December 2008 Market Update
When looking at December home prices for the Huntsville Metro Area we find that the average sales price this month was $86 Sqr/Ft, while December 2007 prices averaged $91 Sqr/Ft, indicating a year-over-year price depreciation of -5.5%.
When we couple this month’s result with that of October (-2.2%), November (-2.1%), and realize that prices have moved below their moving average trend line since September 2008, it is an easy leap to conclude that average Huntsville Home Prices are weakening, especially when considering our market’s point of reference is a previously steady multi-year history of price appreciation as illustrated in the following 3 year price chart.
However before we reach such a conclusion, it is important to take a closer look at these statistics because recent market dynamics are much more complex than can be illustrated in this simple chart.
First of all, the Huntsville Real Estate Market has shrunk and it now smaller than in recent years. Moreover the mix of homes that are being sold has shifted dramatically. For example, in December the number of homes sold around the $1o0k price point increased some +21%, while at the same time the number of homes sold above $300k has decreased some -40%. Given that we are looking at a simple average home price, we would expect to see numbers similar to what we are seeing based on this market shift alone and it does appear that this factor is the major mover of average Huntsville Home Prices.
To illustrate the diverse and dynamic market we are now experiencing lets look at a couple of charts related to price-range and location within the metro area.
| Price Range | 2007 Price | 2008 Price | Price Change |
| 0-150k | $70 | $64 | -8.6% |
| 150k-200k | $94 | $94 | 0.0% |
| 200k-300k | $95 | $95 | 0.0% |
| 300k-400k | $109 | $116 | +6.4% |
| 400k – up | $129 | $134 | +3.9% |
Given the above chart and the statistics of the past few months, we can conclude that not only are lower-end unit sales growing but prices are declining, median priced home sales have slowed however their price has remained stable, and while upper-end home sales have declined dramatically their prices have remained strong. It is not a coincidence that where we are seeing lower prices, unit sales are increasing and vise-visa.
Whether a buyer or seller, your price range will be a major contributor toward what type of Huntsville Real Estate Market you can expect to encounter, but your location of interest will also have a major effect. We are seeing average price appreciation in some parts of the metro area, while at the same time experiencing price depreciation in others as illustrated in the following chart:
| MLS Area | Sales Price Sqr/Ft | Price % Diff | Unit Sales |
Sales % Diff | Months Of Inventory |
| Hsv_City_NW | $68 | +2.9% | 39 | +5.1% | 8.95 |
| Hsv_City_NE | $76 | +6.5% | 13 |
-35.0% | 10.23 |
| Hsv_City_SW | $80 | -13.9% | 44 | –29.0% | 8.70 |
| Hsv_City_SE | $97 | -.4.% | 23 | -41.0% | 15.26 |
| Hsv_City_East | $113 | +3.0% | 14 | -60.0% | 17.14 |
| Mad_City_Limit | $96 | -4.0% | 44 | -25.4% | 9.23 |
| Mad_Outside_City | $88 | -3.2% | 41 | -30.5% | 9.56 |
| Metro Area Totals | $86 | -5.5% | 218 | -29.9% | 10.34 |
So back to our original question: Are Huntsville Home Prices Falling? The answer is a complex one with no clear Yes or No, the answer is clearly dependent on the particulars of your market segment.
This market analysis post is likely the most complex we have ever publicly presented and is of course not for the casual reader, however given the complexity of the current real estate market it seems warranted. Our feeling is that this market does indeed represent some huge buying opportunities, but there are also perils to be navigated, thus it is far better to have well informed clientele than to simply gloss over any bad news that comes our way.
{ 3 comments }
I think this is an excellent analysis of how these average market prices are derived. I have a home for sale right now in S. Huntsville that is over 400k and certainly the price per square foot has appreciated; not the opposite. This analysis shows how media reporting can skew the perception in a negative fashion. While the market dynamics may have changed, as a whole, it still seems pretty strong in our area.
Your market is very unusual, volume slowing is the trend. Prices falling is also. I see your market is strong enough to lift prices in your higher ranges is interesting. I have notice Alabama seems to be better than most of the country. Do you have any feelings why?
Yes, the current trend is lower volume and moderating prices. However, the average price adjustment we are seeing is in the 2% – 5% range which of course bares no resemblance to the price weakness we see in the hardest hit states such as Cal, Florida, Nev, Etc.
The reason, I believe, is that Alabama currently has one of the lowest foreclosure rates in the country and thus the number of short sales on our market (bringing down prices) also doesn’t compare with many other states.
I would not go as far as to say that prices in the upper price ranges are being lifted. The number of sales in these prices ranges is much lower than in the past 2 years thus the sample is much smaller as these homes are selling very slowly.
I would term it more like this: The higher end homes that are selling are bringing good prices but few of them are selling, likely because their price is too high for the current market.
Thanks for the comments,
Elizabeth
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