Weak start to spring Real Estate market in Huntsville

Huntsville/North Alabama Area MLS Observations Huntsville, Alabama Residential Real Estate Market February 2009:

After a modest downtick in January the Huntsville, North Alabama market had a very modest uptick in February. This is a concern since February normally shows a pronounced increase as a harbinger of spring. February total dollar sales were $91,189,468, 13%, higher than last month’s $80,666,406, and 33% below last year’s level of $136,832,110 (Section A Page 4).

Total unit sales increased from 481 in January to 574 in February, an increase of 93 units.

New sales increased from 111 homes last month to 116 this month, an increase of 5.

Used sales increased from 370 homes last month to 458 this month, an increase of 88 (Sect E Page 3).

The Used market has begun to show a slight decrease in inventory (absolute numbers). Used homes are 9.7 months of inventory in all price ranges, which is roughly equal to last month’s 9.9 months. The inventory situation remains challenged in the higher price ranges. Used homes over $200,000 are now at over 14 months of inventory, and in some price ranges as much as 4 years of inventory. This situation has not materially changed over the last few months. New houses over $300,000 are almost 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. There still remain 1,781 New homes for sale, a slightly less than double what would have been normal prior to 2006 See chart Page C-1. I have noted on the web site what seems to be a large number of housing permits being issued, given the market conditions.

Total Active listings decreased by 4.5% this month, 8,116 compared to January, 7,751 and 1% less than February 2008, 7,837 (Chart section A page 4 and Page E-3). New houses New listings ran 2.6 times the rate of sales (Section B Page 1).

Active New listings decreased from 1,869 last month to 1,781 this month, down 88 (Page E-3).

Active Used listings decreased from 6,247 last month to 5,970 this month, down 277 (Page E-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. This could result in higher spring new listings and inventories as these properties come to market.

As mentioned above, we provide a link to free census department data on our blog site. Under data sources in the right column, the high number of building permits relative to sales and inventory is highlighted. It is unusual in any market to see months of supply for New houses exceeding Used supply. Huntsville city shows 44 permits for the month of January. Given the high number of homes for sale (over 7,500), the BRAC realignment will not cure the market, particularly in light of other employment problems. I don’t get the continued new construction? What banks are funding construction?

Absorption for New homes remained at 11.1 months of inventory in February vs. 11.1 last month. This is still a deterioration of 1.6 months from last year at this time. See Section E page 8. Absorption for Used homes was 9.7 months of inventory in February vs. 9.9 last month. This is a deterioration of 2.6 months from last year’s level at this time see Section E pg 8.

Average Days on Market for Sold New houses was 120 days vs. 87 days last month, with Used at 124 vs. 123 last month. (See Section A Page 18).

Average sales price for Sold New homes was $237,481 vs. $245,105 last month. (Chart Sect A Page 2)

Average sales price for Sold Used homes was $138,956 vs. $144,486 last month. (Chart Sect A Page 2)

The mix of higher and lower priced homes is jumping around quite a bit so it’s hard to read too much into the average prices.

TWB 3/14/09*All references to last month numbers are revised, to pick up late entries (made after our prior publication date) to the MLS system.


2 thoughts on “Weak start to spring Real Estate market in Huntsville

  1. Ed

    Elsewhere on your site you mention that Birmingham values have dropped around 6% from their peak. How have Huntsville values fared? Is it fair to say that inventory levels in Huntsville have farther to go to get back to normal levels?

    1. tbrander Post author

      Average prices have probably dropped about 5% but the averages are very misleading at this point since the mix of homes are shifting rapidly, and the high end is not selling. Same home or comparable home stats would be great but I really don’t much believe in the case-shiller stats either. Given what has happened to the mix, that is the lack of higher end sales in the mix, and generally a reduction in new (higher priced) homes it is sort of mystifying why we have not seen more of a drop in the overall averages. I can’t explain it. What does anyone else think?


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