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Photo by Erin Nelson Sweeney.
New homes under construction in the Everlee subdivision in Hoover on Feb. 5.
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Photo by Erin Nelson Sweeney.
New homes under construction in the Smith Farms subdivision in Bluff Park on Feb. 5.
Residential real estate sales in Hoover continued their slowdown in 2023, but prices remained strong and slightly outpaced inflation, and Realtors and home builders are predicting an uptick in business this year.
After total home closings in Hoover declined 18% in 2022, they fell by another 23% in 2023, according to statistics from the Greater Alabama Multiple Listing Service.
The total number of home closings in Hoover fell from 2,243 in 2021 to 1,844 in 2022 and 1,421 in 2023, data shows.
That included a drop in existing home sales from 1,858 in 2021 to 1,512 in 2022 and 1,166 in 2023 and a drop in new homes sales from 385 in 2021 to 332 in 2022 and 255 in 2023.
The primary reason for the slowdown was the continued uptick in interest rates, Realtors said. Thirty-year fixed mortgage rates had fallen to a historic low of 2.65% in January 2021, creating a surge in home buying, but rates climbed back up to 7% by October 2022 and continued rising through most of 2023, peaking at 7.79% in October 2023, according to Freddie Mac.
The higher rates made it less attractive for many people to sell their homes and move because even if they wanted to find an equal house in the same market, it was going to cost them more money just because of the higher interest rates, said Jonathan Belcher, president of Signature Homes, which sold 85% of the new homes purchased in Hoover in 2023.
As a result, more people who were potential buyers and sellers decided to stay where they were, he said.
While the overall number of home sales were down, it was still a very profitable year, said Kathy Gipson, the team leader and broker for the Keller Williams Realty office in Hoover.
From her perspective, Hoover had the strongest of all the markets in the Birmingham metro area, although she is less familiar with the Mountain Brook and Homewood markets, she said.
Hoover certainly has a higher volume than other suburban markets, with its 1,421 home sales in 2023 comparing to 610 in Vestavia Hills, 554 in Trussville, 465 in Pelham, 446 in Bessemer, 427 in Chelsea, 407 in Calera, 337 in Helena, 352 in Alabaster, 302 in Odenville, 300 in Homewood and 280 in Mountain Brook, according to MLS data.
Prices still rising
Hoover’s average home prices also held up nicely in 2023, despite the higher interest rates. The average home price in Hoover had jumped 11% in 2022 (from $438,666 to $485,441) as inventory remained low, but the average price managed to rise another 4% in 2023 to $505,168, even with higher interest rates.
That shows the strength of the Hoover market, Belcher said.
Other metro area cities where prices increased more than the Consumer Price Index in 2023 included Pinson (where the average price increased 19% to $241,433),
Odenville (increased 17% to $253,917), Mountain Brook (increased 7% to $1,102,750), Trussville (increased 4% to $425,278) and Alabaster (increased 3.5% to $307,129).
Harold Collins with eXp Realty said 2023 was the second best year his team, The Collins Group, has ever had in his 11 years in the business, falling only behind 2021. No matter where interest rates are, people have multiple reasons for needing to move, from job relocations to needing more or less space, or desiring a different kind of space, he said.
What he noticed in 2023 is that, in general, homes priced at $500,000 or below were moving faster than larger, more expensive homes, he said. They seemed to be getting more multiple offers, he said. Owners of higher-priced homes could still get the price they were asking if it was within reason, but they might have to wait longer to sell, he said.
Gipson said the market hasn’t been nearly as volatile as it was during the COVID-19 pandemic, when there sometimes were 50 people vying for one house. Still, buyers are getting multiple offers, and she believes it is still a seller’s market, she said.
Houses are not selling as fast as they were in 2021, Gipson said. Due to the low inventory, for a while real estate agents were tracking hours on the market instead of days, she said. Some sellers began to expect that to happen automatically, but as interest rates have risen, real estate agents have had to give sellers a reality check so they don’t get disappointed when it takes a little longer to sell, she said. “It’s a different market now.”
That said, most buyers can expect a house to sell in under 30 days, depending on the price point and condition, Gipson said in early February. “Now, condition is the key,” she said.
She also has noticed, with fewer buyers competing for houses, that buyers are beginning to put more contingencies in their contract offers, and more buyers are requiring inspections that were being waived during the peak market demand, she said.
During the COVID-19 pandemic, a lot of people were taking advantage of lower interest rates to buy bigger houses with office space to accommodate working from home, Gipson said. Also, families wanted more space to spread out since they were spending more time at home, she said.
As workers are shifting back to offices, the need for office space at home has lessened, Gipson said. But families may now want space for a bonus room for teenagers or a place for aging parents to move in with them, she said.
Bluff Park hot spot
The Hoover neighborhood with the most real estate activity for existing homes in 2023 was Bluff Park, with 81 sales. Bluff Park is going through a revitalization, with people buying older homes and renovating them, Gipson said.
“It’s a sought-after community, mostly because of the schools and community atmosphere,” she said. “Everybody that lives in Bluff Park wants to stay in Bluff Park.”
Collins, who lives in Bluff Park, agreed. A lot of people who live in Bluff Park call it a “modern-day Mayberry,” with an old-fashioned, locally owned hardware store and diner, Collins said. The addition of numerous sidewalks in recent years has added to that community feel, he said.
“Value occurs when something is difficult to recreate,” he said. “Bluff Park and Cahaba River Estates are the most difficult neighborhoods [in Hoover] to recreate because of what they have.”
Both of those communities have large lots, which give people more room to add things such as a batting cage, workshop or three-car garage in the backyard, Collins said. And some people just like a bigger yard, he said. “I appreciate having a lot of dirt.”
Bluff Park also has road connections that can get people to key places in every direction in eight to nine minutes, including downtown Birmingham, Collins said.
Other communities with larger numbers of existing homes sold in 2023 included Lake Cyrus (46), Greystone (35), Riverchase (35), Trace Crossings (34), The Hamptons at Ross Bridge (34), Russet Woods (25), The Preserve (20) and Green Valley (20).
Gipson said she had noticed quite a few people moving from Lake Cyrus to newer communities such as Everlee.
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New home stats
Of the 255 new home sales in 2023, Signature Homes was responsible for 217 of them (85%), including 75 in Bradbury at Blackridge, 52 in the Knox Square sector of Trace Crossings, 40 in Everlee, 47 others in Blackridge and three homes in the Abingdon sector of Lake Wilborn, according to MLS data. Meanwhile, Embridge Realty had 13 home sales in Lake Cyrus and three in McGill Crossings, and Harris Doyle Homes had seven homes sales in The Foothills at Blackridge.
The average price of a new home in Hoover in 2023 was $661,519. The most expensive homes sold on average (new and existing) were in Blackridge ($1,013,369), Heatherwood ($917,627), Greystone ($896,952), Greystone Legacy ($864,590), The Preserve ($858,953), Greystone Cove ($736,219), The Foothills at Blackridge ($705,665) and Kirkman Preserve ($701,480).
Belcher said the modest increase in home prices last year made for a “balanced year” in the market.
He said his company would have been able to build more new homes in Hoover if it hadn’t been for supply constraints. It wasn’t the same as the supply chain problems from a couple of years ago. The wood market has been consistently better the past 18 months, and the market for windows has gotten better, too, he said.
But there were big challenges with ductile iron pipe, which is used in the land development stage, so his company wasn’t able to get to the actual home building stage as quickly as it anticipated, Belcher said.
Future outlook
The outlook for 2024 looks positive from the development and real estate industry standpoint, Belcher and Gipson said.
Interest rates started to drop toward the end of the year and were averaging 6.63% on Feb. 1.
“We’ve had a great January,” Belcher said. “All the banks and real estate offices have seen a lot of activity just in the past 90 days.”
As rates decline, it will increase what people can afford to purchase, which should push up home values, he said.
Gipson said it generally takes about 90 days for a change in interest rates to show up in the real estate industry, so the rate decreases that started happening in late 2023 are beginning to be felt.
Belcher said he expects rates to keep dropping into the second half of the year, and Gipson said she thinks they’ll drop at least two more times this year.
Belcher predicted real estate closings from the Greater Alabama MLS, after falling from 21,536 in 2022 to 17,739 in 2023, would jump back over 20,000 in 2024. It’s harder to tell what the Hoover numbers will look like, he said. Hoover usually has 1,700 to 2,000 overall home sales but had only 1,421 last year.
As for new home sales, Belcher said he expects his company will see its home sales in Hoover climb from 217 in 2023 to 335 or 345 in 2024. That should include about 75 in Blackridge, 80 in Windsor Court on U.S. 280 and 180 to 190 in Everlee off Alabama 150, he said.
He also expects to see 30 to 40 new home sales in the portion of Lake Wilborn being handled by Embridge, 30 to 40 home sales in The Foothills of Blackridge, handled by Harris Doyle, and 15 to 20 new home sales by various builders in The Preserve.
His company also expects to deliver 700 apartments restricted to buyers age 55 and older in the near future, including 163 in Knox Square across from Hoover Metropolitan Stadium, 300 in Everlee and 250 in the Riverwalk development in Riverchase, he said. Those units combined should generate $250 million in property tax revenue but shouldn’t add students to Hoover schools because of the age restrictions, he said.
He expects to complete the Knox Square apartments by the end of this year, he said.
Embridge, which is building homes in the last section of Lake Wilborn, has about 90 homes left out of the 540 or so total in the neighborhood, Belcher said.
About 400 of the 854 planned homes in Blackridge have been built and sold, so that development likely will take four to five more years to complete, he said.
No one had moved into the Windsor Court townhomes off U.S. 280 as of late January, but about 80 of the 120 townhomes should be built this year, leaving 40 or so for 2025, Belcher said.
He estimated there probably are about 300 homes left to be built in The Preserve, out of a little over 800 total home sites that had been approved. Meanwhile, the Riverwalk development should be in the development phase throughout 2024 and probably won’t get into vertical construction of the residential units until mid-2025, Belcher said.
Collins, who is representing the developer of the 44-lot Smith Farm development in Bluff Park, said 12 of those had been sold as of early February, but 22 more were under contract, leaving only 10 left to sell. All the lots had been under contract with builders or individuals until the fall of 2022, when a builder backed out of a contract to buy 30 lots after interest rates rose, Collins said.
He believes all the lots will be sold by the end of 2024, he said.
Marty Gilbert, the city of Hoover’s building official, noted that single-family building permits actually increased from 317 in 2022 to 357 in 2023. The first four months of 2023 were relatively slow, with just 39 permits issued, he said. Normally, the permits average in the mid-30s on a monthly basis, he said.
Activity seems to be picking back up, Gilbert said. “I think the first half of the year is going to be good,” he said. “Our market is strong.”
There is more uncertainty with the second half of 2024 because markets sometimes change directions in an election year.
As interest rates drop, real estate agents are preparing for a surge of interest.
“Will it be as wild as during COVID? I don’t think so,” Collins said. “But we may get a taste of that in some areas people really want to be in.”
