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Alabama Real Estate Market Remains Strong in Pandemic

When the COVID-19 pandemic reached the U.S. in the early part of 2020, it sent a wave of uncertainty across the country. With entire states going into lockdowns, the economy grinding to a halt, and millions of people thrown temporarily out of work, many people wondered what impact the pandemic would have on the real estate market.

However, recent reports show that the Alabama real estate market has fared much better than expected despite these concerns. Despite a slight drop during the height of the first wave of the virus, the market has not only recovered lost ground in the past few months — it has grown. After an amazing bounce back in home sales last summer, overall home sales were up at least 3.5 percent year to date by the end of August.

What Is Driving the Numbers?

In March 2020, when President Trump declared a national emergency, many real estate markets ground to a halt due to quarantines and stay-home orders. Alabama saw a modified version of this with agents conducting the majority of viewings and paperwork online during the Safer-at-Home initiative. The market effectively stayed open but with reduced output, which accounts for the dip in sales during that time.

However, as the economy started coming back, it wasn’t long before sales roared back to life. Let’s look at some of the surprising reasons the Alabama real estate market has done better than other industries during this time.

Home Prices Rose Instead of Falling

While one might naturally predict a drop in home prices due to flagging sales, in fact, the opposite occurred. There are two basic reasons for this:

  1. Low-interest rates have kept demand high. The Federal Reserve made emergency cuts to interest rates to soften the pandemic’s effect on the economy. As a result, mortgage rates are at record lows, giving people more incentive to buy.
  2. Inventories went down. While Alabama saw a flood of more interested buyers, homeowners were actually skittish about selling their homes for fear of the market’s uncertainty. As a result, average home prices have risen across the state.

More Interest in the Suburbs

Another reason Alabama’s housing market has continued to grow is that buyers have taken a fresh interest in suburban areas. Concerns about the infectiousness of COVID-19 have motivated many people to leave dense urban areas in favor of the wide-open spaces of suburban and rural areas — this has allowed sales to remain strong even not only in Montgomery’s outlying areas but also in smaller towns like Auburn and Opelika.

Higher Demand for New Construction Homes

Lower inventories in the real estate market haven’t just driven up home prices — they’ve also caused a skyrocketing demand for new construction homes to make up the difference. According to the University of Alabama’s College of Business, the demand for new homes in Alabama is up a remarkable 39 percent from the same time last year, leaving builders scrambling to keep pace with the demand.

The Outlook Ahead

As 2020 comes to a close, we’re seeing new spikes in coronavirus cases across the country, along with fresh sets of stay-at-home orders and restrictions. While we can’t predict the future, for now, the Alabama real estate market remains strong and healthy. Even if stay-at-home orders cause another lull in the real estate market, the construction industry is considered an essential business, so the availability of new construction homes is likely to continue for the foreseeable future.

What does all this mean for home buyers? It means that while interest rates remain low (and before prices rise further), now is really the best time to buy, despite the concerns of COVID-19. Among your options here in the Montgomery, Alabama area, new construction homes may be the best choice. Not only will you find more selection in some of the best new neighborhoods in the region, but you’ll have more opportunities to customize your home to your individual tastes and budget.

Lowder New Homes has been a preferred builder in Montgomery and the vicinity for more than 60 years. We’ve seen many fluctuations in the housing market during our years in the business, and we’re confident that we can get you into the home of your dreams even here in 2021. Contact us to learn about availability and current promotions.

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