Trouble on the Gulf of Mexico from the BP oil spill and a tight mortgage market is sending Alabama housing sales weaker after the federal home buyers’ tax credit produced a limited number of additional transactions. The economic growth for the region seems to have run out of gas.
Slightly higher home sales resulted from the tax credit, but not enough to push the states markets into better times. The slow housing market along with BP oil that has stained area beaches is making it nearly impossible for markets to rebound from their downturn.
Making matters tougher, the pent up inventory of homes listed for sale is growing and foreclosures are showing signs of rising as unemployment increases in Alabama, one of the southern states that has experienced more growth than most others.
On the Gulf of Mexico, times are tough, especially in the troubled second home vacation market, which grew to record levels during the boom. Condo and home values on the immediate gulf front are plummeting as weary buyers withdraw from purchases as a result of the oil spill. Most are waiting to see what the long term effects of the nation’s worst environmental disaster will be before venturing out to look at property. The beaches of Gulf Shores are being cleaned up by work crews hired by BP oil as the area battles back from the downturn.
In Huntsville, the over-priced single family market has eroded as bankers slash prices on foreclosures to get them sold, and off bankers’ balance sheets. Huntsville defied national trends, while the rest of the country was cooling in terms of home sales, but tighter mortgage financing combined with higher unemployment and expected job cuts in Aerospace at NASA are projected to hurt the area, which is forecast to deflate 8.9% in average home values for the year.
In larger Birmingham, a decline in the foreclosure inventory triggered a slow down of sorts, but an increase in lower priced properties as a result of rising foreclosures is expected to aid an increase in home sales by the end of the year. Foreclosed homes or REO properties should make up the majority of sales, but that won’t help prices much. Birmingham is forecast to see average home prices drop 7.1% through the end of 2010.
Mobile is witnessing a later downturn in its market as it adjusts to growing pains from the unprecedented growth it experienced as a result of new residents from Hurricane Katrina. Population growth has eased in the uncertain economy, and home sales remain timid. Mobile average housing deflation is forecast to be 7.3% for the year.
Hurting local economies are weighing on Montgomery and Tuscaloosa. Record high foreclosures coupled with bank failures, business closings and growing job losses are making life tough for many residents. Home sales weren’t helped much by the federal tax credit in either community, and the future looks bleak for the time being at least.
Montgomery entered the nation’s economic recession later than most other areas and for all intents and purposes it appears as though it will be pulling out later. Housing sales are projected to remain sluggish through the remainder of the year on forecast average deflation of 6.9% for 2010.
The foreclosure epidemic is taking a hard hit on Tuscaloosa, where rising job losses are expected to impact the regional economy, and will likely increase foreclosures. The height of the housing crisis may be yet to arrive in Tuscaloosa, barring additional federal assistance. Tuscaloosa is forecast to finish the year with average home deflation of 6.6%.