News From the Field - Fall 2011

GENERALLY SPEAKING – Plain and simple, the homebuilding industry depends on several factors, but the most important is CONSUMER CONFIDENCE. Recent events in our nation’s capitol have resulted in a loss of consumer confidence. Our builder Clients are reporting that potential buyers are delaying their decision to purchase a new home until they “see what is going to happen”.

BIRMINGHAM - As new home starts in Birmingham have reached the lowest level since the housing recession began, the inventory of "not sold new homes" is also at the lowest level since the housing recession began.  The number of people employed in Birmingham has finally turned positive and we are gaining new jobs (according to the Bureau of Labor Statistics).  Currently there are 960 "not sold" new homes in Birmingham Metro & Tuscaloosa, this number peaked in July of 2008 with 2600 units.  We believe that the "preferred" number of "not sold" new homes in inventory is approximately 500 units (based on the current closing rate).

COASTAL ALABAMA & FLORIDA PANHANDLE - Which of the following counties has the largest share of the market - based on building permits issued?
• Baldwin
• Mobile
• Escambia
• Santa Rosa
• Okaloosa
• Walton
• Bay
• Gulf

The answer is Okaloosa County!!

NORTH ALABAMA - With 1,294 residential building permits issued year to date, the four-county market is currently at the lowest level in the last few years. Employment numbers (from the Bureau of Labor Statistics) have finally begun to show overall job growth.  The comparison of jobs versus permits issued has finally turned positive after almost three years of negative numbers.

CONCLUSION – For the last few months, new home starts in the southeastern United States have been at the lowest levels since we entered the current housing recession. This is resulting in a constant decrease in the inventory levels of new homes, and this is all part of the recovery process. The number of persons employed has been stable for several months and in many markets has begun to improve. An increase in the cost of building materials has forced some building companies to increase their new prices and this also is part of the recovery process.

If you haven't seen the www.mgresearch.net website recently, please give us a call.  There is a section that is only available to clients which utilizes the most advanced research technology available for residential market research.  Have a good day.