2014 Alabama Residential Real Estate Forecast


Summary:

Two years ago, ABRE Analytics, a collaborative research partnership consisting of the Alabama Center for Real Estate (ACRE) and Tom Brander, began to attempt to identify correlations with select economic indicators and historical sales data that could possibly shed light and assist with providing future real estate sales projections in selected markets across the State of Alabama.

In 2013, our sales forecast for Alabama fell within the margin of error – just 3.3 percent short of actual closed transactions. These projection results were an improvement from our inaugural 2012 forecast that also underestimated sales by 6.0 percent, but still well within the margin of error. For the first time after two-years of trial and error, we are also providing the 2014 sales forecast for each of the 25 associations that report data to the Center each month.

The projections for 2014 are based on using the last quarter’s actual sales (in 2013) and linear regression against full year sales, with as much history as we have in our database.

We have anywhere from 5 to 10 years of historical data depending on the area. The areas are quite different in total annual volume, ranging from under 100 sales per year to over 40,000 sales per year. Generally, the more annual sales and the greater history we have the greater projection accuracy we expect.

The initial correlations that we have found, supporting the concept used in the projections, range from 93%, best to a low of 33%. To some degree the correlation percentages may be indicative of future forecast accuracy.

In short, the larger the market the more likely the projections will be more accurate. This is due to both the law of large numbers and the momentum of larger markets. Using the last quarter of the prior year, we believe is the most relevant and timely data to project the following year. To the extent that an event happens during the year this approach to forecasting would not project that possibility (up or down).

Some areas and time periods have ”adjustments” applied to history to normalize the numbers. Examples include the tax credit in 2009 that pulled sales into 2009 and out of 2010. We also see limited data in particular for Baldwin county. Certain areas have ”unusual” events, such as plant closing or openings as well as major weather events that may distort historical data and certainly could happen in the future.

We think the projections have value, if for no other reason than to see if the year is unfolding as predicted or if variances emerge that should be investigated. So, please take these projections as our best efforts, but do your own work.

Statewide full year summary:

Statewide projected 2014 = 45,318, 5.0% over 2013 actual of = 43,160
Athens projected 2014 = 854, -2.95% over 2013 actual of = 880
Baldwin projected 2014 = 6,666, 47.74% over 2013 actual of = 4,512
Baldwin Condos projected 2014 = 2,052, 41.52% over 2013 actual of = 1,450
Birmingham projected 2014 = 12,845, 8.17% over 2013 actual of = 11,875
Calhoun County projected 2014 = 1,134, 4.52% over 2013 actual of = 1,085
Cherokee County projected 2014 = 135, -8.16% over 2013 actual of = 147
Covington projected 2014 = 253, 11.45% over 2013 actual of = 227
Cullman projected 2014 = 674, 6.14% over 2013 actual of = 635
Dothan projected 2014 = 1,039, 2.47% over 2013 actual of = 1,014
Gadsden projected 2014 = 681, 5.91% over 2013 actual of = 643
Huntsville projected 2014 = 5,219, 0.87% over 2013 actual of = 5,174
Jackson County projected 2014 = 163, -3.55% over 2013 actual of = 169
Lake Martin projected 2014 = 453, 3.66% over 2013 actual of = 437
Lee County projected 2014 = 1,345, 5.08% over 2013 actual of = 1,280
Marshall County projected 2014 = 773, 5.46% over 2013 actual of = 733
Mobile projected 2014 = 3,937, 2.79% over 2013 actual of = 3,830
Monroe County projected 2014 = 83, 7.79% over 2013 actual of = 77
Montgomery projected 2014 = 3,747, 5.11% over 2013 actual of = 3,565
Morgan County projected 2014 = 1,149, -3.04% over 2013 actual of = 1,185
Muscle Shoals projected 2014 = 1,419, -1.8% over 2013 actual of = 1,445
Phenix City projected 2014 = 951, 2.81% over 2013 actual of = 925
Selma projected 2014 = 143, 4.38% over 2013 actual of = 137
Talladega County projected 2014 = 150, -16.67% over 2013 actual of = 180
Tuscaloosa projected 2014 = 2,001, 4.22% over 2013 actual of = 1,920
Walker County projected 2014 = 335, 15.92% over 2013 actual of = 289
Wiregrass projected 2014 = 839, 5.4% over 2013 actual of = 796

Sample monthly area forecast charts (will have Projection to actual as data becomes available)

Monthly sample charts

Monthly sample charts

Full year projections with history:

This is useful to see how variable the history has been and how the forecasted linear regression tracks.

Group 1 charts

Group 1 charts

Group 2 charts

Group 2 charts

group 3 charts

group 3 charts

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s