Photo by Jeff Thompson.
Southampton, Signature Homes’ new development in the Ross Bridge area, is one of three new Hoover locations where the company is constructing. It’s joined by Northampton in the same vicinity and The View at Lake Cyrus.
Bob and Selia Rainey weren’t sure if July would be a good time to sell their home in Bluff Park.
The couple, now in their 80s, wanted to find the perfect place to retire. Selia said their home had wonderful curb appeal, gracious neighbors and was convenient to everything in Birmingham, but like many others thinking of dipping their toes in the market, the unknown was a major concern.
“We were very skeptical about putting it on market,” Selia said. “Things changed so much after the crash, we worried it could sit there for six months or even a year.”
But it didn’t.
Instead, within 48 hours of listing the property, Selia said their real estate agent returned with a contract from a buyer worth more than the asking price. And they aren’t alone.
Experts say power in the market is finally shifting away from homebuyers, where it’s been entrenched for approximately five years. Recent data shows Hoover made strong gains in both number of home sales and average sale price this year.
Ginny Willis, president of the Birmingham Association of Realtors (BAR) and an associate broker with RE/MAX First Choice, said home sales in Hoover were up 15 percent for January through July when compared to 2012, from 968 to 1,112, and the average sale price jumped 3 percent, from $273,188 to $281,329.
“If this keeps up,” she said, “before the end of the year we’re going to have a strong sellers market in the area.”
Locally, the some agents are most thankful for a change in is “inventory” – the number of homes on the market. An August report from the Birmingham Association of Realtors that compiled data from Jefferson, St. Claire, Blount and Shelby counties lists inventory has steadily declined, down 3 percent from last year, from 8,262 to 7,979.
“The big thing that’s going to bring us back is that the inventory has gone down,” said James Harwell, an agent with RealtySouth in Hoover and BAR vice president. “When everyone was sucking wind, we had more than 15,000 houses on the market. And you can’t negotiate the price of a house when there are hundreds of others out there just like it.”
Harwell is the agent who both sold the Raineys’ home and is helping them search for a new one. He said the substantial gains are partially driven by the national economy, which in turn is driving buyers to the table. Hoover is now seeing a “sense of urgency.”
“Houses aren’t returning to the market, and a lot are finally leaving,” he said. “Time is suddenly of the essence.”
Several other factors are contributing to the shift, Harwell said. Besides a decline in inventory, a rising interest rate was a major catalyst. His colleagues agree.
“We’ve been flat off the bottom for three years as people wondered where the market would go,” said Clark Edwards, an over-the-mountain real estate agent with RE/MAX who works extensively in Hoover. “But now, this increase is tied to both confidence and a limited supply on a national level. So many people for so long have read negative reports and have been concerned about the unknown as much as anything. But once the interest rate moved up, it had a snowballing effect on our recovery.”
According to Bankrate, Inc. (bankrate.com), an online financial monitoring organization, interest rates have increased about a full point since May. Coming into the summer, banks were offering 30-year fixed-rate mortgages at approximately 3.7 percent. In August, they reached 4.6 percent.
Experts in Hoover said when the rates started moving, so did buyers.
“Even though we’ve had an uptick in rates, they’re still at record lows,” IBERIABANK Mortgage Branch Manager Brian Goldman said. “We’ve started seeing bidding wars because people can’t get offers in fast enough on houses to get bids accepted. The whole story is you can’t lowball somebody anymore. You have to be realistic.”
Goldman, who is mostly optimistic about the direction of the market, is taking his own advice. He said not to overlook the market’s volatility. Though it may be a good time to sell, a “sellers’ market” isn’t a guarantee in Hoover.
The BAR’s August report indicated that 17 percent of all home sales in the four-county area were foreclosures, and that it was the lowest percentage in more than four years. However, Goldman said banks are holding onto “shadow inventory” – foreclosures that had already taken place but remained unlisted.
“There are still a lot of houses out there that are for sale,” he said.
In addition, homes haven’t appreciated back to the point they reached in 2006. Prices are rising, but they aren’t skyrocketing.
“We’re seeing values somewhere about 2005,” Edwards said. “So, values haven’t reached their peak, but they have climbed 10 percent over a 12-month period.”
Regardless, while a seller may have things to mull over in the fall, buyers will lose leverage if experiences like the Raineys become more common.
“If you like it, you have to act,” Edwards said. “You’re not able to sit on the sidelines for five months like you used to.”