Huntsville/North Alabama Area MLS: Observations Huntsville, Alabama Residential Real Estate Market November 2008:
The poor performance of world monetary markets has negatively impacted the local real estate market and consumer confidence is at an all time low.
November total dollar sales in the Huntsville, Alabama area were $78,574,792, 31%, lower than last month’s $113,827,476, and 50% below last year’s level (of $156,545,933) (Section A Page 4). There has now been four months of steady decline in excess of normal seasonal patterns. It looks like the gross sales which were settling into a range that was between 2004 and 2006, have now sunk well below the 2004 levels, and almost even with the 2003 and 2002 levels (deterioration from last month).
The extreme nature of the national economic picture is being felt here also. This compares with sales which have dropped to the 1999 levels in Birmingham and the Alabama coastal areas. While we hoped for a bottom over the last few months the current economic backdrop makes further decline highly likely. Unfortunately, we are looking at further deterioration just as the local real estate market was beginning to stabilize.
Sections C and D of the main report present active and absorption data historically by price range and by area. There is a large disparity in performance and trends in different price ranges and areas. For instance; only 3 houses total, new and used sold over $600,000 out of 347 listings. Please see sections C and D.
We do see continuing inventory build-up. The used market has shown a persistent increase in months of inventory and now is at 9.5 months in all price ranges with the situation being quite acute for a broadening price range of houses; Used homes over $200,000 now are over 12 months of inventory and in some price ranges as much as 4 years of inventory. New houses over $400,000 are over a year and in some price ranges over three years of inventory. (Page E-1). Absolute numbers of active listings have been moderating slightly for a few months, (see below). There still remains 1989 new homes for sale, about double what would have been normal prior to 2006 See chart Page C-1 There are 5% more houses active this month(8,223) than in November of 2007, (7,828) against the lower dollar sales cited above. (Chart section A page 4).
The following table shows a summary by price range , for the entire North Alabama area.
We believe that there is an increasing amount of “shadow inventory” in both the new and used market places i.e.; houses held off the market for various reasons, but that really are for sale. It seems to me that the For Sale by owners will list as they discover how tough the market is.
The builders in the Huntsville area are facing the challenge of reacting to market conditions and constraining supply. It is unusual to see months of supply for new houses exceeding used house months of supply. The chart on page B-1 shows new listings as compared with sales for new houses only, and speaks to the seller frustration. As most of the new listings are from prior cancellations, I doubt there is that much new construction! Sellers of existing houses are having a harder time as the supply increases. The build up of existing housing supply will continue to impact the new housing market.
Total active listings decreased slightly from 8,630 in October* to 8,223 in November a decrease of 407. (See Page E-3). There were 301 new house new listings (a decrease from 442 last month), while sales of new houses decreased to 103 for the month from 134 in October. New houses new listings ran 2.9 times the rate of sales (Section B Page 1).
Active New listings decreased from 2,066 last month to 1,989 this month, a decrease of 77 (Page E-3).
Active Used listings decreased from 6,564 last month to 6,234 this month, a decrease of 330 (Page E-3).
Total unit sales deteriorated from 699 in October to 460 in November a decrease of 239 units.
New sales deteriorated from 134 homes last month to 103 this month, a decrease of 31.
Used sales deteriorated from 565 homes last month to 357 this month, a decrease of 208 (Sect E Page 3).
Absorption for new homes was 11.2 months of inventory in November vs. 10.9 last month. This is a deterioration of 1.6 months from last year at this time. See Section E page 8. Absorption for used homes was 9.5 months of inventory in November vs. 9.7 last month. This is a deterioration of 2.8 months from last year’s level at this time see Section E pg 8.
Average Days on Market for sold houses for new houses was 92 days vs. 113 days last month, with used at 104 vs. 105 last month. (See Section A Page 18).
Average sales price for sold new homes was $249,913 vs. $230,603 last month. (Chart Sect A Page 2)
Average sales price for sold used homes was $142,011 vs. $142,011 last month. (Chart Sect A Page 2)
The average prices are beginning to come down as it appears that sellers are getting more flexible on pricing given the market conditions I expect to see more price adjustment down and I was surprised to see the levels go up slightly this month..
*All references to last month numbers are revised, to pick up late entries (made after our prior publication date) to the MLS system.