10 Fastest-Growing Real Estate Markets~Birmingham Alabama is number 3!

[cpg35223]

Originally Posted by lovesfelines

One more quick question for those who answered to my first question: The article that cites Birmingham as the # 3 best market projects a 2.9% increase in the median price in one year, and a 29% increase in the median price over a 5 year period. Agree, or not? Thanks in advance for your answers.

Hard to argue with those statistics. There was a huge run up in price beginning in 2003. I remember our putting a full-price contract on a house in Mountain Brook in Spring, 2005, and then watching five other contracts come in topping our original offer. We said, "too rich for our blood" and backed off. Only in 2006, did you see some realism begin to creep back into pricing. So I would offer that the bulk of the run-up in pricing really took place in the first three years of the five-year period.

[lovesfelines]

Originally Posted by cpg35223

Hard to argue with those statistics. There was a huge run up in price beginning in 2003. I remember our putting a full-price contract on a house in Mountain Brook in Spring, 2005, and then watching five other contracts come in topping our original offer. We said, "too rich for our blood" and backed off. Only in 2006, did you see some realism begin to creep back into pricing. So I would offer that the bulk of the run-up in pricing really took place in the first three years of the five-year period.

Thanks. The article was projecting from now until five years from now. After what I saw happen in Central Florida, I had to wonder if a 29% increase in the median price by the year 2013 might not be unrealistic. So, to pick your brain a little further, it seems like you agree that the median price will increase. The big question is, do you agree with the projected 29% increase? As I said, I don't know Birmingham and the market here the way I did Central Florida, as I lived there way before the boom, and saw the growth as it occurred. I appreciate your input. It would be great to think that we moved from a market having a downturn that will continue until 2010, to one that is increasing in its median price - however modest the increase is. Just thought that 29% in 5 years - by 2013 - was pretty aggressive.

[cpg35223]

Projections are very tricky things, of course. That being said, I think there's going to be a moderation in new home construction in the market--chiefly because of the past overbuilding and tighter lending guidelines. Second, with very low unemployment, new industries, and aggressive hiring slated in the area, I think you'll start seeing much more people moving to the market (United or Allied Van Lines conduct an annual survey on state-to-state emigration, and Alabama is a hot state for growth). Further, Alabama's per capita income, and Birmingham's in particular, continues to climb quickly. For example, if trends continue, we'll surpass Michigan in 2010--a remarkable change from just 25 years ago.

So I think the lower rate of new home construction, the higher incomes, and the increased migration to the market will all combine to drive up costs, particularly in the sliver of suburbs between Birmingham's southern city limits and I-459. Those areas will be able to demand a premium in the coming years for their combination of really good schools, convenience to downtown and other amenities, and nice lifestyle.

[Bravo35223]

Birmingham is a traditional 'slow growth' market which does not boom as high in times of expansion and does not see meaningful decreases in times of softness.

Birmingham has a paradoxical situation currently: bad Jefferson County governmental leadership, while concurrently having one of the lowest unemployment rates in the nation. Translated: there is no recession here.

The governmental situation is strange in and of itself: The County Commissioners have gotten the County under a huge debt load, while at the same time, getting themselves indicted and in some cases convicted. The Sewer contruction project is a debacle. Now here we go with the "on the other hand"....On the other hand, Jefferson County (from an Operating Standpoint) actually has a surplus...meaning in terms of delivering day-to-day services to its citizens, the County is in good financial shape.

It is important for anyone who is moving into the Birmingham metro that the 80/20 rule applies: Total metro population of 1.2 million with only 240k actually living in the city limits of Birmingham itself. The metro area has 30+ independent towns that completely control their schools, police, fire and other city services, and as a generality - so a superb job.

Underpinning the economy here are tremendous employers, including UAB, AT&T, Regions BAnk, Compass Bank and several other multi-billion revenue firms that are extremely competitive. So the economy here is not really going to retract....I will note however with regret that the leadership crisis in the County and in Birmingham is definitely holding the metro back from reaching its potential.

From a statewide standpoint, Mobile and Huntsville are going to lead in terms of job growth, by a large margin due to a variety of factors.

A very close friend is one of the largest home builders in the state, and his firm is ploughing ahead just fine, in all markets in which it is building, which include Birmingham, Huntsville and Baton Rouge....he actually is a banker by education and background and Market Analysis is his number one factor in considering a new development....