Prompted by a long-running trend of economic growth, the recession got a late start in Alabama. Mortgage lending tightened up as the financial crisis hit and the brakes were felt in the housing market, but as a result the fallout has been at a slower pace.
Better home sales resulted in most Alabama markets because of the federal first time home buyers incentive, improving sales in the lower ranges. However, any pro-longed recovery is projected to take longer in the state known best for a slow southern style.
The over-priced single family sector saw housing prices decline, and it will take until the lending pipeline loosens before markets stabilize, which should be some time in 2010. Foreclosures represented more than a third of all sales as a result of homeowners who only saw their home values' fall or were thrown out of work and unable to make their mortgages in Birmingham. Average home prices are forecast to deflate a modest 5.8% in Birmingham in 2010.
Defying a seasonal trend, home sales are keeping an upward trend in Huntsville, mainly attributed to the extension and expansion of the home buyers' tax credit. But even as sales, especially in the lower price range flourish, housing values are declining and are forecast to remain that way through 2010 on average deflation of 7.9% in Huntsville.
The aerospace industry and high-tech growth should aid the local economy in recovering from the recession in Huntsville, which should do much better than much of the state in the short run.
| City |
Forecast |
| Birmingham |
− 5.8% |
| Huntsville |
− 7.9% |
| Mobile |
− 6.8% |
| Montgomery |
− 5.2% |
Tuscaloosa |
− 3.2% |
Down on the Gulf of Mexico, Mobile is going through growing pains from new residents who moved to the area after Hurricane Katrina hit New Orleans more than four years ago. Crime figures are rising as the city becomes more accustomed to growing city crime levels. But the crime growth hasn't halted more residents from moving to the community.
Population is on the upswing, but the housing market has seen a slower movement of home sales due to the uncertain economy. The second home market along the immediate Gulf Coast has been batted by the recession, and Mobile is hurting. Home sales are projected to pick-up through 2010 on average housing deflation forecast to be 6.8% for the year.
Stabilizing attempts haven't yet aided the market in Montgomery, which has seen housing prices deteriorate for more than two and a half years. The financial crisis is taking a heavy toll on the community, which entered the recession like most of Alabama later than most other areas of the country.
Year-over-year housing sales remain in a slump with deflating values. A larger federal stimulus package could boost the market in time by putting more of the growing unemployed back to work. However, lower home prices with an average of about $135,000 does give first time buyers an edge in the market in Montgomery, which is forecast to see home values decline another 5.2% in 2010. The foreclosure epidemic is making a widespread impact on housing values.
However, there are more positive signs of a recovery of sorts in Tuscaloosa. Home sales are still sluggish, but the average time to sell a home has been cut to slightly above three months, an indicator that the market is making inroads towards recovering from the slump.
Home prices are still declining but not at the rapid level of deflation seen in the early part of the downturn, all pointing to improving market conditions in Tuscaloosa. As the market moves towards equilibrium housing values are forecast to deflate a modest 3.2% on average in 2010.
