Tag Archives: Montgomery

3rd Quarter Alabama Residential Real Estate Outlook Continues Positive

Summary

The survey projects expectations for the 3rd quarter of 2013. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.

The professional real estate community remained optimistic this quarter. All of the overall indicators are at the highest 3rd quarter levels we have seen since beginning the survey in 2010. Sales expectations are at 62, down 3 points from last quarter, yet still the highest 3rd quarter measure,  and up 4 points from last year. The availability of credit continues to be viewed somewhat negatively, at 49, the same as last quarter.

3q Indicators Overview

3q Indicators Overview

The national score at 58, up 1 point from last quarter, indicates that respondents are continuing to see improvement in the overall economic picture. The participants are more positive on the statewide conditions at 63, up 1 point from last quarter. Inventory expectations moderated to 54, down 1 point, indicating continued reduction of supply expected. Sellers are seeing improvement for improved pricing with a score of 57, up 1 point from last quarter. Financing continues to be viewed negatively at 49, indicating that buyers may face tight financing conditions.

Regional Results:

The coastal region continued to remain the most optimistic in the state at 67 (Alabama Stat). On an overall basis all areas sales expectations remained above 60 except the Huntsville North Alabama area at 59 however expansion is still expected.

3q Regional Outlook

3q Regional Outlook

This quarter showed stability in all regions.  Historically, we usually see a marked decline in 3rd Q expectations. This is encouraging, and overall measures remain in the expansion zone.

Commercial market participants, (the majority of the respondents are from the Birmingham market area), remained positive this quarter (Total Stat) at 54 this quarter a one point decline and declining 3 points to 57 for sales expectations. Price expectations improved 2 points to 54 indicating improving pricing conditions. The score for credit availability is looking stable at 53.

North Region

All areas including North Alabama had stable total scores which is very favorable since historically the 3rd quarter normally shows a decline. The total score remains 53. The sales outlook is positive at 59 off by 2 but with pricing pressure positive at 53 (up by 2).

North Central Region

The North Central Region overall score remained at 58. The sales score declined to 61, off by 4 points. Inventory score remained at 55, with pricing improving to 58 from 56, and credit at 51.

South Central Region

The South Central Region outlook for sales declined to 61 from 65.  We saw a dramatic uptick in the Montgomery, Central Alabama Rural segment with sales expectations at 57, up from 42; our sample size here was quite small however. The Suburban areas show sales expectations of 63, off from 69.

South Region

The Southern Region sales score is the highest regions at 67, off 2.  Price expectations declined slightly to 61 points from 62 last quarter.

About the Alabama Real Estate Confidence Index and Survey:

More than 450 professionals responded to the 3rd quarter 2013 survey which was conducted during the month of June 2013. The survey, conducted by the Alabama Center For Real Estate now has the largest participation of any real estate survey. It provides important market insights. Full history and scores for each market segment are located here on the web http://goo.gl/eBQXZ

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

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2nd Quarter Alabama Statewide Residential Real Estate Survey Outlook Optimistic

The survey projects expectations for the 2nd quarter of 2013. The scale ranges from 0-100 with 0 being much worse, 100 being much better, and 50 indicating no change expected.

The professional Real Estate community’s optimism soared this quarter. All of the overall indicators are at the highest levels we have seen since beginning the survey in 2010. Sales expectations are at 65 up 10 points from last quarter. Only availability of credit continues to be viewed somewhat negatively, now at 49, up five points from last quarter.

Market Indicators 2q 2013

Market Indicators 2q 2013

The national score at 57, up 10 points from last quarter, indicates that respondents are more optimistic about the overall economic picture. The participants are more positive on the statewide conditions at 62 up nine points from last quarter. Inventory expectations improved to 55 up 6 points indicating continued reduction of supply expected. Sellers may see some improvement for the first time in several years with a score of 56 up six points from last quarter. Financing continues to be viewed negatively at 49 indicating that buyers may face tight financing conditions.

Regional Results:

The coastal region continued to remain the most optimistic in the state at 69. On an overall basis all areas sales expectations gained at least 8 points with the lowest being the Huntsville North Alabama area at 61 still, indicating expansion expected.

Regional Outlook 2q 2013

Regional Outlook 2q 2013

This quarter showed substantial change in expectations in all regions. The results are encouraging, with overall measures in the expansion zone.

Commercial market participants (the majority of the respondents are from the Birmingham market area) turned positive this quarter (Total Stat) at 55 this quarter a five point improvement and climbing 14 points to 60 for sales expectations. Price expectations improved 6 points 52 indicating improved pricing conditions. The score for credit availability is looking stronger, up 7 points to 53, the first over 50 reading for this segment.

North Region

All areas except North Alabama had the highest levels we have yet seen. It is likely that anxiety over the sequester cuts effect on the defense oriented industry, served to dampen expectations. Nonetheless scores were positive and improved over the prior quarter. The total score of 53, up by 6. The sales outlook is positive at 61 up by 8 but with pricing pressure neutral at 51 (up by 6).

North Central Region

The North Central Region overall score improved to 58 up 8 from last quarter. The sales score improved to 65 from 54. Inventory score improved to 55 from 50 with, pricing moving to 56 from 52, and credit at 52.

South Central Region

The South Central Region participants’ outlook for sales improved from 65 from 51.  The only sub-segment declining and in negative territory is the Montgomery, Central Alabama Rural segment with sales expectations at 42, our sample size here was quite small however. The Suburban areas show sales expectations of 69 up from 52.

South Region

The Southern Region sales score are at the highest regional level, 69,  up 8.  Price expectations jumped 7 points to 62.

About the Alabama Real Estate Confidence Index and Survey:

More than 400 professionals responded to the 2nd quarter 2013 survey which was conducted during the month of March 2013. The survey, conducted by the Alabama Center For Real Estate now has the largest participation of any real estate survey. It provides important market insights. Full history and scores for each market segment are located here on the web http://goo.gl/1ByP7

The ACRE Leadership Council  determined the need for a statewide industry confidence index and this was adopted as the Council’s first initiative. Tom Brander, Council Member, was selected by the Council and Grayson Glaze, ACRE Executive Director, to spearhead and work with the Center to conduct and produce its Alabama Real Estate Confidence Index (ARECI). The Council appreciates everyone who participated.

For further information contact Tom Brander at Tombrander@tombrander.com or Grayson Glaze at gglaze@cba.ua.edu

ABRE Analytics: 2013 Forecast for Alabama Residential Sales

Last year, ABRE Analytics, a collaborative research partnership consisting of the Alabama Center for Real Estate (ACRE) and Tom Brander, began studying the correlation between unemployment rates and future real estate sales projections in selected markets across the State of Alabama.
Ala - 2012 Act vs Proj 2013.jpgView full sizeABRE Analytics: 2013 residential sales projections for selected real estate markets. All rights reserved.
With the release of the metro unemployment data for January 2013, ABRE Analytics is pleased to present our 2nd annual forecast stemming from this methodology and related commentary.
Area Full year 2011 Actual Full year 2012 Proj % chg from 2011 2012 Actual Err % Diff to proj Act 2012 % Diff to 2011 Forecast 2013 2013 F’cast to 2012 Act Method Unemp or last Q
Statewide 36965 41,992 14% 39280 -6% 6% 41,799 6% Last Q
Huntsville 8610 9,050 5% 9189 2% 7% 9,835 7% Unemp
Birmingham 12468 14,550 17% 13514 -7% 8% 14,571 8% Last Q
Auburn 1132 1,138 0% 1233 8% 9% 1,338 8% Last Q
Tuscaloosa 1743 1,826 5% 1735 -5% 0% 1,935 12% Unemp
Montgomery 2774 3,679 33% 3111 -15% 12% 3,342 7% Last Q

Note: the error bars are at +/- 10%

The above table summarizes last year’s results and our expectations for 2013. These predictions assume no “major events”. As expected with any new trends model in its inaugural trial run, the 2012 predictions were mixed. Alabama residential saleswere up 5.9 percent in 2012.

In Huntsville, the forecast was within 2% of the full year 2012 results. In the aggregate, the results pointed in the right direction right, but with some error so this led the team to explore some alternative approaches for this year’s predictions to improve accuracy. In the markets with the greatest error we revised our methods to use the last quarter of 2012 sales via straight line linear regression instead of the unemployment rate. This method appears to be more accurate in most markets historically and hopefully going forward.

With these adjustments, above is the overview of what ABRE Analytics think might happen in 2013. As for the projection of a 12% increase for Tuscaloosa that is out of line with the other markets, ABRE’s opinion is that this may be a little too optimistic, but we have yet to figure out a consistent method to arrive at a better projection for Tuscaloosa in 2013. Of course, the local market’s near-term response to the tornado of April 27, 2011 certainly has a role with the difficulty in identifying a projection that could be presented with more confidence. Last year we experienced a similar issue with Montgomery, which prompted us to develop the alternative methodology of using last quarter sales for predictions.

The method ABRE used for 2012 was based entirely on the January unemployment rate for a market area. The assumption was that the January unemployment rate eliminated the effect of holiday temporary work and would reflect the mood of the populace towards buying and selling a new home in the upcoming year. A standard linear regression line yielded a better than 80% correlation since 2004 in all areas. The standard error however is somewhat high. This method also has the benefit of using two longer term trends, unemployment and home sales, and only at a single point per year, which eliminates a lot of “noise” in both series.

The seasonal regularity of sales is such that if you know the total sales for a year, dividing the total by the average proportion of the yearly sales attributable to a month has shown to be remarkably stable. Exceptions to the regularity do occur, such as fiscal cliff drama and the tax credit for first time home buyers in 2009. ABRE eliminates this data when calculating the monthly spreads.

ABRE originally chose unemployment data as it is one of the more timely pieces of data released by the government, as well as being released by geographies that generally correspond to the reported real estate market areas. Other data from various government agencies are released so late as to not be timely enough for meaningful projections.

So, what ABRE presents is our best estimate of next year’s sales which specifically excludes the possible impact of unpredictable governmental action or inaction, although even this seems to be having less impact as both the populace and markets begin to ignore political histrionics. For what it is worth, ABRE did test everyone’s favorite housing predictor, interest rates, and could not find any useful correlation.

In each case ABRE experiments with prior years data to see how well the prediction methodology would have worked. We tried using the last quarter sales of the prior year to “regress” against the full year sales of the projected (next) year. This is based on the same premise that recent data may be indicative of future results.

In each case, except Huntsville and Tuscaloosa, this methodology (last quarter of the year to the following year) resulted in greater historical accuracy in predicting and considerably better correlation numbers. We did exclude 2010 from the analysis since the last quarter of 2009 had abnormally low sales, (although the full year sales were as expected), due to the 1st time homeowners tax credit that pulled sales into earlier quarters and depressed the year end.

Complete spreadsheets with all data are available as public Google spreadsheets, which also include month by month projections, at http://goo.gl/jtJGW. ABRE presents these projections as a “work in progress” and as a tool for assessing how well current sales are performing against some level of “informed” expectation. You should not rely on them, but nonetheless ABRE hopes the projections are found useful. ABRE welcomes comments and suggestions for improvement.

About ABRE Analytics: Strategic collaboration is one of the keys to accelerating the flow of insights in the 21st century. The Alabama Center for Real Estate (ACRE) and Tom Brander has been successfully collaborating since 2009. The flow of ideas stemming from this relationship have led to solutions to better serve the Alabama real estate industry and consumers. ABRE (ACRE/Brander Real Estate) Analytics is designed to foster future creative thinking while also providing hands-on experience for student interns of ACRE.

About ACRE: ACRE’s core purpose is to advance the profession of real estate in Alabama by providing relevant resources in the areas of research, education and outreach. The Center, founded in 1996 by the Alabama Association of REALTORS, the Alabama Real Estate Commission and the Office of the Dean at UA’SCulverhouse College of Commerce, also acts as an industry liaison for the benefit of business school students pursuing a career in real estate. To learn more, please visit ourwebsite.
About Tom Brander: Tom Brander is a prominent real estate publisher. He produces The Rudulph/Brander Monthly Real Estate Report in the Birmingham, Huntsville and Baldwin County markets. His company, OSWCO, LLC (Open Software Company) is an authorized Google reseller. He has earned the Google apps sales consultant certification and the Google apps deployment certification, from Google. Tom also co-produces the ACRE quarterly Real Estate Sentiment Index and report in conjunction with ACRE. He is a designated ACRE Education Instructor and serves as a member of the ACRE Board of Trustees. To learn more, please visit http://oswco.com.