Birmingham Area MLS* Monthly Observations for March 2009
March turned into a bust for the residential real estate market. While sales increased slightly from February, total dollar sales were still lower than any March on record since 1999. Dollar sales were up 4.8% to $153,515,619 in March vs. $146,453,884 in February. In March 1999, sales were $159,868,748. I have been reporting some pretty awful numbers lately and these are bad. I’m feeling foolish for pointing to signs of a bottoming process. But still there are some faint flickers of good news which I’ll highlight below.
Total unit sales improved by 8.7% to 995 in March from 915 in February, an increase of 80. This is a 29% decline from March 2008 (1,405). New sales improved 13% to 180 homes this month from 159 in February; an improvement of 21 units. Used sales improved 7.8% to 815 homes in March from 756 last month, an increase of 59 (sect E page 3).
A bit of good news: total inventory is down 16% from last year at this time at 12,571 vs. 14,982. Contrast this 16% reduction in inventory with the 29% reduction in sales on a comparable month basis. Active New listings decreased to 2,020 in March from 2,387 in February, a decline of 367 units (E-3). This is down 47% from a peak of 3,819 in September 2007*. While it seems that there are a low number of housing permits in the area (61 in February vs. 36 in the prior month for Jefferson County) the increase is worrisome. New inventory still has to contract to 1,800 or to reach more normal pre-2004 levels, and in light of the heavy used inventory, and low sales levels even that would be high (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 8 months last year at this time (Section E page 3). New house inventories in the higher price ranges (above $500,000) remain excessive at over a year, and are continuing to see poor sales.
June 2008 set a record of 12,542 Used homes for sale. March 2009 shows 10,551 Used active listings (page E-3). Absorption for Used homes had been holding steady at 12 months of supply, level from June to August of 2008 and had been showing modest improvement which has now reversed, and sits at 11 months of inventory. This is a 1 month increase from last year’s level at this time (See section E page 3).
Again this month I looked at a number of the areas and was struck that the primary reduction in used homes for sale has occurred in the areas such as 170 North Birmingham/Norwood, 160 Eastlake, 130 Centerpoint (which alone dropped almost 100 active listings of which 76 were sales and 99 “fails”), while 140 Trussville, and 200 Mountain Brook, 230 Homewood were all up. I suspect some sellers in the lower price ranges may simply giving up trying to sell? The market for houses requiring “Jumbo” loans remains challenged. While foreclosures have impacted average prices, a bigger factor is the dramatic reduction in the number of higher priced homes sold.
Average sales price for Sold New homes decreased to $211,410 from $227,119 last month (Chart sect A p2). Average sales prices for Sold Used homes decreased to $141,676 from $145,955 last month (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. It’s hard to read too much into average prices with the absence of higher end 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. Note that our totals are higher than what the MLS board reports because they apparently omit some areas which are in the MLS system but not in the immediate Birmingham area. We report everything in the system. Since both use consistent methods the % change or reported trend is almost always within a % or 2.