Economic Snapshot Overview by Dr. Reid Cummings - February 2018
Posted on February 7, 2018 by Dr. Reid Cummings
Greetings, and welcome to the February 2018 Mobile Bay Economic Snapshot.
This month, we recap the year in real estate, contrasting 2017 market activity with the previous year. Based solely upon number of units sold and total transaction values, one could reasonably say that overall, markets on both sides of the Bay were slightly less robust in 2017 than in 2016. Yet upon closer inspection, the numbers point to a rather interesting, more upbeat side of the story—a silver lining, if you will.
In Mobile County, 2017 existing single-family sales led the way with 5,914 units sold, generating total sales volume of $796.4 million. There were 300 commercial real estate sales transactions, with values totaling $382.1 million—a notable 7.4% increase over 2016. There were 338 new single-family homes were sold, totaling $75.8 million. Finally, 179 condominiums changed hands in Mobile County last year, producing $24.5 million in total sales.
In Baldwin County, 2017 existing single-family sales also set the mark. With 4,035 transactions, incredibly, total sales exceeded the $1 billion mark for the second straight year! Condominium sales were again strong in 2017, totaling 1,984 units and $647.5 million in sales volume. New single-family sales posted impressive gains as well, registering 1,267 units and total sales of $317.8 million. Finally, 373 Baldwin County commercial properties sold in 2017, totaling $304.5 million in sales volume.
In our November 2017 Mobile Bay Economic Snapshot, we suggested that if sales in November and December kept pace with year-to-date sales recorded through October, then total sales would likely top the $3.5 billion mark for the year. They did! 2016-2017 Mobile and Baldwin County total real estate sales volume exceeded $7.2 billion.
Evidence of the earlier-mentioned silver lining shines brightly when we examine critically important price trends. On both sides of the Bay, average sales prices for all sales categories increased from 2016 to 2017. Mobile County average transaction values increased 5.7% in existing single-family home sales, 4.7% in new single-family home sales, 9.3% in condominium sales, and a fairly remarkable 26.7% in commercial property sales. Baldwin County average transaction values increased 7.3% in existing single-family home sales, 2.9% each in sales of new single-family homes and commercial properties, and 5.4% in condominium sales.
The key question as we look ahead is will the pattern continue? Some macroeconomic conditions that might cause market concerns include the specter of increasing interest rates and inflation, a weak U.S. dollar, and a rising U.S. trade deficit. As in real estate markets across the country, Mobile and Baldwin County inventory levels have fallen; continuation of this trend will tend to put upward pressure on prices. One major unknown that bears watching is how the recently enacted tax law changes will affect real estate sales. Even so, with unemployment at or near all-time lows, and consumer confidence strong, we expect another solid performance in 2018 for our region’s real estate markets.
Until next time, from everyone at the Center, we wish you and yours all of the best.