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        <title>Huntsville, Al Real Estate Blog</title>
        <link>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/2023-11/</link>
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    <guid>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/sneak-peek-listings-for-november-24th--homes-for-sale-in-huntsville-alabama.html</guid>
    <link>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/sneak-peek-listings-for-november-24th--homes-for-sale-in-huntsville-alabama.html</link>
        <author>leadrouter@mattcurtisrealestate.com (Matt Curtis)</author>
        <title>Sneak Peek Listings for November 24th | Homes For Sale in Huntsville, Alabama</title>
    <description> <![CDATA[ 
Sneak Peek Listings for November 24th


121 Mystic Way - $399,900


121 Mystic Way, Madison, Alabama 35757


4 Bed | 3 Bath | 2,112 sqft


Talk to an MC Agent today for more info or call 256-270-9393








61 Ransom Road - $325,000


61 Ransom Road, Laceys Spring, Alabama 35754


3 Bed | 2 Bath | 1,300 sqft | 2 acres


Talk to an MC Agent today for more info or call 256-270-9393





1702 Morningside - $249,900


1702 Morningside Dr NW, Huntsville, Alabama 35816


3 Bed | 2 Bath | 1,594 sqft


Talk to an MC Agent today for more info or call 256-270-9393
 ]]> </description>
    <pubDate>Fri, 24 Nov 2023 08:00:00 -0600</pubDate>
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<item>
    <guid>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/huntsville-alabama-housing-market-report--q3-2023.html</guid>
    <link>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/huntsville-alabama-housing-market-report--q3-2023.html</link>
        <author>leadrouter@mattcurtisrealestate.com (Matt Curtis)</author>
        <title>Huntsville, Alabama Housing Market Report | Q3 2023</title>
    <description> <![CDATA[ 
Huntsville, Alabama Housing Market Report | Q3 2023








The Huntsville, Alabama real estate market's Q3 report reveals insights on pricing resilience, market challenges amidst rising interest rates, shifts in home sales, and inventory dynamics. Additionally, economic factors such as GDP growth, population trends, and household incomes play a pivotal role. Amidst these shifts, the question emerges: Can new construction meet the escalating demand, or will the market face a potential supply crunch in the near future?


Median Sales Price, Home Sales, &amp; Pending Sales


What stood out to me was the median sales price, only dipping by 1.3 year over year. It's quite impressive considering the recent surge in interest rates over the past 12 months. This resilience seems to mirror the strength of the job market and the influx of relocations pouring into the Huntsville market.


Naturally, the hike in interest rates has impacted home sales over the last year. Comparing this year's Q3 to last year's, there's been a significant 20.3 drop in home sales—2,331 homes down to 1,858. This puts us back to levels reminiscent of 2017, a span of about six years. As a side note, I think that if we descend back to the mid to low 6 range, we might witness home sales reminiscent of the COVID period, around 2,500 or more for a quarter.


Pending sales have also decreased this month, as expected due to the decline in home sales and the increase in interest rates. Pending sales have dropped by 21.7. As a result, the number of homes being sold continues to decline towards the end of 2023, particularly with interest rates peaking above 8.


Housing Inventory &amp; Days on Market


With fewer homes being sold, naturally, the inventory in the market is growing. Listings have surged by 20.8, rising from 1,496 to 1,807. Despite this increase, it still only represents a 2.7 months' worth of supply compared to merely 1.1 months of supply at this time last year. Technically, this still indicates a seller's market. Anything below four months is considered a seller's market. Our average days on the market stand at 26 days, a considerable increase from 12 days last year. This market remains one of the most favorable I've worked in over the past fifteen years. Even a decade ago, it outpaced the market in terms of swift home sales. It might not feel that way considering the hyper seller's market experienced in the past couple of years.


One piece of excellent news for buyers is that inventory has increased across all the different price bands, except for the $350,000 to $500,000 range. One reason for this is the immense popularity among move-up buyers and the substantial new construction happening in that particular price range. It currently constitutes 26 of the market, with 477 homes sold.


Even more critical than that price range is the bracket just below, ranging from $200,000 to $350,000. When you combine these price bands, they account for 46 of the market, totaling 856 homes sold. This price range holds significant importance because it's where median-income families can afford homes in the Huntsville area. As people move into the region and buy their first homes, this price band becomes a crucial market for starter homes in our area. The remarkable thing is that the $250,000 to $300,000 price range has surged by an incredible 91.5. Hats off to our local builders. It's impressive how they managed to achieve this despite inflation and rising land values, creating an affordable product here in Huntsville for our first-time homebuyers.


Huntsville, AL Q3 Economy Stats


Some other local economy stats revealed in this report show that our GDP has risen to $25.4 billion from $23.9 billion so our growth in this market continues.


Our population is also witnessing an influx of individuals and families moving to the Madison County area. We've reached 406,026 people from 400,898 at this time last year.


Additionally, great news for our area is that the median household income has continued to increase. The household income last year was $76,977, and it's now up to $81,968. I believe this is another reason why many buyers should consider purchasing a home now. Some buyers tend to wait until they receive a promotion or a raise at work. However, what often happens is that as they receive promotions and raises, we're also observing inflation and rising home values. Therefore, I strongly encourage people to invest in a home today, securing their purchase price. Later, when they receive that raise, they can benefit from a higher quality of life and standard of living instead of merely allocating those funds towards inflation and higher purchase prices.


In conclusion, we're moving in the right direction regarding supply in this area. We're still below the typical housing supply of 4 to 6 months, but progress is being made, and that's promising. Now, on the other hand, the challenge lies in the fact that we're experiencing interest rates at a level not seen in over a decade or even higher. Yet, we still haven't reached that 4 to 6 months' worth of supply. Interest rates have been decreasing, and if this trend continues into 2024, I anticipate it will impact our housing supply. Many potential buyers may emerge from the sidelines and swiftly absorb a significant portion of that inventory. Moving forward, what we need to focus on is whether new construction builders can keep up with the area's demand, or will we find ourselves in a low supply situation in 2024 or 2025?



 ]]> </description>
    <pubDate>Fri, 17 Nov 2023 12:25:00 -0600</pubDate>
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    <guid>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/2024-real-estate-outlook-impact-of-current-consumer-trends-on-real-estate.html</guid>
    <link>https://www.mattcurtisrealestate.com/HuntsvilleAlRealEstateBlog/2024-real-estate-outlook-impact-of-current-consumer-trends-on-real-estate.html</link>
        <author>leadrouter@mattcurtisrealestate.com (Matt Curtis)</author>
        <title>2024 Real Estate Outlook: Impact of Current Consumer Trends on Real Estate</title>
    <description> <![CDATA[ 



2024 Real Estate Outlook: Impact of Current Consumer Trends on Real Estate





In the world of finance and real estate, critical shifts are on the horizon, and it's essential to grasp their implications as we move closer to 2024. The economic landscape is evolving in a way that will directly impact consumer spending, and consequently, the broader economy. The 'Experience Economy' is redefining spending patterns, creating a wave of change. Alongside this, the real estate market is undergoing transformations, and commercial real estate faces significant challenges. Let's discuss specific consumer and real estate trends that could influence real estate values and home sales in the Huntsville, Alabama market in 2024.


Savings, Spending, and Shaping Trends


Let's start with a discussion of consumer spending. Right now, consumer spending in our country is a key driver of inflation. It could have a significant impact on our economy in 2024 because our savings rate has been cut in half since 2019, now down to 3.4.


The driving force behind this trend is the 'Experience Economy.' Many people are seeing inflation numbers continue to rise, and they feel like they're losing the value of their money, so they're starting to spend it. For instance, Delta has seen a 30 increase in earnings in Q3, and Ticketmaster is up 18 year over year, which is simply unsustainable.


I want to focus on two groups. The Wall Street Journal has focused on one group that is experiencing this in a positive way. They feel like they're in a good position in terms of low mortgage rates. Rates are higher, but their mortgage rate may be locked in in the high twos or low threes. They have stable jobs, so they can easily cover their mortgage. They're also seeing rising home values as a kind of wealth effect, and that's prompting them to spend more money. The challenge is they're not saving as much money as they once were. And the potential wealth effect of their rising home value is really untappable right now, as we have higher interest rates in the 8 range. We're not in a position to refinance and really do that cash-out refinance to be able to tap into that equity. So, for this group, it's really like paper money right now, and their savings rate has dwindled down.


For this particular group, given the challenge of inflation eroding the value of your money, I suggest considering two options. Firstly, if you already own a home, it might be a good idea to explore investment properties at this time. There is currently a substantial amount of new construction and properties available at attractive prices. Alternatively, you could consider investing your money in physical assets other than US dollars. This is because the experience economy and related jobs are the main drivers of our economy. If there is a slowdown in these ‘experience economy’ type jobs, it could potentially lead to a recession in our country with potential job losses. During such uncertain times, it's essential to build up your savings for the future as a financial safety net.


The second group I want to emphasize is the one that wasn't even mentioned in the Wall Street Journal article. This group is particularly vulnerable in the current economy.


They aren't benefiting from the increase in home values; in fact, they are facing the opposite situation. Affordability is diminishing due to higher mortgage rates, increased prices, and the impact of inflation is hitting them hard. However, they are still spending on experiences, which are enjoyable, but we need to consider the long-term perspective for this group – looking one year, three years, and five years ahead.


My recommendation for this group is to redirect the money they would spend on these experiences towards saving for a home. If you're unsure about how to save up or potentially buy a home in this market, we are ready to sit down with you, provide guidance, and develop a plan to help you enter the housing market and begin building wealth and stability for you and your family.


The key point for both of these groups is that our national savings rate is alarmingly low. Therefore, let's work on increasing our savings, as we may need it for a rainy day, especially in the face of a potential recession, and consider reinvesting those savings in tangible assets, particularly in real estate, either on the investment side or as a first-time homebuyer.


The Mortgage Crisis: Potential 2024 Economic Impact


Another significant development that could have a major impact in 2024 is the sharp decline in mortgage applications, reaching a 28-year low. They have fallen by 6 week over week and 21 year over year. This is important because the real estate and mortgage industry significantly influences our economy. With the decrease in mortgage applications, there will be a reduced demand for loan officers and fewer staff members at banks. Consequently, layoffs have already been announced at banks and mortgage companies, which will also have a ripple effect on the real estate sector. Real estate agents may exit the marketplace, and contractors who depend on real estate-related business are likely to leave the industry as well. Unfortunately, this trend may lead to a decline in GDP and potentially push us into a recession in 2024.


What's primarily causing this situation isn't solely the Federal Reserve raising interest rates; in fact, they haven't done so since July. The main factor contributing to the higher interest rates and reduced mortgage applications, despite existing demand, is the slowing down of demand due to waiting for lower interest rates. When interest rates are lower, there's a substantial amount of demand in the market that remains on the sidelines.


However, the main driver of the current increase in interest rates is the rising yields on the ten-year Treasury bonds. This increase in yields can be attributed to a couple of factors. First, the Treasury Department is issuing more debt than what most of the market had initially expected, resulting in an imbalance between supply and demand for debt in our country. Additionally, Japan is making changes to the incentives related to buying their own debt, which might divert some of the potential demand for US debt to Japanese debt. This is a significant cause for concern.


As we look ahead, it's evident that our country's financial health is currently not in good shape. We are spending more money than we are earning, and the need to keep issuing additional debt is becoming increasingly pressing. The crucial question is whether we can achieve financial stability. If not, there may be insufficient demand for the Treasury Department's issued notes. In such a scenario, anticipate the likelihood of higher mortgage rates for an extended period and the possibility of elevated interest rates. This, in turn, will impact both our GDP and the broader economy in 2024.


Commercial Real Estate Challenges Ahead


The final topic I'd like to discuss is commercial real estate in our country. Commercial real estate will undoubtedly have owners, but according to Warren Buffett, these owners are likely to change. He predicts a drop in commercial real estate values of around 25 to 30, and he believes we're approximately halfway to that point. This is partly due to the data indicating that by 2026, one in five office buildings will have their interest rates coming due for renewal.


The significance of this lies in the difference in financing between commercial and residential real estate. Most commercial loans are structured as balloon notes, typically with a five or seven-year term, while residential real estate loans are generally fixed for 15 or 30 years. When these commercial loans come up for renewal, the owners have to renew them at the current interest rates, whether they are lower or higher. Currently, interest rates are considerably higher than they have been, creating a challenging situation for the commercial real estate industry as vacancy rates are down. As an illustration, consider the recent case of Dropbox, which paid $79 million to terminate a lease for 165,000 square feet of space in San Francisco. We're seeing large office buildings standing vacant, and, in addition to that, the interest rates for landlords have more than doubled.


The third factor to consider is how these loans are typically structured, based on something called a debt service coverage ratio. This ratio is calculated by comparing the income the property generates to the cost of the mortgage. As mortgages come due and income decreases, it disrupts this ratio. In simple terms, it means that property owners not only have to deal with higher mortgage rates but also often need to inject more cash. Consequently, many commercial office building owners may have to return the keys to the banks.


So, how does this impact you? Well, it will lead to a slowdown in lending across the country. We've already mentioned the decrease in lending applications, but local banks that typically provide financing for commercial properties will have less capacity to lend for residential purposes due to the ties to these commercial deals and foreclosures. This is a significant consideration for the future. Additionally, we must think about how to repurpose this commercial space because new office workers may not be in high demand anymore.


These are the three trends that could have an impact as we head into 2024.


There are plenty of other trends on the horizon that will affect the 2024 real estate market, particularly in the Huntsville area. We will discuss these in the upcoming weeks and provide our predictions for 2024. So, stay tuned.


 



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    <pubDate>Fri, 03 Nov 2023 13:49:00 -0500</pubDate>
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