Economic Snapshot Overview by Dr. Reid Cummings - April 2020
Posted on April 27, 2020 by Dr. Reid Cummings
Greetings, and welcome to the April 2020 Mobile Bay Economic Snapshot.
In our March 2020 report, we introduced our latest dashboard: The Trend Report. We used it to illustrate key tendencies in area residential markets in recent years, such as which sub-markets performed the best, or whether sales of new or existing residential properties were gaining or losing ground. Although we generally report all first quarter sales activity in our April issue, because of the widespread economic effects of the Coronavirus, we decided to instead focus on what market trends can we identify as a result, and if any of them turned negative.
It seems reasonable to expect that given the uncertainty and negative action in so many markets—equities, bonds, oil, retail—that real estate markets would follow suit in March. An April 21 National Association of Realtors® report seems to confirm that intuition in part, at least nationally. NAR reported that U.S. existing home sales declined -8.5% from February to March of this year. Even so, on a year-over-year basis, overall sales of existing homes increased 0.8% from March 2019—the ninth month in a row of such increases. The question we wonder about is whether the same national trends are evident in our area real estate markets.
Our newest dashboard highlights existing home sales activity individually for Baldwin and Mobile Counties in terms of total units. Focusing on total unit sales, looking first at Baldwin County we note that March 2020 existing home sales declined -3.3% from February to March of this year, which is 5.2% better than the national average. However, compared to March 2019, existing homes sales in Baldwin County declined -9.3%, which is 10.1% worse than the national average. In Mobile County, 2020 sales data show existing home sales increased 20.9% from February to March, which is 12.5% better than the national average. Yet compared to March 2019, sales in March 2020 fell -23.5%, which is 2.7 times more than across the country.
So, did our markets fare better or worse than markets nationally? The data suggest somewhat of a mixed bag of results. Sales increases in Baldwin and Mobile Counties from February to March 2020 indicate greater market strength locally versus nationally, yet the opposite is true for year-over-year comparisons. Because of the virus and the widespread economic damage reactions to it have caused, we expected to see sales declines from February to March of this year. The data tell a much different story though: our markets performed better compared to national market averages. What we now wonder about is whether the same trend will continue.
To try to obtain some qualitative sense of market direction, we interviewed more than a dozen Baldwin and Mobile real estate professionals. Anecdotally, the overwhelming consensus is that real estate markets on both sides of the Bay are on ‘fire.’ Reports of multiple offer situations and shortened marketing durations abound, and these active agents see no slowdown in the near-term. Despite the challenges of showing properties amidst the many Covid-19 concerns and constraints, our ‘essential business’ real estate companies continue to do what they do best: professionally representing clients and producing market results.
On another note, given the continued uncertainty about the Coronavirus, we decided to reschedule our annual conference from August 6 to October 8. Please look out for more announcements soon and be sure to make plans to attend.
Until next time, from everyone at the Center, we wish you and yours all the best.