices for Sold Used homes decreased to $137,491 from $154,164 last month (Sect A p2). The twelve month moving average price line for Used Homes has been quite steady since mid 2009. Average Home prices, new and used, have stabilized  (Sect A p2). This is mostly a reflection in the change of “mix” with more larger homes being sold, but the price of any specific home remains under pressure.

TWB 1/15/12

Huntsville Real Estate Sales Flat in 2011

Huntsville/North Alabama Area MLS Observations: Real Estate Market December 2011

Year end summary:

	TOTAL	NEW	USED	New Avg price	Used Avg price	All Avg Price	Total $ Sales
2010	8,544	1,857	6,687	$225,137	$147,760	$164,545	$1,412,705,316
2011	8,610	1,764	6,846	$228,839	$142,279	$160,086	$1,379,625,696
% change	0.77%	-5.01%	2.38%	1.64%	-3.71%	-2.71%	-2.34%

As the above chart illustrates, 2011 was largely even with 2010, but that was a win compared to multiple years of decline. Price pressure indicated by the decline in average prices will likely continue.

Projections:

We published our preliminary outlook for 2012 on the web site Here. I forecast a 2.2% increase in units for 2012. Currently this is based on my estimate of the January unemployment rate which will be released in Late February. Given the pricing pressures, it is likely that total dollar sales will be down slightly. The numbers will be revised when the final unemployment rate for January comes out. 

December sales improved 6% to $109,029,076 vs. November at $103,296,410. This was virtually identical to last year at $109,443,153. The twelve month moving average line on the total dollar sales chart is flat.

Total unit sales increased to 688 in December vs. 668 in November increasing of 20.

New sales increased to176 this month vs.142 last month, increasing 34.

Used sales decreased to 512 this month vs. 526 last month, decreasing 14 (Sect E  p.3).

Used inventory levels remain high this month at 12 months (see the chart Sect C p.1), with the situation particularly challenged in the higher price ranges. Used homes over $100,000 are still over 12 months of inventory and over $400,000 have two or more years of inventory.

New home absorption is 9 months of inventory overall, (with last month at 10 months), (E-1). The New Home inventory level in the $300,000-$500,000 is approximately 5 months (not bad).

There continue to be a large number of housing permits issued in Huntsville city, given the market conditions. November decreased to 78  vs. 79  in October (chart on the web site).

Total Active listings decreased this month to 7,920 compared to last month’s 9,034, which is below last year at this time at 8,879 with the reduction likely exaggerated due to year end expirations. (Sect A p.4 and Sect E p.3).  Active New listings decreased from 1,491 last month to 1,320 in December, down 171. (Sect E p.3). Active Used listings decreased from 7,543 last month to 6,600 this month, down 943 and below last year’s amount at this time of 7,473. (Sect E p.3).

Average Days on Market for Sold New homes was 177 vs.142 days last month, with Used at 142 in December compared with 149 in November (Sect A p.18). Days on Market at or below 6 months, while the inventory numbers are way higher, indicates well priced homes are selling. Sellers, including bank owners, are not adjusting to the new price reality which contributes to inventory build-up.

Average sales price for Sold New homes was $238,330vs. $212,742 last month. (Sect A p.2)

Average sales price for Sold Used homes was $131,021 vs. $138,949 last month. (Sect A p.2)

The Average price lines which were on a upwards slope for a while, turned down particularly for Used Homes. Prices for individual properties remain under pressure.

TWB 1/12/12

Baldwin County Has A Good 2011 In Real Estate

Baldwin County & Alabama Coastal MLS*: Observations for the Month of December 2011

Year end Summary:

	TOTAL	NEW	USED	New Avg price	Used Avg price	All Avg Price	Total $ Sales
2010	3,788	360	3,428	$198,008	$201,010	$200,781	$760,995,789
2011	4,392	322	4,070	$215,567	$200,589	$201,504	$887,630,802
% change	15.95%	-10.56%	18.73%	8.87%	-0.21%	0.36%	16.64%

The above chart illustrates, 2011 was a very substantial improvement over 2010. New Home sales were off due to lack of supply and the heavy competition with the used market. Prices remain under pressure.

Monthly Results:

Dollar sales this month decreased 2% to $57,553,203 from November’s $58,582,263. This is 15% below December last year at $67,350,226. (Sect A p.2). The 12 month moving average line of sales flattened out once again. Inventories have been coming down quite dramatically. Unit sales have recovered to normal levels. Dollar sales still lag reflecting fewer high end sales and lower prices. This situation is starting to reverse, with more high end homes selling. Still, it is unlikely that prices will increase for a while. 

On a unit basis, sales of all houses declined 8% to 297 this month vs. 322 last month, which is 9% down from last year’s 325.

Used Home sales declined 10% to 272 this month vs. 303 last month, which is down 8% from last year’s 296 (Sect A p.18). New Home sales were 25 this month vs 19 last month. Low sales of New homes reflects intense competition from existing, and the shutdown of new construction.

New listings for New homes decreased to 34 from 57 in November. Used houses New listings decreased to 422 from 512 in November with net inventory down.

The absolute number of Used Active homes on the market, which had a slight peak mid-summer of ‘09, has once again been improving. In December, there were 3,461 Active Used homes, a reduction from 4,004 in November. The New home market, which peaked in December 2006 at 2,144 Active, now sits at 317.

The Absorption rate for New homes was 12 months of inventory for December vs. 14 in November. The Absorption rate for Used homes was 10 months of inventory for December vs. 12 in November. Over the last four years the drop in months of inventory for Used homes has been steady and impressive from 25 months plus in December 2008 to 10 months this December.

Average sales price for all homes has been stable for the past year. For New units, prices decreased to $192,034 from $219,064 last month. (Sect A p.14). Average Used home prices increased to $193,943 from $179,604 in November.

Average Days On Market for New Sold properties in December was 186 this month vs. 174 last month. Days On Market for Used was 169 this month vs. 190 last month.

While we have developed some interesting projections for the Real Estate Market in the Statewide, Birmingham and Huntsville markets, the numerous events on the coast such as the oil spill and several tropical storms, make the methods we used in the other markets unsuitable for the coast.

TWB 1/15/2012

Alabama, Birmingham, and Huntsville Real Estate Market in 2012-Forecast

While the Real Estate market adage is “Location, Location, Location” I submit that based on this study that maybe it should be “Jobs, Jobs, Jobs”

Over the years, I have often been asked to predict what will happen in the future in the residential real estate market. I have generally resisted providing answers to this, pointing out that the current data which I provide gives some pretty strong hints.

However, in doing some consulting work I have come across some useful correlative data that holds promise for quantifiable, accurate, projections of future real estate sales.

While it is  important to keep the adage “correlation is not causation” in mind, correlations can be useful and dependable if they pass the “common sense” test.

I have found that for a given area, the Bureau of Labor Statistics Unemployment Statistics can reasonably and reliably predict future sales. This makes sense in that buying homes is not a spur of the moment decision, but rather influenced by consumer future expectation, which is nicely captured and influenced by the unemployment rate.

To date, I have tested this concept in multiple markets with similar results. I expect that additional implementation will show similar predictive capabilities.

Since both the real estate and labor market have large seasonal swings, I chose to use the January unemployment rate to project the entire year’s transaction volume. I then spread the volume over the individual months, based on the historical percentage of sales that a given month has in a year. The percentage sales in a month holds steady in “normal” years. I have currently used 2004-2011 to arrive at the percentage sales per month. I suspect that some inaccuracy comes from including 2010 when we had the really abnormal melt-down followed by the extraordinary tax credit. Rather than continue adjusting numbers, I have chosen to publish these preliminary findings in the hope that others can help with the methodology.

Summarizing the findings:

How Unemployment correlates to Real Estate Sales from 2004-2010:
Correlation rate:
Statewide         80%
Birmingham     83%
Huntsville         73%

I have also tested a few other areas, outside Alabama, with similar results.

Interestingly, when I included years before 2004, correlation rates went down. I suspect that this is due to the way financing changed in 2004. I also suspect that years before 2004 will show strong correlation, and that years post 2004 will continue to show even more correlation just not across the 2004 “divide”. This remains for more research. By the way I attempted to find some correlation based on mortgage interest rates. In short, there was none. There may be some very short term impact from interest rates, but nothing close to the jobs market.

Based on the initial correlations a linear regression can predict sales for 2011, and preliminarily for 2012 (based on the estimated January 2012 unemployment rate) for the same three markets.

Market	2010 (actual)	2011 (proj)	2012 (proj)
Statewide	36,234	37,407	39,429
Birmingham	12,235	12,736	13,430
Huntsville	8,543	8,321	8,507

The statewide totals are via the Alabama Center for Real Estate

The monthly projected results compared to the actuals for 2011for Birmingham are as follows:

2011	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov
proj	755	877	1135	1137	1239	1314	1180	1191	1090	933	914
actual	683	773	1072	1022	1106	1255	1237	1224	1145	983	944
%error	-10.5	-14.9	-5.9	-11	-12	-4	4	2.7	4.8	5	3
Cumulative error											2.9

As you can see this is quite encouraging. The cumulative error for 2011 projections is under 3% for 2011. I believe that excluding 2010, to calculate the monthly changes, due to the tax credit impact will improve the monthly accuracy.

Why might this be useful?

If the results during the year do not unfold as projected one should be looking for the reasons such as the tax stimulus or similar government action. It is also likely that other impacts and shocks to consumer expectations will cause the market to react in ways that are not accounted for in the projections. One can think of major disasters such as the coastal oil spill and multiple weather events. I have not yet tried to see how the coastal markets can be projected.

Residential Unit Sales and Dollar Sales Sink in 2008-Birmingham

This series of 4 posts contains the remarks I’m making at the annual lunch meeting, January 8, 2009 at the Club for the Greater Birmingham Association of Homebuilders. The main Rudulph/Brander Web site is at http://tomBrander.com. The blog is located directly at http://tbrander.wordpress.com. We offer two free newsletters, Local, and National for which you sign up for and you control. Watch to make sure you get a confirmation message and that it does not get stuck in the spam filter!!. Each month we provide summaries of each of our market areas, Birmingham, Huntsville, and Baldwin County. We occasionally update daily if there is news of import including credit market and policy updates.

Page 1 is located at Http://TomBrander.com pages 3-4 of the presentation are located Here.

Number Of Homes Sold (click for bigger)

Total number of homes sold monthly at the peak (2006-2007), using a 12 month rolling average basis about 1,750 per month in ’06 (Most of the year) dropping to about 1,250 a month today. That is a decline of 29%. However, using  just the peak month, we see about a 66% drop from peak to current (about 2,225 mid ’06 to about 750 today Nov. ’08). This measure is particularly volatile but provides some useful understanding of just how extremely the situation can be portrayed. Used home sales dropped from about 1,250 a month to 750 a 40% drop (12 month basis) and 1,600 to 600 on a peak to trough basis 62% drop. New homes dropped from about 500 to about 275 (12 month basis) a 45% drop and on a peak to trough basis from 612 to 149 in Nov., a 75% reduction. Normal New home sales is about 350 a month.

November 2008 Birmingham Total Sales

Total dollar sales are worse, with a 12 month average peak of $340,000,000 now at $240,000,000 a 29% reduction. Peak to trough of $450,000,000 to $125,000,000 a 72% reduction overall (now at mid ’04 level). It is a 50% reduction from Nov ’07 levels.

Stacked Months

Stacking the months to show seasonality we can see that the pattern is quite “broken” now at the 1999 levels.  Earlier this year I was hoping we would hold at the 03-04 levels…now I hope we don’t do below the 1999 levels.

If you need help buying or selling, put these powerful research tools to work for you by contacting Shasta Brander, Realtor. (click for her web site).

Average Prices Drop And So Does The Supply of New Homes

12 month Average sales prices in the Birmingham market are holding fairly well but I’m not sure that is good news. New and Used prices peaked in Dec ’06 at $192,000 but are now at $180,000 about a 6% drop. Used prices peaked in the same time period at $175,000 and now is at $165,000 a 6% drop. New prices peaked in May ’08 at $250,000 and is now at $245,000 a 2% drop. These numbers are based on 12 month moving averages so it is highly likely that the trend will be resulting in steeper drops as we go forward.

Peak to trough prices are much worse. But one should use caution with these figures since they can be very volatile for a host of reasons. Used Home prices, for instance peaked at $215,000 in about May 2007 and now sits at about $150,000 a 30% drop!! A lot of this however has to do with the complete absence of sales in the higher end. New Home prices peaked in November ’06 at $260,000 and now sits at $220,000, a 15% reduction. All of the above calculations use approximate figures from the chart, and approximate time frames rounded.

Birmingham '08 Average Sales Prices

Inventory Used houses coming on the market are the “real” competition for new…The normal level of “active listings used to be about 6,000 and is now pushing 12,000, up to 11 Months of supply, and two to three years in the higher price ranges. New Home Active listings are somewhat better. The normal level previously about 2000 (in the ’02-’04 time frame),and now is about 2,488 which is 8-9 months of supply. New inventory peaked at 3,834 in Sept ’07. Total number of Active listings, is down about 11% from last year at this time. Some good news is that the Housing permit numbers for Jefferson County are down 66%, with only 36 issued in November 2008 as compared with 106 in November 2007. This would indicate that the New Home inventory should continue to come down. See the Census bureau link on my blog site.

November 2008 Birmingham Inventory

New Home Market Share Sinks As Existing Home Inventory Piles Up

This Chart shows Total Home dollar sales and New Home Dollar sales for the 12 months ended November of each of the last ten years.

Yearly New and Total Sales

Yearly sales New vs. Used The new market is shrinking as a % of the total market, and should continue to do so until used inventory starts to get back to “normal”.

New as Percent of Total Sales

New sales dollars as a % of total, is down at 31% (annual).

New Home Sales down in all price categories inventory(Active Listings) is going down in absolute numbers, but remaining high in Months of inventory. This reflects the lower number of sales and competition with the Resale market. While months of inventory has generally improved in price categories under $600,000, it has deteriorated in the higher priced categories. (Note the abnormal increase in number of active new homes in the $800,000 to $900,000 range)

New Home Price Distribution & Inventory

Price distribution note two price levels showing real improvement $100,000-$200,000 (in number of active listings, not months of inventory) and $300,000 -$400,000 Mostly impacted by national pull out?? Don’t know. Above $400,000 it is really tough and the Used inventory is quite rough….

Top Builder Sales

Builders Selling 20 or more (last year we used 30) Note higher relative inventory for “none” (Note that this compilation is subject to how well the information about builder names is entered in the MLS system.)

Top Birmingham New Housing Markets

Top markets, Hoover, Bluff park, Riverchase remains top dog (in New Home sales) Note a few green areas showing year over year increases..I would not look for a repeat this year. See my special report on the web on just the Hoover, Bluff Park, Riverchase market.

If you need help buying or selling, put these powerful research tools to work for you by contacting Shasta Brander, Realtor. (click for her web site).

12 Month New Home Sales Off 30% In Hoover/Bluff Park/Riverchase Area 250: November 2008

For at least the past two years this area, which is geographically quite large, has had the largest number of new home sales, 43% more new home sales than the next largest MLS area, which is, the (282) Adger/McCalla/Oxmoor Valley area. For the twelve months ending November 2008 unit sales of new homes were down 30 % as compared with 2007 (432 vs. 620). If you need help buying or selling, put these powerful research tools to work for you by contacting Shasta Brander, Realtor. (click for her web site).

Area 250 Summary Table

The table above (click for larger) shows an overview of the area for the month of November 2008. Broken down by price range, the table shows for the current month: Active Used and New houses, Failed (expired, canceled or withdrawn) Pending Sold, and New listings. The next column shows how many houses were sold in the last 12 months. Next, for active listings, the average price, within the price range. Next the average Sold price for those that sold this month. Then, the Days on Market (DOM), for sold houses only and last the Absorption in months of inventory. Absorption is the current inventory divided by the last 12 months sales times 12. This shows the number of months it would take to sell the active houses if the future sales rate remains as it was for the last 12 months.

The total line represents the totals and averages for the entire area.

Area 250 New Subdivision Detail

This second table (click for larger) selects only New homes and those subdivisions that have had 5 or more sales in the last 12 months. All other New homes in the area are in the “Other” subdivision. Looking at the “other” subdivision one can see the averages for the smaller and one off New Home subdivisions and compare how they are doing vs. the larger subdivisions. The “Other” subdivision has the largest number of houses and that the absorption rate is 39 months. In general larger subdivisions are performing better, with the absorption in months of inventory lower. Note that this can be distorted on a “new” subdivision that has not been on the market for a year.

This next section is new for us but quite powerful. It takes all New house activities, (Active, Pending, Failed and Sold) , and picks those subdivisions that have at least 5, and gives details for that subdivision, for the current month only. It also puts all others into a subdivision called “Xother”. But the big difference is that we report on the competing resale/used/existing homes in the same subdivision since we are now seeing an increase in the competition from Existing/Used stock.

Caldwell Crossings

An example of this is the first subdivision Caldwell Crossing (click for larger) which shows 13 active “Existing” listings at an average price of $311,781 and 5 New at an average of about $400,000. One house sold Last month, a used one for $289,000.

Lake Cyrus

Lake Cyrus (Click for larger) shows a different situation with the Resales being listed at higher prices than the New construction. Both New and Existing had sales last month but at the low end of the price range.

The entire detail is here(pdf): Area 250 detail Nov ‘08 Hoover, Bluff Park, Riverchase

The overall trends can best be seen in this Chart:

Area 250 Chart-Overall

Birmingham Area MLS Annual Comments 1/13/08

Click on the headline above for the full comments. 

Again this year we were invited to present at the annual dinner meeting of the Birmingham Area Homebuilders   (a great group if you don’t already belong). The following nine pages contain the presentation and notes. Please note that the numbers I presented in this year-end presentation section were generated from MLS data generated on 1/5/2008. The main monthly report was generated from MLS data generated 1/11/2008 so there are small discrepancies reflecting later data entered by agents last week. I have not revised my year end presentation. The differences are not material but  the monthly report has the most current numbers… 

Highlights:Total sales Dollars

’06 $3,850,206,923,                              

 “07 $3,596,855,551 (-6.58%)

New Houses          

’06 $1,502,248,548                               

’07 $$1,295,059,555 (-13.79% )

Market share for  new houses went up steadily from 2001 to 2006 , peaking at 39% of sales and then dropping to $36% of 2007 sales. Presumably due to pressure from increased used house selection availability.December Dollar sales slightly lower than November (normally somewhat higher month to month note that January is usually much lower…’06 $292,143,193’07 $219,517,680 (December to December -24.86%) (see above monthly narrative for updated numbers) Last year dollar sales were very good until about July and August , when the wheels came off… this is about 6 months behind some of the national market.