The 2021 housing market has been historical to say the least. With low-interest rates, high demand for housing, low inventory, and bidding wars, the price of homes have gone up and up.
“It’s a crazy industry,” says Zelda Friedman, Crye-Leike REALTOR® and managing broker in Huntsville, Alabama. Friedman has almost two decades of experience in the northern Alabama market, including working through the 2008 housing market crash. “Realtors have to make sure that they stay educated on what’s going on with the market,” she adds.
There are a few signs that the Huntsville area market is cooling. The inventory of homes rose from the second quarter to the third. It’s the first third quarter increase in seven years. The homes available for sale also jumped 49% above the second quarter’s average.
However, home prices are continuing to rise and continue to steepen. “We are now at $323,000 for our average sales price,” says Friedman. “Just a few years ago, probably three or four years ago, it was around $280,000.” Even with the prices, homes are going fast. The average number of days a single-family home spends on the market was eight days in September. This was the lowest monthly level in 20 years. “I’ve been doing this for a while. I can remember when days on the market were 60 days, 40 days, 30 days … it’s just a completely different market when it gets down to single digits.”
New home construction is essential in meeting the demand for residential real estate. The Huntsville Area Association of Realtors (HAAR) noted that if the rise in new home construction continues, then inventory could improve and support a higher level of sales. However, investors have been buying up both pre-existing homes and new construction, pushing homebuyers out. This is impacting the momentum of the residential real estate market.
“The investors seem to have plenty of cash,” explains Friedman. “The homebuyers are the ones who are struggling with that.”
The population in northern Alabama has grown significantly in the last two years. Over 7,000 new residents have headed to the area annually. This growth is largely driven by an increase in employment opportunities.
“One thing about Huntsville is that we have a lot of jobs coming into the area. That's what's promoted a lot of our growth,” Friedman says. The Huntsville area has several big employers, such as the U.S. Army's Redstone Arsenal, NASA's Marshall Space Flight Center, the Federal Bureau of Investigation, and Boeing. “With those bigger companies comes a lot of smaller companies and some of their suppliers.”
These employment opportunities created a massive demand for housing throughout the pandemic. “Records were broken last year because of people buying homes,” recalls Friedman. “With inventory being lower this year, it's made it a lot more stressful for those homebuyers.”
One of the biggest challenges buyers are facing in the northern Alabama market is not having the cash to make an offer that stands out in this ultra-competitive market. “Sellers will accept those cash offers over the ones with loans,” explains Friedman. “Cash can close more quickly and there's no appraisal with cash.”
Standard mortgage loans can take anywhere from 30 to 60 days from application to closing and the home sale could still fall through. Using all cash not only means a much faster closing, but it means less risk for both the buyer and the seller. This is why many large investors are paying cash as they round up the properties in the area.
At this point, buyers need a stronger offer than ever to stay competitive in the Alabama market. “This market is so busy right now with multiple offers and investors buying up properties,” says Friedman. “A lot of times, buyers don't have access to cash. Ribbon gives them an opportunity to turn their pre-approval letter from a local lender into cash which makes their offers more appealing to sellers.”
“We’ve been looking forward to giving our buyers an option that will help them so that they hopefully won't have to go through so many offers before one is accepted.”
Want to learn more about Ribbon and the Alabama market? Chat with a Ribbon expert today.