Sales: According to the Lake Martin Area Association of Realtors, May waterfront sales decreased 5% year-over-year from 40 to 38 closed transactions. Following seasonal trends, sales increased 26.7% April. Sales are down 13.2% year-to-date, and are likely to moderate in the months ahead due to the growing economic impact of COVID-19.
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Inventory: Total homes listed for sale declined 33.1% year-over-year from 317 to 212 listings. Months of supply declined from 7.9 to 5.6, reflecting a market where sellers generally have slightly elevated bargaining power.
Pricing: The median sales price in May was $564,510, an increase of 13.6% from one year ago and an increase of 3.6% from April. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
Lake homes sold in May averaged 124 days on the market (DOM), 10 days faster than May 2019.
Forecast: May sales were eight units, or 26.7%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 30 sales for the month, while actual sales were 38 units. ACRE forecast a total of 105 residential sales in the area year-to-date, while there were 130 actual sales through May, a difference of 23.8%.
NAR commentary: According to the National Association of Realtors (NAR), existing home sales nationwide fell 9.7% during May (seasonally adjusted annual rate). This marks a three-month decline in sales activity due to the pandemic. Sales prices, however, remained somewhat stable as the nationwide median sales price increased 2.3% Y/Y, extending the streak of year-over-year price gains to 99 consecutive months.
When addressing slowing home sales, Lawrence Yun, NAR chief economist said: “Sales completed in May reflect contract signings in May and May – during the strictest times of the pandemic lockdown and hence the cyclical low point. Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
Yun added that ““New home construction needs to robustly ramp up in order to meet rising housing demand, otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
ACRE commentary: Closed sales data from May shows that total residential sales declined 15% year-over-year. Sales prices, however, increased 7.1% Y/Y in May. Inventory (properties listed for sale) was tight before the pandemic, and inventory continues to be constrained as listings declined 22% from one year ago. In the months ahead, sales activity is likely to slow when compared to the prior year (Y/Y decline in sales) due to the growing economic impact of the pandemic. While sales prices were somewhat stable through May, they could decline slightly later in the year if demand continues to soften. Pricing dynamics driven by the law of supply and demand are always at work moving toward or away from market equilibrium (6 months of supply) – where buyer and seller have equal bargaining power. In May months of supply was at 3.1.
The Lake Martin Area Waterfront only report is developed in conjunction with the Lake Martin Area Association of Realtors to better serve area consumers.
Editor’s Note: All information in this article reflects data provided to the Alabama Center for Real Estate for the time period May 1 – 31, 2020. Thus, the performance represented is historical and should not be used as an indicator of future results, particularly considering the upcoming impact of COVID-19 on the housing market.
