Huntsville/North Alabama Area MLS Observations Huntsville, Alabama Residential Real Estate Market December 2008:
After a string of awful monthly sales declines the Huntsville /North Alabama area had a very modest increase in sales for December. This is good news as the real estate market seems to be reacting to the perception (and reality) of mortgage availability and declining rates. Given the continuing focus by the administration and monetary authorities on these issues, the outlook is somewhat brighter.
December total dollar sales in the Huntsville, Alabama area were $81,117,618, 2%, higher than last month’s $79,731,099, and 40% below last year’s level ($134,782,311) (Section A Page 4). It looks like the gross sales which dipped to the 2002 levels last month, are now back between 2004 and 2006 levels (an improvement from last month).
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 13 houses total, New and Used Sold over $400,000 out of 807 listings. Please see sections C and D. Virtually all sales activity is in homes that fall into the “conforming loan limits under $417,000. For the time being homes requiring Jumbo loans are not selling. At this time there does not seem to be any political enthusiasm to address this issue with all attention being placed on the conforming market. Of course fixing that will eventually help the upper end as well, finally allowing trade-up consumers to sell the lower priced property.
We do see continuing inventory build-up. The Used market has shown a persistent increase in months of inventory and now is at 9.1 months in all price ranges. The situation is 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 $300,000 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 1,868 New homes for sale, about double what would have been normal prior to 2006 See chart Page C-1. There are 1.3% fewer houses Active this month (7,734) than in December of 2007, (7,636) against the lower dollar sales cited above. (Chart section A page 4).
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.
The builders in the Huntsville area are facing the challenge of reacting to market conditions and constraining supply. In Huntsville city we see at least a year’s worth of inventory of New homes and yet, we continue to see fairly high numbers of building permits issued. In November, for instance there were 48 single family permits issued in Huntsville city alone, compared with 90 for the same period last year. We provide a link to this free census department data on our Blog site under data sources in the right column. 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. 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 from 8,602 in November* to 7,734 in December, a reduction of 868. (See Page E-3). There were 262 New house New listings (a decrease from 304 last month), while sales of New houses increased to 105 for the month from 104 in November. A substantial reason for the inventory reduction was “Failures” (952 for the month) most of which will probably come back to the market. New houses New listings ran 2.5 times the rate of sales (Section B Page 1).
Active New listings decreased from 2,132 last month to 1,868 this month, a decrease of 264 (Page E-3).
Active Used listings decreased from 6,470 last month to 5,866 this month, a decrease of 604 (Page E-3).
Total unit sales improved from 470 in November to 528 in December an increase of 58 units.
New sales improved from 104 homes last month to 105 this month an increase of 1.
Used sales improved from 366 homes last month to 423 this month, an increase of 57 (Sect E Page 3).
Absorption for New homes was 11.0 months of inventory in December vs. 11.9 last month. This is a deterioration of 1.3 months from last year at this time. See Section E page 8. Absorption for Used homes was 9.1 months of inventory in December vs. 9.8 last month. This is a deterioration of 3.2 months from last year’s level at this time see Section E pg 8.
Average Days on Market for Sold New houses was 102 days vs. 92 days last month, with Used at 102 vs. 104 last month. (See Section A Page 18).
Average sales price for Sold New homes was $229,733 vs. $249,373 last month. (Chart Sect A Page 2)
Average sales price for Sold Used homes was $128,322 vs. $140,833 last month. (Chart Sect A Page 2)
For the record average Used prices were $136,670 last year at this time which indicates a 6% reduction. Much is due to no higher priced houses selling however, so it’s hard to read too much into either this figure or even a median figure, since the mix is swinging quite a bit.
The average prices are beginning to come down as it appears that sellers are becoming more flexible on pricing. Given market conditions I expect to see more downward price adjustment.
*All references to last month numbers are revised, to pick up late entries (made after our prior publication date) to the MLS system.