Market Spotlight: Dothan
For this month’s market spotlight we are heading to a region that accounts for approximately one-fourth of the nation’s peanut crop, Southeast Alabama. Building on its agricultural legacy, the area’s largest city, Dothan, is now home to a diversified economy. Dothan’s largest employment sector is the combined healthcare and social services industry, and Southeast Valley Medical Center is the city’s largest employer. Other large employment sectors in the region include aerospace, fabricated metals, transportation, and distribution centers. Additionally, Fort Rucker has an economic impact on Southeast Alabama that is estimated at $1 billion annually. Home of helicopter pilot training for the U.S. Army and the Alabama Aviation Center, Fort Rucker is the nucleus of the region’s growing aerospace and aviation industries. Major players in the industry have operations in Southeast Alabama including Lockheed Martin, Arista Aviation, Vector Aerospace, Sikorsky, and Commercial Jet Inc.
The Dothan area led all of Alabama’s 14 metro areas* in median sales price growth in July as it increased 13.1% year-over-year (Y/Y) from $145,000 to $164,000. Year-to-date (YTD), median sales prices are up 5% from 2018, while the statewide average is 4.2% during the same period. Properties in the Dothan area sold at an average of 112 days in July, 26 days faster than July 2018. Year-to-date, properties are selling eight days faster than one year ago (144 vs. 136).
2018 was a record year for residential sales activity in both Alabama and the Dothan area. The 61,062 closed sales statewide in 2018 finally surpassed the pre-recession peak of 59,480 set in 2005. In the Dothan area, the 1,503 closed transactions in 2018 exceeded the pre-recession peak of 1,436 set in 2006.
Residential sales in the Dothan remained strong in July, increasing 11.5% from 139 to 155 closed transactions. Year-to-date, sales are up an impressive 11.4%, making the area Alabama’s third fastest growing market for residential sales activity behind the Phenix City area (19%) and Athens (13.5%). One of the main drivers of growing home sales in the region is the relocation of many Panama City, Fla. residents to the greater Dothan area following Hurricane Michael in October 2018. This demographic shift, combined with the region’s ever-expanding economy, lays the groundwork for 2019 being yet another record year for home sales in the region.
With rising prices and sales activity, it was not surprising to see the Dothan area post its largest ever month for dollar volume in April 2019 at $28.8 million, a Y/Y increase of 28.5%. Dollar volume was also strong in July as the $27.6 million in total sales activity reflected a 19.1% gain from July 2018 ($23.2 million). Dollar volume in the area is up 15% YTD from $146.5 million in 2018 to $168.5 million in 2019.
On the supply side, inventory is tight as residential listings are down 22.5% Y/Y. For context, statewide inventory was down 9.9% during the same period. Other metro areas with tight inventory include Athens (down 31.7% Y/Y), Huntsville (down 28.8%), Phenix City (down 25.7%), Decatur (down 21%), and Gadsden (down 19,5%). Additionally, the Dothan area has seen 13 consecutive months of Y/Y inventory declines, a streak that began in July 2018. As demand outpaces supply, expect inventory to trend downwards and the seller’s market to continue.