COVID-19 & The Current Birmingham Metro Real Estate Market and the likely future trends…

At this point I have not been able to locate any solid data for more recent numbers than March (post the Stay at Home period which began mid March). There can be little doubt that we will experience much higher numbers, as we move into and through summer, with some relief based on the ability to reduce COVID cases. At this point Alabama COVID Cases are still on the rise. That said, we are still likely to fare better than the rest of the nation but how much better is yet to be determined.

The market and here I’m referring not to the real estate market but the larger economic market and primarily the retail market that includes a wide array of business including, food service, entertainment, retail merchandise industries seem to be undergoing some accelerated adjustments: J Crew, Macy’s, J C Penny, Nordstrom just to name a few in the department store arena and accompanied by lesser known players in other spaces. All of which are not much more than early implementation of the well expected shrinking of brick and mortar venues exacerbated by the pandemic. All rethinking their long term future and manpower requirements. In short, while the list of players impacting the Birmingham market may be different, lots of jobs are not coming back.

It’s a well-published fact/assumption that most American families do not have ample savings to weather a financial storm. Last May, it was reported (CNBC: May 23, 2019) that nearly a third of families cannot weather a $400 financial crisis. How bad has that number grown during the COVID-19 crisis? It has certainly worsened and as a result, even though there are some efforts at forbearance to protect families from evictions and foreclosures, we will certainly see a reduction of Buyers that can qualify for a mortgage and over a longer period of time an increase in foreclosures.

I’m a logical animal. I don’t see how this doesn’t impact the real estate market. My forecast is that we will see a significant softening of buyer demand in the next 90-120 days. With mortgage acceleration (the first steps of foreclosure) increasing dramatically in the same time period. However, we will not see those homes appearing on the market until next spring (2021). Creating new opportunity for investors and the fortunate homebuyers that can remain unscathed by the pandemic. I don’t believe the impact will be as deep as the 2008-2010 period but I also don’t think recovery is likely to be as quick.

The latest news on COVID-19 in Alabama (5/10/2020): Alabama on Sunday (5/10/2020) had more than 9,600 confirmed cases of COVID-19 and was approaching 400 deaths from the illness.

State Health Officer Scott Harris said Friday that caseloads have been “a little higher” in recent days, but officials are trying to determine how much of the change was linked to increased testing or increased disease.

Virus cases have risen by 2,000 since the state loosened some restrictions 10 days ago, lifting a stay-home order and allowing retail stores to open with occupancy limits.

More than 450,000 Alabamians have applied for unemployment since the pandemic began. That’s 10% of Alabama’s population of 4,908,621.

Sellers’ DO NOT miss the Seller’s Market while it lasts. Buyers beware of a market to likely change.

This is real folks. Stay safe.

May the market be with you.

Dave Parrish, ABR ®,CRS,CSP,GRI,ePRO ®, REALTOR ®

RE/MAX MarketPlace

Making a difference!

Going a bit deeper into the numbers

*The highest rate of U.S. unemployment was 24.9% in 1933, during the Great Depression.1_ Unemployment remained above 14% from 1931 to 1940. It remained in the single digits until September 1982 when it reached 10.1%.2_ During the Great Recession, unemployment reached 10% in October 2009.

The government steps in when unemployment exceeds 6%. The Federal Reserve uses expansionary monetary policy to lower interest rates.3_ Congress uses fiscal policy to create jobs and provide extended unemployment benefits.

The unemployment rate falls during the expansion phase of the business cycle. The lowest unemployment rate was 1.2% in 1944.

A break down for the full real estate market for the Birmingham MLS based on data available at this point in time (May 10, 2020):

4183 total homes for sale includes Single, Family, Townhomes, Condos and Manufactured Homes and Farms:

3,797 Single family

76 Town homes

154 Condos

130 Manufactured Homes

26 Farms

Total Sold between 11/01.2019 and 04/30/2020:

9291 All Classes = 1549 per month

8469 Single Family = 1412 per month

331 Town homes = 55 per month

308 Condos = 51 per month

158 Manufactured Homes = 26 per month

25 Farms = 4 per month

Months of Inventory Currently Available based on past 6 months of sales

9291/1549 Overall Market All Classes combines = 2.7 Months Inventory

3,797/1412 Single family = 2.7 Months Inventory

76/55 Town homes = 1.4 Months Inventory

154/51 Condos = 3.0 Months Inventory

130/158 Manufactured Homes = 0.8 Months Inventory

26/25 Farms = 1 Months Inventory

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