There have been two major trends in Alabama real estate over the past year: rising prices and falling sales and inventory. Both of these trends are related to each other, so it is no surprise to see them going strong heading into the second half of the year.
According to the latest report issued by the Alabama Center for Real Estate (ACRE), though, one of these trends reversed itself, at least momentarily. Home sales actually rose by 7.9 percent from June 2013, to a total of 4,445 units. This is a 13.9 percent increase from the average of homes sold from 2009 to 2013, too. Home prices are still rising throughout the state.
In June 2014, the median selling price was $144,125, which was 4.2 percent higher than the June 2013 figure of $138,270. This is also a 12.2 percent jump from May 2014, and a 10.7 percent increase from the average of the last four years. The month-to-month increase of 12.2 percent is nearly four times the historical average between May and June. We anticipate the same trends that are happening in Birmingham – lower supply creating upward pressure on home prices – will continue to occur throughout Alabama.
This is actually a major trend in residential real estate across the entire country. Investors who want to take advantage are using this opportunity to purchase properties, knowing that price appreciation will be something they can rely on in the foreseeable future as supply continues to remain constrained. We also anticipate downward pressure on vacancy rates and upward pressure on rental rates, as buying a home continues to become more expensive. The fact that interest rates are once again rising is making purchasing a home more expensive for typical buyers, which will only add to demand for single-family home rentals.