Birmingham Area MLS* Monthly Observations for January 2008
January is normally the weakest sales month of the year. The pick up in sales we saw in December reversed with a vengeance in January. Dollar sales were down 37% to $101,439,487 in January vs. $161,717,665 in December. This is a 47% decline from January 2008 ($191,889,454).
Total unit sales declined 27% to 707 in January from 973 in December, a decrease of 266, this is a 33% decline from January 2008 (1,052). New sales slid 42% to 120 homes this month from 207 in December; a reduction of 87 units. Used sales dove 23% to 587 homes in January from 766 last month, a reduction of 179 (sect E page 3).
February normally starts the seasonal uptrend. I hope that spring does arrive this year and I suspect it will.
Good news is that the absolute inventory of active New listings decreased to 2,197 in January from 2,578 in December, a decline of 318 units (E-3). This is down 43% from a peak of 3,822 in September 2007*. In addition, the low number of housing starts in the area (36 in December for Jefferson County) is also a very positive sign. Inventory still has to contract to 1,800 or to reach more normal pre 2004 levels (See the chart on page C.1, and table on page E-3).
Absorption rates for New homes improved to 8 months from 9 months of inventory last month, about even with 7.9 months last year at this time (Section E page 3). New house inventories in the higher price ranges (above $600,000) are excessive at over a year. Larger developers in lower price ranges are almost sold out (0 to 5 months of supply).
June 2008 set a record of 12,528 Used homes for sale, and January 2009 shows 10,090 Used active listings (page E-3). Absorption for Used homes had been holding steady at 11.8 months of supply, level from June to August of 2008 but has begun to show a modest but consistent reduction to 10.4 months of inventory in January. This is a 1.2 month increase from last year’s level at this time (See section E page 3).
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. I am concerned that spring could see a rush to market for homes, overwhelming the demand.
Total inventory is down 15% from last year at this time 12,287 vs.14,439.
Birmingham area Average Days on Market for New houses declined to 147 days as compared to 165 days last month. Used houses declined to 104 from 117 in December (sec A page 18). This reduction in DOM along side the dismal sales figures tends to reinforce that buyers are snapping up bargains, and overpriced homes are sitting.
The market for houses requiring “Jumbo” loans remains challenged. While foreclosures have an impact on average prices, I believe that a bigger impact has been the dramatic reduction of sales in the higher price ranges.
Average sales price for Sold New homes decreased to $230,577 from $247,151 (Chart sect A p2). Average sales prices for Sold Used homes decreased to $126,911 from $144,331 (Chart sect A p2). Note that the twelve month moving average line on all categories of houses, New, Used, and total is now showing a very substantial downward slope (chart section a-2) indicating that sellers are at last showing flexibility on pricing. Used house average prices are now at 1999 levels, reflecting the more active market for bargains, lower priced homes as well as the dramatic decrease in new home sales.
*Caution!: All references to last month (and earlier) numbers show revisions. Each month we pick up late entries (i.e. ones made after our prior publication date) to the MLS system.