ACRE Forecasts Sales Growth in Most Residential Markets in 2020
Residential markets across Alabama have plenty of momentum in 2020. Total residential sales passed the pre-recession peak in 2018, and 2019 was yet another record year with 64,278 closed sales across the state. The Alabama Center for Real Estate’s 2020 forecast calls for 65,468 sales statewide, representing growth of 1.9%.
The Center’s 2019 forecast performed quite well, with actual sales within 6.5% of the forecast.
Current economic conditions in Alabama are favorable for growing residential sales. Unemployment is at an all time low (2.7% in December 2019) while total employment is at record levels with over 2.2 million jobs at the end of 2019. Mortgage rates are also expected to remain low in 2020, which are very favorable to both consumers and investors. With minimal unions and the ability to negotiate tax abatements, Alabama has also attracted investment thanks to a pro-business climate. Large scale economic development projects are currently underway across the state, which will also boost demand for residential real estate in the coming years. Examples include the Toyota-Mazda factory and Facebook data center in Huntsville, and expanding infrastructure at the port of Mobile including an automotive export facility.
Among Alabama’s metro areas, residential sales are expected to grow in 13 of 14 markets. Areas with the largest expected growth include Daphne-Fairhope-Foley (16.5%), Auburn-Opelika (12.7%), and Florence-Muscle Shoals (10.2%). All three areas are experiencing population and economic growth which helps to fuel demand for homes. Daphne-Fairhope-Foley and Auburn-Opelika also have robust new construction markets, where it generally accounts for about 20-30% of all residential sales in recent years.
Residential sales are also expected to grow significantly in the Huntsville area with ACRE’s forecast calling for 9.3% growth. A growing population and a strong regional economy anchored by the Marshall Space Flight Center will continue to boost residential sales activity for the foreseeable future.
The only metro area with a forecast for declining sales is the Dothan area, which is coming off an especially strong year in 2019 (9.4% increase year-over-year). This level of sales activity will be difficult to maintain, which is one reason that the Center expects sales activity in this area to moderate somewhat in 2020.
For the state’s non-metro areas, the forecast calls for growing sales activity in three of nine areas including Cherokee County, the Cullman area, and Marshall County. The good news is that sales are not expected to drop off significantly in the areas with projected declines, just to moderate a touch from 2019, which was a record year at the statewide level.
Metro Area Forecast
Non-Metro Area Forecast