Before COVID-19 hit the Birmingham area, the local housing market was blazing hot. Then things shifted, and by the end of May, closings were down 31.3% from the previous year. We talked to ARC Realty’s Beau Bevis and John Perry to get the latest on Birmingham’s surprisingly resilient housing market. Keep reading to discover what we learned or reach out to ARC directly if you know you’re ready to sell, buy or look.
“The important thing to know is that the market is still really strong. The Birmingham area is a great place for people to invest in a home right now. Confidence in home ownership is high, the market is moving and we’re doing home sales now in a really good way.”Beau Bevis, President, CEO and Qualifying Broker, ARC Realty
Time travel: what Birmingham’s housing market was like before mid-March
Beau Bevis, President and CEO of ARC Realty, shared his bird’s eye view of the state of Birmingham’s pre-pandemic housing market:
- January and February saw record numbers of closings. The first two weeks of March were really good, and then things started to slow down. “Fear of the unknown makes people slow down when it comes to what’s typically the largest purchase of their life,” Bevis explained.
- There was—and still is—huge pent-up demand for houses in the Birmingham metro area. Going into the pandemic, Birmingham was down to 2.7 months worth of inventory. This means if all houses on the market sold, we’d be out of homes for sale in 2.7 months. This is creating a sellers’ market in Birmingham, continuing to drive home prices upward in all price ranges.
Ready to list or look? Visit ARC Realty and start the journey to your new home today.
Did COVID-19 kill the local housing market? Not so fast.
“Never was I so glad to be in Birmingham, Alabama. I’m in a peer group with Realtors across the country. Major markets were getting pummelled—some were down 81% in volume of closings. That kind of dropoff puts you out of business.Bevis
Here, though, huge hats off to local and state government in Alabama for deeming real estate and construction essential businesses. This kept our state going and in so much better shape financially than most people realized.”
Any time you’re looking at the housing market, you’ve got to look at what’s happening on the selling side and the buying side, so that’s how we’ll break it down.
Birmingham-area housing sales March-May, 2020
By the end of March 2020, Birmingham-area pending contracts were down about 10% from the previous March, Bevis said.
Inventory was already really low, and then when COVID-19 hit, even fewer sellers wanted to list their homes because “who wants strangers coming in and out of their house during a pandemic?”
The normal spring rush of housing listings never came.
April ended with closings 25% below where they were in April 2019. Even more concerning was that new listings were down 38%.
According to the Birmingham Association of Realtors, closed sales in Central Alabama were down a total of 31.3% from where they were the previous year at the end of May.
But demand remained high
“I love being able to say that Birmingham has a diverse economy. Because it’s not all tech, not all institutional or something else, it hasn’t been hammered in the way some other places have been.”Bevis
Bevis reflected that in a 60-day period, out of about 600 closings, ARC lost only 10 transactions.
In April and May, Realtors at ARC saw record numbers of potential pre-approved buyers who were ready to buy. Also, online searches for April and May increased 5 times from the previous year.
People were definitely looking, and after a few weeks at home, they had a clear list of what they wanted:
- Back yards
- Outdoor living spaces
- Extra bedrooms
- Extra bathrooms
- Suburban areas with bigger lots and bigger houses
The only problem—lack of houses on the market.
Realtors went old-school, knocking on doors, picking up the phone and calling people in their database to see if they could rustle up potential sellers.
How ARC Realty responded to the pandemic and the disruption it wrought in Birmingham’s housing market
ARC, which stands for A Relationship Company, focused on relationships and training. Realizing that everyone involved in home sales needed a lot more communication than normal, they kicked their in-house training into high gear. Topics for daily training calls included creating virtual tours, doing business online and “no contact” showings.
The good news for Realtors—and for buyers and sellers—is that as crazy as 2020 has been, it doesn’t look like a housing crisis in the making. In fact, the National Association of Realtors predicts 2020 will end with a net gain in housing value.
Also, the pandemic has led to some improvements in business as usual. John Perry explained some of the changes:
- Showings are extra-safe now. The current standard is that agents go into homes before potential buyers and turn on lights, open cabinets and disinfect everything. That way it’s set up for a low- or no-touch viewing. Everyone’s encouraged to wear masks, too.
- Virtual tours with video walk-throughs are helping buyers have a much better idea of what a house is about before they walk in the door.
- Drive-by closings are making the closing process easier and more efficient.
If you’re thinking of selling
Here’s what you need to know, according to the Birmingham Association of Realtors.
- At the beginning of June, while there was a 16% increase in listings, demand throughout Central Alabama was 5.5% higher than that. Translation: if you want to list, this is a good time.
- Prices are rising, with inventory currently at 2.3 months. Average listing price is up 7.8% YTD from 2019 and average closed sales price is up 4.1% YTD from 2019.
When Bevis looks at sellers, he sees two groups with distinct opportunities in today’s market:
- The downsizers:
- Typically Baby Boomers thinking about retirement at some point. To them he says “you’ll never get more for your house than you will today. That will let you net more to downsize and pay cash for your next place.”
- Sometimes, people who are just tired of the upkeep a home requires. After selling, these folks can move to an apartment with cash in their pocket and their entire maintenance headache gone.
- Those who want to step up: Usually families, these folks don’t usually want to sell their house until they have somewhere to go. Until people sell, though, there’s no inventory.
To this group, Bevis said “Interest rates are the lowest they’ve been since 1945. You can get the most house you’ll ever be able to get for the lowest monthly payment, and values are still predicted to increase over the next three years. Even a 1 point interest rate increase means the same amount of money gets you a smaller house or pushes you further outside the city center.”
If you’re thinking of buying, here’s what Bevis has to say to you:
- You’ll never borrow money any cheaper than today. Rates on a 30-year fixed mortgage are between 3.2 and 3.3%.
- Every price point around metro Birmingham is getting multiple offers right now. Here’s what you need to be prepared for:
- Expect multiple offers on any house you’re making an offer on right now.
- Get preapproved for a mortgage. Sellers won’t consider an offer without the preapproval letter attached to the offer.
- Find a true connection with the seller. Personal letters are one vehicle for making those connections.
- Work with your agent to make the cleanest offer you can possibly make. Contingencies—such as the sale of your house—won’t be entertained right now.
- The right agent can work with you to make just the right offer that will get you the home you’re looking for.
Visit ARC Realty’s website, follow them on Facebook or Instagram, or call 205.969.8910 if you’re ready to sell or buy a house.