Economic Snapshot Overview by Dr. Reid Cummings - July 2020
Posted on July 28, 2020 by Dr. Reid Cummings
Greetings, and welcome to the July 2020 Mobile Bay Economic Snapshot.
Here in the middle of the summer on the Alabama coast, as expected, the weather is super-hot! But our weather is not the only super-hot thing on the coast right now鈥ur area鈥檚 residential real estate markets are on fire!
What we have wondered about recently is what conditions on the street are like? What factors are driving the market? What dynamics have changed for real estate agents and ancillary industry participants during the pandemic? What are markets likely to do over the coming months? What areas are doing better than others? Is one property type doing better than another? Should sellers sell? Should buyers buy? We contacted several top producers on both sides of the Bay and are delighted to offer their insights into one of the most amazing markets we鈥檝e ever seen.
Baldwin County, Q1-Q2, 2020
A total of 2,515 existing single-family homes changed hands so far this year, with transaction volume totaling $666.7 million. Sales prices averaged $264,600 while the median sales price was $227,800. On the new homes front, 860 transactions totaled $243.5 million, as sales prices averaged $284,000 and the median sales price was $255,800. Condominium sales continued their strong showing with 1,030 sales totaling $366.3 million. The average condo sales price was $352,500 and the median price was $296,900.
Mobile County, Q1-Q2, 2020
A total of 3,011 existing single-family homes sold during the first two quarters of 2020 for total transaction volume of $457.7 million. Average sales prices were $149,800 and the median price was $137,500. New home sales volume totaled $41.5 million on 173 transactions. There were 99 condominiums sold totaling $15.1 million. The average sales price was $156,800 and the median price was $130,500.
Why Are Our Markets So Hot?
The big question is why are our area鈥檚 real estate markets doing so well, even amid the Coronavirus pandemic? It seems that everyone is crazy busy these days and we really appreciate the professionals who took the time to help us learn more!
What is our current market like?
鈥淭he current market is very active and is a sellers鈥 market. Properly priced homes and condos go under contract in a few days.鈥 Drew Rambo,
鈥淭his market has been very exciting. Buyers are making decisions. We have limited inventory which limits the choices. I love that buyers know what they are looking for.鈥 Judy Niemeyer,
鈥淚 have personally never been as busy as I have been the past 2 months. The market seems to continue to pick up steam. The momentum is very unique considering all of the underlying variables. It's an election year, we are dealing with a global pandemic, global economic unrest, and global civil unrest. If you were to look at a snapshot of everything going on in the world right now you would think the real estate market would be cooling or even crashing, but it is booming!鈥 Bo Nichols, Nichols Real Estate
鈥淚nventory is very low making it more of a sellers鈥 market.鈥 Nicole Patrick,
鈥淥ur current real estate market is indescribably amazing, very strong and very fast moving, unlike any other market in the past. I've been licensed over 30 years and have never experienced this in the two different markets where I have worked.鈥 Michelle Talbott Rogers,
鈥凌辞产耻蝉迟!鈥 Mary Cane,
鈥淥ur current market right now is experiencing low inventory in all price ranges. Our market was heading towards a reduction in inventory even before the pandemic. With record low interest rates, this has placed buyers in the market who may have not been able to purchase previously.鈥 Chris King,
What do you think is the primary thing driving our current market?
鈥淟ocally we have many factors that are helping us see this surging market. South Alabama is experiencing massive new commercial/industrial growth that is fostering the residential boom we are seeing on both sides of the Bay. That paired with a great public-school system and historically low interest rates, and of course views that aren't too shabby, our area will only increase in population and demand! The simple supply and demand economic principle applies to real estate in every transaction.鈥 Bo Nichols, Nichols Real Estate
鈥淭he primary drivers are a desire to move, to own, and low interest rates.鈥 Judy Niemeyer,
鈥淚 believe interest rates are certainly playing a big part of it, but I also think that with our current situation, people are finding their home as their 鈥渟afe鈥 place, but also possibly their new work place.鈥 Chris King,
鈥淟ow interest rates definitely help and I think people have realized that if they can work remotely due to the pandemic they want to live close to the beach.鈥 Drew Rambo,
鈥淭he Fairhope market is driven by quality of life and small-town atmosphere. Interest rates are extremely favorable as well.鈥 Mary Cane,
鈥淟ow interest rates.鈥 Nicole Patrick,
鈥淎 significant factor driving our current real estate market is certainly super low interest rates, but also we should keep in mind the fact that homes are still very affordably priced, in spite of slightly increasing prices.鈥 Michelle Talbott Rogers,
What is the biggest challenge for our current market?
鈥淣ot enough product.鈥 Mary Cane,
鈥淐ertain price points are more challenging than others. Low inventory has been a major issue. Most of the inventory is in the new construction sector. But I would say the biggest challenge is finding a home for your buyers that they feel comfortable paying the price the sellers are asking. Everything is up and people are very hesitant to make a bad decision on the purchase.鈥 Bo Nichols, Nichols Real Estate
鈥淭he lack of inventory.鈥 Nicole Patrick,
鈥淭he biggest challenge in this market is getting loans out of underwriting. Lenders are flooded due to re-financing and new loan applications and they do not have enough qualified staff to handle it. Cash is king.鈥 Judy Niemeyer,
鈥淚nventory is the biggest concern today. If you know of anyone thinking about getting their house on the market now is the time. It is a sellers鈥 market.鈥 Kelly Cummings, The Cummings Company
鈥淚 have been working with a lot of buyers recently and inventory is low. It has been quite the challenge in the multiple markets I have been working.鈥 Kate Irvine,
鈥淭here is a lack of inventory which is driving up the prices of what is available. Many homes and condos that are properly priced and sometimes what looks like above market are receiving multiple offers due to the lack of inventory.鈥 Drew Rambo,
How do you see our market performing through the rest of 2020?
鈥淚 think a lot depends on how the election goes in November. Investors are starting to show hesitation and are waiting to see how everything shakes out. People forget how much of what we do is for people that use real estate as an investment and not just for their personal use.鈥 Bo Nichols, Nichols Real Estate
鈥淚 think it will continue at a steady pace.鈥 Chris King,
鈥淓虫肠别濒濒别苍迟濒测!鈥 Mary Cane,
鈥淭his is always an unknown. As long as inventory does not increase, we should continue along the same course.鈥 Judy Niemeyer,
鈥淚f interest rates stay close to where they are now I do not see the market slowing down anytime soon.鈥 Drew Rambo,
鈥淚 believe that the market will continue to stay strong with interest rates remaining low. It will be very interesting come November to see how the market will react to the election.鈥 Kelly Cummings, The Cummings Company
鈥淚t is hard to say. So far, it has been a great year and I am hopeful it will continue. We just need more homes to sell!鈥 Nicole Patrick,
鈥淚 expect our market performance throughout the remainder of 2020 to follow a similar trend. I do anticipate a rise in foreclosed properties coming onto the market by year's end but do not expect this to have an overall negative impact.鈥 Michelle Talbott Rogers,
鈥淭o date stats show market highs in months we never thought possible since the onset of COVID-19. It does not appear to be slowing buyers and sellers in our market as of yet. What is to come through year end? I am not sure I can predict!鈥 Kate Irvine,
What types of properties are hot right now?
鈥淲aterfront and downtown areas in Baldwin County. Springhill and Midtown in Mobile.鈥 Mary Cane,
鈥淎nything around $300,000 and lower is on fire around the Eastern Shore! New construction seems to be the majority of the market, so if you can be in that price point with something unique in an older neighborhood, that's awesome too. Additionally, the luxury market has been selling well in certain pockets of the Eastern Shore.鈥 Bo Nichols, Nichols Real Estate
鈥淚 do not think that there is one type of property that is 鈥渉ot鈥, because buyers鈥 needs are constantly changing, whether to simplify lifestyles or meet the needs of growing families.鈥 Chris King,
鈥淓verything. Single family and condos. Orange Beach seems to be extremely hot right now with the new school soon to open and an extreme lack of inventory. Lots, homes and condos are moving at a very rapid pace in Orange Beach.鈥 Drew Rambo,
鈥淣early any well-priced property, with regard to location and condition, would be considered hot right now but most particularly single-family residential homes priced between $100,000 and $250,000 are moving quickly.鈥 Michelle Talbott Rogers,
鈥淩eally can鈥檛 pinpoint one type. Everything seems to be selling.鈥 Nicole Patrick,
鈥淭urnkey is hot right now. Buyers do not want to do repairs. Homes priced from $400,000 and below are hotter than above.鈥 Judy Niemeyer,
Within the Mobile-Baldwin region, where are you seeing the most activity?
鈥淒aphne, Spanish Fort, and Fairhope continue to grow at staggering rates. The schools are having a hard time keeping up with the growth, as is the infrastructure.鈥 Bo Nichols, Nichols Real Estate
鈥淲e only deal with South Baldwin County and the most activity we see are in Orange Beach followed by Gulf Shores. The Foley market is also very active as well.鈥 Drew Rambo,
鈥淏aldwin County had consistently seen a large amount of growth from new construction to Bayfront property. As far as growth in Mobile, newer construction is more prevalent in the northern and western parts of our city. Midtown and Springhill continue to be popular with buyers.鈥 Chris King,
鈥淎ll over with no specific area. We are seeing some of the older aged REO inventory coming onto the market for those investors who are looking to pick up rental properties or flip candidates. This is going to help the REO inventory issue that we are going to experience in the next 12 to 18 months due to the pandemic.鈥 Kelly Cummings, The Cummings Company
鈥淭he most active market is downtown Fairhope due to the walkability to the city and the Bay.鈥 Judy Niemeyer,
鈥淐an鈥檛 put a finger on any certain area.鈥 Nicole Patrick,
鈥淏aldwin County is still experiencing a tremendous amount of new construction, as is north Mobile County, specifically Saraland. But let's not overlook the Midtown and Downtown areas where investors have begun to focus. Existing properties in Midtown, west Mobile, Chickasaw, Saraland, and Spanish Fort seem to be hot commodities in nearly every price point, but again, when priced right in regard to condition and location.鈥 Michelle Talbott Rogers,
How has the pandemic affected the way you do business?
鈥淎fter Mardi Gras things were taking off and the market was heating up. That is typical for our area. Something about dressing up in costumes and throwing plastic out on the street really gets the market pumping around here. Things slowed for about 3-5 weeks after the first round of the quarantine. I enjoyed spending time with my family at home. But now I think that actually pushed what is our normal selling season back a couple months. Now I am seeing people scramble trying to get in a home before school starts.鈥 Bo Nichols, Nichols Real Estate
鈥淚 ask my customers if they want me to wear masks and gloves or meet at properties separately rather than riding in the same car together. Special care is taken when showing properties鈥攕imple things such as taking precautions when touching light switches and door handles.鈥 Chris King,
鈥淚 have been busy and do not see a negative effect.鈥 Judy Niemeyer,
鈥淗as not affected it.鈥 Mary Cane,
鈥淭itle companies are offering a variety of options to get the loan closed. Electronic signatures on loan documents are accepted more and showing houses has changed as well. We are very cautious going into an occupied home with the use of social distancing, masks, disinfectant wipes and gloves. Buyers and sellers appreciate the extra effort to keep everyone safe.鈥 Kelly Cummings, The Cummings Company
鈥淚 am working more from home right now and buyers are trying to do the majority of their home shopping online.鈥 Nicole Patrick,
鈥淲e have not had any in person office meetings since March, opting instead for webinars and we communicate mainly through office wide email messages. The agents have adapted to working from home utilizing dotloop very efficiently.鈥 Drew Rambo,
鈥淚 find I am working with more qualified and more prepared purchasers than in the past. Most buyers are ready to make a purchase immediately once they see a home they are interested in.鈥 Michelle Talbott Rogers,
Why should a seller sell now?
鈥淏ecause inventory is low.鈥 Nicole Patrick,
鈥淕reat time to sell and move up or down due to the limited inventory. We need homes but homes that are well positioned.鈥 Judy Niemeyer,
鈥淏ecause demand is high, and inventory is low.鈥 Mary Cane,
鈥淧rices are up and with the low days on market sellers will not have to deal with showings over a long period of time and should receive top dollar for their property.鈥 Drew Rambo,
鈥淟ow inventory! There are so many buyers in our market!鈥 Bo Nichols, Nichols Real Estate
鈥淲ith a limited inventory, we are seeing an increase in the value of homes, and shorter market times, making the entire process easier for the seller.鈥 Chris King,
鈥淚nterest rates are low, inventory is low, and buyers are serious about buying! With rates providing more buying power, this is a great opportunity for sellers that may be looking to move up in housing to get a quick sale on their home and then turn around and purchase in a higher bracket that they may not otherwise be able to afford when interest rates are higher.鈥 Kate Irvine,
鈥淪ellers should sell now because buyers are ready and serious in their decision making. This, coupled with fewer days on the market, means fewer inconveniences for the seller in showing appointments.鈥 Michelle Talbott Rogers,
Why should a buyer buy now?
鈥淢ost of the buyers now are leaving large cities and/or are looking for a second home for a retreat. Our region can offer all someone is looking for: resort area such as Orange Beach; small-town atmosphere such as in Fairhope or Springhill; central downtown area for shopping and restaurants such as in Mobile, Daphne, or Fairhope.鈥 Mary Cane,
鈥淗istorically low interest rates!鈥 Bo Nichols, Nichols Real Estate
鈥淩ecord low interest rates and people are spending more time in their homes either working or social distancing.鈥 Chris King,
鈥淲ith interest rates as low as they are buyers have more buying power then they will in the coming months when interest rates inevitably tick up.鈥 Drew Rambo,
鈥淏uyers should buy now because interest rates are truly incredible and despite the fact that pricing is increasing, home prices in our area are still extremely low.鈥 Michelle Talbott Rogers,
鈥淚nterest rates are at an all-time low.鈥 Nicole Patrick,
鈥淚t is an incredible time to buy. Interest rates make the payment less than a rental.鈥 Judy Niemeyer,
A hot market indeed!!! When the pros say they have never seen anything like it and expect it to continue for the near future, we ask what are you waiting for? Whether considering selling or buying, either way, be primed to recognize real opportunity, and when you see the one that is right for you, be ready to act quickly! First though, be sure to buckle up鈥urely it will be a wild ride!
Until next time, from everyone at the Center, we wish you and yours all of the best.