Soaring unemployment and weak economic fundamentals are leading the Alabama housing market into a second down turn that is projected to pull home prices down further. Home sales have slowed after the federal tax credit for home buyers’ expired, leading to a growing series of problems for Alabama, which includes worries along the Gulf of Mexico from the BP oil disaster.
Work crews are still cleaning-up Orange Beach, where oil from the BP leak rolls up occasionally, but the beaches of South Alabama are mainly free of oil and are attracting tourists back to the region. Most of the oil from the massive spill has been confined to offshore waters of Alabama as a result of efforts used by the oil giant to keep contamination away from the coast. The disaster has still slowed home and condo sales in the gulf coast area, which is mainly composed of second home and vacation home buyers.
Those condos and homes that are selling in Orange Beach are “like the deal of the Century,” according to real estate agents. One posh condo unit in a high rise building that sold for $1.2-million three years ago just resold for $450,000.
Property is being sold in the area, but only the best deals are even being looked at by buyers. Orange Beach is forecast to sustain average home price losses of 9.3% in 2011.
In Mobile a growing inventory of foreclosed properties hitting the market is adding to an over supply of homes for sale. The rise in foreclosures is a menace for the
market, which is already troubled by growing job losses and doubts about any sort of economic recovery. Sales are slowing in the aftermath of the tax credit as the community adjusts to less prosperity and growth in the new economy. Tight bank lending is making it tough for many people to obtain a mortgage or other lending. Mobile is forecast to experience deflation of 8.2% on average homes in 2011.
Upstate in Huntsville, a consistent decline in home sales has materialized since the federal tax credit for buyers expired, capping a season of higher sales from the credit amid a weak economy. NASA is cutting jobs at the aerospace facility and growing unemployment troubles the housing market, which is only expected to see more foreclosures this year. The foreclosure crisis has hurt home values in Huntsville. Home prices are forecast to decline another 7.8% in 2011 on sluggish sales.
Home sales took a 40% dive after the federal credit expired in Birmingham, the largest city in Alabama pulling home values down with the slump in sales. Alabama has been suffering from some of the worst housing deflation in the nation as home buyers grow increasingly reluctant to take action in the wake of the financial crisis. More foreclosures anticipated this year from bankers, who are reluctant to negotiate with mortgage holders to modify mortgages are driving the foreclosure crisis to new highs. The rise will pressure home prices, which are projected to take another hit for the year, and are forecast to decline 8.3% on average in Birmingham.
Home sales have tumbled in Tuscaloosa as a result of weak consumer confidence and growing foreclosures as homeowners lose confidence in their ability to obtain refinances, workers lose jobs and are unable to make mortgage payments. Lower priced foreclosures are hurting Tuscaloosa, which is ailing from the financial crisis. Slow home sales are projected for the New Year as consumers remain leery about the market. Average home prices are forecast to deflate 8.6% in 2011.
The highest unemployment rate in the state troubles Montgomery, which has the second largest population for any city in Alabama. The weak economy has sent home sales tumbling in the fall-out of the financial crisis. Bank failures in Montgomery have been particularly devastating for the region, which is in just the early stages of realizing changes from the new economy, resulting in less bank lending and lower wages for workers. Montgomery is forecast to sustain average home deflation of 9.0% in 2011.