Sales: According to the Dothan Multiple Listing Service Inc., Dothan-area residential sales totaled 90 units during January, down 10 percent from the 100 units sold in January 2017. The five-year average for total residential sales during January is 79 units. Two more resources to review: Quarterly Report and Annual Report.
For all of Dothan’s area real estate data, click here.
Forecast: Closed transactions in January were two units or 2 percent below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE’s 2017 sales forecast through December projected 1,226 closed transactions, while the actual sales were 1,376 units, a favorable difference of 12.2 percent.
Supply: The Dothan-area housing inventory in January was 1,042 units, an increase of 2.4 percent from January 2017. January inventory was 3.9 percent above December inventory. Historical data indicate that January inventory on average (2013-2017) increases from December by 2.5 percent. The five-year average for total homes listed during January is 1,154 units.
Demand: January residential sales in the Dothan area decreased 19.6 percent from December. Historical data (2013-2017) indicate that January residential sales on average increase 5.9 percent from December. Homes selling in the Dothan area during January averaged 163 days on the market, a 3.2 percent increase from January 2017’s average of 158 days on the market.
Seeking balance: The inventory for sale divided by the current monthly sales volume equals the number of months of supply. The market is considered to be in balance at approximately 6 months of supply. The Dothan area has 11.6 months of supply, up from 9 months in December and up from 10.2 months in January 2017.
Pricing: The Dothan-area median sales price during January was $139,650, a 0.7 percent decrease from January 2017 and a 0.2 percent decrease from the prior month. Historical data indicate that January median sales prices on average (2013-2017) decrease by 5.7 percent from the month of December. Differing sample sizes (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE highly recommends consulting with a local real estate professional to discuss pricing trends, as they will vary from neighborhood to neighborhood.
Industry perspective: The recent headlines in the real estate world have revolved around rising interest rates. As of Jan. 31, the interest rate on a 30-year fixed-rate mortgage was 4.38 percent. This is up from 4.18 percent on Jan. 10 and up from 4.08 percent on Dec. 6, 2017. The stock market has rebounded somewhat from its large selloff on Friday, Feb. 2, and Monday, Feb. 5, as investors adjust from an accommodating monetary policy to one with some inflation and higher interest rates. The recent market decline is a signal of a return to normalcy and higher debt costs. Rising interest rates, however, do not cause housing activity to come to a halt, in the same way that rising rates do not cause businesses to go into hibernation. In the spring of 2006, the Federal Reserve stopped raising interest rates after raising rates 16 times over a three-year period. The economy was performing well during this time (2004-2005) of rising interest rates. The Great Recession happened, interestingly enough, at a time when interest rate increases were halted.
Home ownership rates increased to 64.2 percent during 2017 after falling to a post-1965 low of 62.9 percent in 2016. Not surprisingly, home ownership rates peaked during 2005 at approximately 69 percent. Millennial home ownership rates are also on the rise as their employment situations continue to improve. Millennials, in fact, have been recently credited with an improvement in suburban housing markets as not all are city dwellers. This rise in home ownership was highlighted recently at the annual TrendLines 2018 program in Washington, D.C., with an analysis of Census Bureau housing data presented by Sage Policy Group, Delta Associates and Transwestern. The following excerpt is from the closing paragraph from the home ownership report, and is encouraging news for residential real estate markets across the nation:
“This year, the most common age in America will be 26 years old. There is also an abundance of 25- and 27-year-olds. All of these people are millennials, America’s largest and most educated generation. As more of this demographic block marches into their 30s, demand for ownership opportunities will rise. While there may be downturns that occasionally suspend these demographics, the next decade stands to emerge as a period of rapidly expanding home ownership and single-family homebuilding in America.”
Click here to generate more graphs from Dothan’s January Housing Report, including Total Sales, Average Sales Price, Days on the Market, Total Inventory and Months of Supply.