Home Prices Soaring In Birmingham Metro, But For How Long?

BIRMINGHAM, AL — Anyone in the Birmingham area that might have even a thought of selling their home might be wise to do so, as the metro area real estate market is as hot as it has been in years.

Homes are selling almost as quickly as they are listed, and often for prices well above appraisal. This trend in the Birmingham area — namely in the city's suburbs of Mountain Brook, Homewood, Vestavia Hills, Hoover and Trussville — might stick around for a couple of years, according to market experts.

Stuart Norton from the Alabama Center for Real Estate said housing demand in the Birmingham area is up for several reasons.

"Interest rates are near historic lows, giving buyers more purchasing power which helps offset, to some extent, rising home prices," Norton said. "The trend towards remote work, along with more time spent at home over the last year has many consumers looking for more housing space. Similar developments are happening in markets across the state and nation."

Another trend happening across the state and across the country is extremely low housing inventory, Norton said.

"We entered the pandemic with tight inventory, but it has tightened further as supply struggles to keep pace with demand," he said.

The numbers support Norton's assessment. The number of homes listed for sale is near a record low in the Birmingham area. The 3,146 homes listed for sale in April 2021 represent a decrease of 29.7 percent from a year ago. Statewide inventory reached another record low in April, with the 9,582 listings representing a decrease of 46.6 percent, according to ACRE.

"A unique supply and demand dynamic (sustained demand during a time of record low inventory) has driven home prices in many markets to record highs, while properties are selling faster than ever," Norton said.

In the Birmingham area, the median sales price is currently at a record high of $260,000, a 6.1 percent increase from a year ago.

The trend does not seem to be slowing, and industry experts say the market will likely remain this way for at least a year, probably two.

Freddie Mac predicts home prices will rise 6.6 percent in 2021, slowing to 4.4 percent in 2022, while it expects home sales to reach 7.1 million in 2021, falling to 6.7 million homes in 2022.

Related:

• New Homes For Sale In the Mountain Brook Area
• 5 New Houses For Sale In Vestavia Hills
• 4 New Open Houses In The Hoover Area
• 5 New Homes For Sale In The Trussville Area