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Photo by Erin Nelson.
Contractors work on a newly constructed home by Embassy Homes in the Retreat at Highland Gate in the Lake Cyrus area Dec. 14.
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Photo by Erin Nelson.
Empty lots and homes under construction are seen Nov. 15 in the 55-acre new subdivision at Abingdon by the River in Trace Crossings.
As interest rates continued to drop in 2020, the home building market in Hoover stayed strong, and the outlook for 2021 is the same, industry observers say.
From Jan. 1 to Dec. 9, 2020, there were 374 permits issued to build new single-family homes in Hoover, said Marty Gilbert, director of Hoover’s Building Inspections Department.
That’s a slightly slower pace than in 2019, when 426 single-family building permits were issued for the full 12-month period, Gilbert said. If the COVID-19 pandemic had not hit, last year’s number likely would have been eclipsed, Gilbert said. But permit requests slowed down in April and May.
Despite a slight decline in building permit applications, new home sales in Hoover were 28% greater in the first 11 months of the year, climbing from 299 to 382, according to Multiple Listing Service data supplied by Signature Homes, Hoover’s leading builder.
That was the first time Hoover had more than 300 homes sold in that 11-month period since 2016, Signature Homes President Jonathan Belcher said. It also was stronger growth than the 8% growth rate for the metro area as a whole.
Of those 382 Hoover home closings, 295 (77%) were sold by Signature Homes, Belcher said.
The number of existing homes in Hoover that were sold in the first 11 months of the year climbed 10% from 1,560 to 1,714, MLS data show.
COVID-19 may have caused a temporary slowdown in the housing market, but it didn’t last long. Signature Homes sold fewer than 30 houses in Hoover in March, but by June, that number had climbed to more than 100 — the first time Signature Homes had sold more than 100 homes in a single month in Hoover, Belcher said.
There were fewer people coming out to look at new homes in 2020, but those who did were serious and ready to purchase, he said.
CONSUMER CONFIDENCE
The drop in interest rates played a big part in that, Belcher said. The average 30-year fixed-rate mortgage fell from 3.94% in 2019 to 3.15 in the first 11 months of 2020 and was at 2.77% for November, according to the Federal Home Loan Mortgage Corp, known as Freddie Mac.
But the driving factor for new home sales is consumer confidence, Belcher said. “It didn’t matter that rates were low in March,” he said. People were concerned about the overall economy and keeping their jobs and income, he said.
But once businesses that were closed began to reopen and people were called back to work, consumer confidence surged, Belcher said.
The housing supply in Hoover is limited right now. There were only 212 homes for sale in the Hoover market in early December, and 66 of those were new homes, Belcher said.
Homes in Hoover are selling quickly. Existing homes are selling in about a month on average, while new homes are selling in less than two months on average, for an overall average of 1.2 months on the market, Belcher said.
Such high demand, coupled with low interest rates, drives prices up. The average price of an existing home in Hoover climbed 8% from $330,000 for the first 11 months of 2019 to $356,000 for the first 11 months of 2020, MLS data shows.
New home prices in Hoover actually declined slightly from $527,000 in the first 11 months of 2019 to $524,000 in the first 11 months of 2020, but that’s only because homes were a little smaller, Belcher said. The price per square foot for new homes actually increased from $171 to $176 in that time period, he said. The average cost of a new home in Hoover has climbed more than 20% since 2016, when the average price was in the $430,000s, Belcher said.
STADIUM TRACE BOOM
The vast majority of new construction in Hoover in 2020 — probably about 90% — has been in the new communities along Stadium Trace Parkway, Gilbert said. There have been small numbers of new homes in other places such as Greystone, The Preserve, Lake Cyrus and Ross Bridge, he said.
Most of the homes in the 840-home Lake Wilborn community have been built now, Belcher said. Signature Homes has sold all of its lots in Lake Wilborn and expects to have all of its homes there built by the end of 2021, including about 60 in the Green Trails part of it, Belcher said.
Embridge Homes, the other builder in Lake Wilborn, had closed 45 sales there in the first 11 months of 2020 and still has 88 home sites to develop there that probably won’t be ready until the latter part of 2021, Belcher said. So a full buildout of Lake Wilborn likely won’t occur until early 2023, he said.
Abingdon by the River, a Trace Crossings subdivision restricted to people age 55 and older, has 190 home sites, Belcher said. Signature Homes has sold more than 60 homes there, showing continued strong demand for age-restricted housing.
About half a dozen homes there had been completed by early December, and the first residents were expected to move into Abingdon by the River by the end of 2020, Belcher said. He expects the subdivision will be fully built out by the end of 2022 or early 2023, with prices now ranging from just below $400,000 to the mid $500,000s.
Signature Homes also is beginning development work on the 53-acre Trace Crossings Village Center across from Hoover Metropolitan Stadium. That development will include 118 houses, and Belcher said he hopes to start building houses there by the end of September.
Just a little further south, there are 85 lots left to develop in the northern section of Blackridge, which will have 327 homes when completed, Belcher said. A section called The Landing has sold out, and 59 home sites in the Highlands at Blackridge just recently opened up for sale.
A bridge over a second set of railroad tracks leading to the southern part of Blackridge should be complete by early March, Belcher said. Blackridge South will contain 527 homes, 300 to be built by Signature Homes and 227 to be built by Harris Doyle Homes. Harris Doyle Homes already has received approval from the city of Hoover to begin work on the first phase.
The average price of homes in Blackridge in 2020 was $784,000, Belcher said.
OTHER COMMUNITIES
At The Preserve, development proceeded at a slower pace in 2020, with about a dozen homes being sold, said Merry Leach, the lead real estate agent for the Preserve. She attributed the slower pace to COVID-19 and a lot of rain in the winter months.
As of early December, there were only three lots left in the 14th phase of The Preserve, but 55 lots in the 11th phase recently opened up, Leach said. The 11th phase includes 23 single-level cottage homes to be built by Ridgecrest Properties and priced starting at $419,900, 24 villa lots with homes being built by Centennial Homes and eight estate-size lots along the Village Green park area.
Other builders in the Preserve include Byrom Building Corp., Fargason Building Corp. and Hastings Construction.
U.S. Steel, the developer of The Preserve, hopes to begin construction on the 15th phase, which will go all the way to Patton Chapel Road, in 2021, Leach said. The final phase of the Preserve, across Preserve Parkway and next to the Moss Rock Preserve nature park, will come last, she said.
So far, roughly 450 of the 700 or so homesites in The Preserve master plan have been sold, Leach said. The average price has been about $680,000, though some have been in the million-dollar range, she said.
Development also is continuing in places such as McGill Crossings, Lake Cyrus and the Glasscot sector of Ross Bridge.
Gilbert said he expects 400 or more homes to be built in Hoover in 2021, but a lot depends on if interest rates remain as low as they are and how the economy responds to the new Joe Biden administration.
