Since my last post (holding my breath) on the market when mid-summer activity seemed to pause and pivot, market activity in the Birmingham Metro for most single family homes has come back strongly. This is defying some of the national trends, especially those of the larger, historically robust markets. I thought values would hold, but I was skeptical of the idea that people would list and make a trade for a higher rate mortgage. I also suspected there would be fewer buyers in the market. Right now, it is hard to distinguish our current market from Spring 2022.
However, I am still advising clients to be judicious, as values will not continue to rise at meteoric pandemic levels. I am encouraging Buyers to view houses on a 5-10 year time horizon instead of a 2-3 year quick turn. We could be experiencing the “late movers” cohort that got pushed into listing and buying once they were convinced that the market was indeed shifting.
I have seen the following:
- Sellers moving to their second homes
- Grandparents leaving their hometowns and coming to Birmingham for its lower cost of living
- Some cashing out and downsizing
I have not seen as many:
- Buyers making aggressive offers (foregoing home inspections/offering appraisal gaps)
- Families trading mid-sized homes for larger ones
- Offers for significantly over list price
While we are seeing some price reductions (mostly on houses that were initially priced too high), very few houses are sitting. What I am seeing is more negotiation – on price, inspection requests, and closing timelines. While the current market seems resilient, it still appears that we are moving to a more balanced market versus the Sellers’ market we’ve witnessed over the last 18 months.
However, even as the market becomes more balanced, home values are at an all-time high. And while rates are not at the outlier levels of 2020-2021, they are still historically low (go ask someone who bought a house in 1980 what their interest rate was). One factor pushing home values is the rental market, which is super tight and very expensive. This is driving people who would normally rent in a market like this (where prices and interest rates are higher than they were a year ago) to consider buying – therefore putting even more pressure on a market already low on inventory.
There continues to be a limited amount of new construction coming to market, which also puts pressure on the inventory levels of existing homes. The new construction that is available is often on a 12-18 month build time – so people are either waiting to list until their new construction is ready or foregoing the build and are buying an existing home.
Overall, while I’m seeing the scales coming into balance, this market continues to be unpredictable – so I continue to advise Buyers to make decisions based on a long-term horizon and Sellers to look at the whole picture before putting that sign in the yard. Buying and Selling a house is and will continue to be a serious investment regardless of rates and inventory – keep the focus on buying a house that fits logistically and financially for the long term – Buy Right, Sell Well.