Huntsville's housing market appears stable
Numbers remain steady while BRAC-assisted growth should continue
Sunday, November 27, 2005
The so-called housing bubble in some large U.S. markets may be showing signs of bursting or at least deflating, but Huntsville's market appears stable, according to a University of Alabama study.
In October, sales of existing homes in the Huntsville market, which includes Morgan County and Athens-Limestone County, dropped just slightly from the previous month, to 779 from 812, the study reported. The average selling price hovered around $150,000 both months.
The average number of days on the market is also holding steady, at about 120, said Dr. Leonard Zumpano, director of UA's Alabama Real Estate Research and Education Center.
The median selling price for existing homes in the Huntsville market reached a high of $136,000 in July, according to the report. In September, the average price dropped to $132,967. The number of homes on the market also has remained fairly steady all year, around 3,300.
"I think Huntsville's pretty much bulletproof," Zumpano said. He noted it's typical for the market to soften a bit from the start of school through the holidays.
Statewide, the market shows some signs of softening, he said. Alabama's housing affordability index dropped 7 percentage points during the third quarter, to 158.7 from 165.7. The housing affordability index is calculated as the ratio of the state's median family income to the income needed to buy the state's median-priced home. An index of 100 means that a family earning the state's median income has just enough buying power to qualify for a loan on the state's median-priced, single-family home.
As the affordability index drops, more potential buyers are priced out of the market, Zumpano said. That could cause sales to drop.
Huntsville, Birmingham and Mobile markets have seen average selling prices drop slightly. In Baldwin County, a pricier resort market, prices have fallen each of the past seven months, the UA report showed.
Huntsville's affordability index dropped, too - to 203.6 in the third quarter from 218.3 in the second quarter. But the area's higher-than-average salaries and moderate home prices make Huntsville one of the most affordable housing markets in the state, Zumpano said.
Scott Averbuch, president of Averbuch Realty Co., said he believes Huntsville will continue to be a strong market well into the new year.
"I still think it's a balanced market. We've had some increases in value, but not enough to make it not affordable," Averbuch said.
He said he expects some people to begin moving to the area next year as contractors plan to support the base realignment and closure moves that will happen more gradually during the next several years. Under the BRAC law, the Pentagon can wait two years to begin relocating military units and organizations, but the moves must be completed by 2011.
That growth will lead to more growth, Averbuch said.
"New employees are going to be working at a lot of these new retailers in the market," he said. "Then there is small business growth."
Averbuch said new residents moving from out-of-town tend to prefer new houses in new subdivisions, and builders are getting ready.
"I'm very optimistic. We've had great absorption this year of the inventory," he said. "Builders are ramping up and getting more inventory on the market.
"I think we have much more inventory in the city than we had with the '97 BRAC," he said, referring to the 2,300 Army aviation jobs that were moved to Huntsville from St. Louis. "And we're doing a better job of filling the higher-end market."
The BRAC moves will likely keep Huntsville's housing affordability index high, Zumpano said.
"The salaries tend to be good. That's a very strong contributor to housing growth and market appreciation."
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