Real estate home prices (Birmingham, Homewood: sales, foreclosed, condos)

[bfmx1]

https://www.attomdata.com/news/marke...-sales-report/

This is an interesting article that mentions Birmingham a few times. A few observations:

1. Birmingham mentioned among the metros with most cash sales and Institutional Investment sales.
2. Also mentioned among the metros with highest house appreciation (6.3% prior year vs current year)

Maybe someone here with more Real Estate experience can interpret exactly what this means. But I'll take a shot...Two sides of the coin here.. There's a lot of cheap foreclosed inventory which is bad, BUT that's also
a supply for institutional investors to buy up real estate and usually makes the area better. Often times they fix up and sell. This is great for the blighted areas. Isn't that pretty accurate?

I don't see any downside to this article.

However, Homewood's prices are out of control. Had to throw that in there.

[MinivanDriver]

Originally Posted by bfmx1

https://www.attomdata.com/news/marke...-sales-report/

This is an interesting article that mentions Birmingham a few times. A few observations:

1. Birmingham mentioned among the metros with most cash sales and Institutional Investment sales.
2. Also mentioned among the metros with highest house appreciation (6.3% prior year vs current year)

Maybe someone here with more Real Estate experience can interpret exactly what this means. But I'll take a shot...Two sides of the coin here.. There's a lot of cheap foreclosed inventory which is bad, BUT that's also
a supply for institutional investors to buy up real estate and usually makes the area better. Often times they fix up and sell. This is great for the blighted areas. Isn't that pretty accurate?

I don't see any downside to this article.

However, Homewood's prices are out of control. Had to throw that in there.

Given that the condo market in Birmingham is white-hot, that explains the institutional investor number. We sold our house a year ago and moved into a condo near downtown. It was almost impossible to find a place because demand had become so strong.

I know a lot of realtors. The foreclosed properties shook out a while ago, unless you count distressed areas of town. The real reason is that there is plenty of relo into the market. The latest unemployment figures in Birmingham are in the 2.3% range. So there has been an influx of people to the market that likely won't be noticed until the 2020 census comes out.

The other aspect of that? Birmingham real estate is relatively cheap compared to where a lot of relos are coming from. Just on our former street in Mountain Brook, we've had three different families move here from LA and San Francisco. They literally bought their homes outright on the equity of their home sales elsewhere. We became really good friends with one couple from San Francisco, who sold their two-bedroom home and bought a house twice their size for a fraction of what their house back on the West Coast sold for. Their friends visit and the first thing they do is pick up the real estate listings and drive around. The same is true of people moving here from the northeast. That means what would be considered expensive for a Birmingham native is nothing to someone coming here from elsewhere. So the term 'out of control' is a relative thing.

One of our closest friends is a realtor specializing in relo. She literally just had someone move here from New York. She asked this couple their price range, they said $750,000 was as high as they could go--like they were apologizing. So she showed them a mid-range house in Crestline. They walked in, said, "We can get this for $750,000? Sold." They didn't dicker or anything.

Another factor is that of geography. People with kids want quality school systems and are willing to pay for them. You mentioned Homewood as one example. On the Mountain Brook Facebook forums, people are essentially begging to purchase a house. Vestavia as well. Essentially, right now, if you own a decently maintained house that lies somewhere between the crest of Red Mountain at 459, you are in the catbird seat.

Low interest rates also play a role. One of the dynamics of the mortgage market over the past twenty years is that many people aren't buying on home price, but rather based on what their calculated payment is.

Finally, there is the phenomenon of in-fill into places such as Avondale, Crestwood, and Southside--even stretching into some neighborhoods such as Woodlawn, East Lake, and elsewhere. This is being driven by families that are starting out and simply don't want to slog their way into town on 280 or 65. In the Crestwood area, houses that sold for $80,000 two decades ago, are now pricing in the $325,000 range. Heck, we bought in Avondale in 1993 for $78,000 and sold 13 years later for $285,000--right before the real estate meltdown. Even so, it's worth about $350,000 today according to Zillow. Over a period of 26 years, that's an increase of roughly 24% a year.

If Birmingham's economy continues to diversify and we continue to make the same strides in livability that we have over the past ten years, this is really only the beginning.

[bfmx1]

Yeah that all makes sense. I do think the institutional buy-up is a good thing and should help the "around the corner" blight that some of the new/cool areas are seeing.

I agree that the prices are a huge value compared to anything in CA or NY.. I take those out of my mental equation. Homewood/MB prices are not far off of other metros like ATL, Nashville, Dallas, Austin, Houston, Charlotte. The argument of "better cost of living" is non-existent if you chose to live in those areas.

[MinivanDriver]

Originally Posted by bfmx1

Yeah that all makes sense. I do think the institutional buy-up is a good thing and should help the "around the corner" blight that some of the new/cool areas are seeing.

I agree that the prices are a huge value compared to anything in CA or NY.. I take those out of my mental equation. Homewood/MB prices are not far off of other metros like ATL, Nashville, Dallas, Austin, Houston, Charlotte. The argument of "better cost of living" is non-existent if you chose to live in those areas.

But that's not necessarily where the people are moving from. Companies such as Shipt are bringing in people from the Northeast and the West Coast. So the COL argument is quite applicable. And that doesn't even take into account total tax burden. My aforementioned California neighbor came over to my house with his property tax statement, asking if it were a misprint. "$4,000 a year? That's crazy. I paid more than twice that for a house half my size back home." Add to that gas at about 80% higher and a host of other factors and, yes, COL becomes a real thing. Plus, as my neighbor pointed out, the very low odd that our neighborhood would ever burst spontaneously into flames was an extra special bonus.

[steveklein]

Originally Posted by MinivanDriver

Given that the condo market in Birmingham is white-hot

Huh?

Condos in most parts of the metro area are selling for about what they were selling for in the previous peak 12 years ago. Maybe a little appreciation, but lol at calling it white hot. White hot is when you see 10 and 20% year over year appreciation for a few years in a row. Nashville, Austin, and Denver have experienced that on some level recently. As have certain coastal markets. Homewood and a few other very select neighborhoods may be approaching that territory in the metro... but the Birmingham condo market? Not really that hot actually. If it were, Lakeview Green and other 100+ unit developments would have been sold out 100% pre-construction and they'd be rushing to completion so they could start on their next project, all while existing inventory prices soared.

Not to say that the market isn't doing the best it has been doing in a while, but let's not overhype what is going on.

[BamaDave]

I'm not surprised people come to Birmingham and become ecstatic over the real estate prices, even in some of our pricier areas. My wife and I recently stayed in an Airbnb in DC in a fairly decent neighborhood close to the Capitol, but still gentrifying. The row houses/townhouses in this area were selling in the $700K to $1.2M range, and they were not exactly roomy. The surrounding area was fairly decent, but we weren't comfortable walking around at night and had to Uber back rather than take the Metro. Of course DC blows Birmingham out of the water in terms of amenities and things to do, but it's all about what you want to prioritize. Birmingham has a nice natural setting, lots of good restaurants, a decent climate, and is a nice place to go about everyday life. So I can certainly see the appeal for people coming from flashier metros who are exhausted with being house poor.