What to Expect for 2018—Home Values
Last month, our blog included a review of the state and the Montgomery area residential real estate markets. (If you missed it, you can take a look at the previous blog, “Real Estate Market Trends: Part 1”). We learned that by the end of 2017 the supply of residential homes for sale was down compared to the previous December and that the number of home sales and home prices were on the upswing. Although the Montgomery market is overall not as robust as the state, trends are showing significant positive improvements.
As we head into spring and the beginning of our most active real estate season in Central Alabama, a common question we hear is, “What’s the outlook for area real estate for 2018?”
What most people are interested in are the price and value of homes and most importantly what that means for their home and for them personally.
In fact, this local market information is extremely important for those considering buying or selling as well as homeowners interested in their equity position for possible refinance or eventual sale.
Nationally and statewide, we expect continued real estate growth in 2018, including continued price increases. But what about our local area?
WILL HOME VALUES CONTINUE TO RISE?
Nationally, prices are expected to increase in 2018 with predictions of 3 percent growth rate. 1 We anticipate a similar trend for 2018 in our local area based on the rising trend in home prices in the Montgomery region over the past several years, including 2017. Data from the University of Alabama show the historical median selling price in Montgomery has steadily risen since 2014, from $130,000 to $147,750 in 2016. Montgomery area Multiple Listing Service (MLS) data from 2017 show the overall average sales price in 2017 was $167,792, up approximately 5% from 2016 levels. 2
ARE THERE MARKET DIFFERENCES BY COUNTY?
The short answer to this is a resounding YES! Let’s look at some data and check out the details!
In general, in 2017 the average price of homes sold (including resale and new construction) were highest in Autauga County and Lowest in Montgomery and Elmore. The average home sold price in the Montgomery Area MLS in 2017 of $158,368 was just slightly lower than the average sold price of $165,019 for Montgomery County. Elmore County residential sold property averaged $172,645. Autauga County topped the ranking of the three counties for price, coming in at an average sale price of $193,087. (The overall Montgomery Area MLS data includes other areas not included in the three counties mentioned here, which accounts for the differences in average price.) You can take a look at the chart to see the ovrall pattern between counties and new construction homes by county.
AVERAGE MONTGOMERY AREA HOME SALE PRICES (Overall, New Construction and Selected Counties) :
Average price of all area homes (ALL) and new construction (NC) and breakdown by selected county for Montgomery (MGM), Autauga (AUT) and Elmore (ELM). Data from the Montgomery Area Multiple Listing Service (MLS) for the period January 2017 through December 2017).
WHAT IS THE IMPACT OF NEW CONSTRUCTION ?
You can see in the chart above that the overall average home price is influenced by the much higher home prices commanded by new construction across the area and in the three counties shown. New construction in the Central Alabama region is clearly contributing to home sales in our market and to the average price of homes. New construction residential homes across the Montgomery MLS sold at an average price of $263,294 in 2017. Montgomery County led the average sold price in new construction homes at $293,283. Autauga County followed with an average new construction home sold price of $246,035. Elmore county new construction sold at an average price of $214,568.
New construction is especially important in keeping up with the dwindling inventory of available homes to meet the needs of buyers. Growth in home sales nationally will be driven largely by new home sales, which is expected to continue to increase with single-family construction according to economists at Freddie Mac.3 Volume of new construction sold in the Montgomery region is also up markedly over the past few years, with an increase of 25 percent in 2017 over 2014 levels. (691 new construction units sold in 2017 compared with 553 new construction units sold in 2014).
WHAT DOES THIS MEAN FOR YOU?
Home prices in Central Alabama are on the rise and demand is increasing.
If you’re looking to get into the market either to buy or sell, now could be the time you’ve been waiting for. If you’ve been thinking of selling and possibly purchasing another home, prices and market competition are on your side to transition you to a new home. If you’re thinking about buying, there are many great options for financing available so that you can start your road to home ownership and build equity. But if you’re concerned about rising prices and home affordability in our area, keep in mind the the nationwide median price based on residential sales is $335,000! 4
WHERE CAN YOU GET HELP?
While national, state and regional real estate numbers and predictions can provide a “big-picture” outlook, real estate is neighborhood and home specific. As a local market expert, I can guide you through the specifics of our market and help you understand the factors that are likely to drive home values in your particular neighborhood. As a Certified Pricing Strategy Advisor by the National Association of Realtors, I can help ensure you have comprehensive information concerning the value of your home—whether you are buying or selling. If you have specific questions, or would like more information about area real estate, please give me a call! Id love to discuss the market and help you sort through your plans to buy or a sell a home this year or in the future.
1. National Association of Realtors 2018 Housing Forecast: https://www.realtor.com/research/2018-national-housing-forecast/
2. The University of Alabama, Culverhouse College of Commerce, Montgomery Residential Report: http://d1ambw9zjiu0uw.cloudfront.net/market_monthly/38.pdf?1517347328
3. Housing and Urban Development/HUD: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_18_007