Tuscaloosa Co. led state in real estate salesSales down, inventories up overall statewide

With minor fallout from the national subprime mortgage meltdown and growing fears of recession, 2007 may not have been a banner year for Alabama real estate markets, but it came close.Tuscaloosa County led the state’s major real estate markets in sales growth for 2007, while the year also marked the third strongest on record for Alabama home sales, according to information released Thursday by the Alabama Center for Real Estate.

Tuscaloosa County boasted a 12.69 percent increase in sales over 2006. Muscle Shoals took the mid-size market sales crown with 4.62 percent growth, while Walker County represented the only rural area to grow in 2007, with a 21.69 percent increase in sales. Todd Vick, president of the Homebuilders Association of Tuscaloosa, attributed Tuscaloosa’s success in part to the presence of institutions such as the University of Alabama and DCH Medical Center, which tend to have a moderating influence on sharp swings in the economy.“Relative to some other areas, Tuscaloosa has maintained a pretty stable growth pattern,” Vick said. “I don’t think it was hit nearly as hard as some of the other metropolitan areas around the country.”

Alabama ended the year with 57,083 units sold, a modest year-over-year decline of five percent compared to the high double-digit decline experienced by its regional and national counterparts. The state housing market, however, is not without its challenges. The recent downward trend in monthly home sales continued in December, dropping 1.96 percent from November and 17.59 percent compared to December 2006.Grayson Glaze, director of the UA-based real estate center said such numbers must be viewed in the context of Alabama’s recent spate of recording breaking sales years.“One must recognize that preceding December home sales represented the second best on record at 4,492 units for the month,” he said.

Despite December being the third consecutive month with fewer homes on the market, the state housing inventory remains bloated at 41,604 units. At the current sales pace, Glaze said it would take 11 months to work through that inventory. “This is considered unhealthy and significantly higher than traditional and desired industry levels of approximately six months,” Glaze said.An overabundance of homes has proven to be one of the most significant drags on the Alabama housing market in the past year, driving down home prices and boosting the average time homes spend on the market.

A crisis in consumer confidence caused by the subprime meltdown, rising fuel and food prices and other economic woes has made absorbing the excess housing difficult. Barring a recession, the center projects that inventory will return to more desirable levels in the second half of 2008. Glaze said a return to normal levels will indicate the market’s readiness to move beyond the current correction. The center predicts that home sales will return to a more sustainable pace in 2008 compared to recent years where record sales were the norm. Sales for 2008 are projected to fall below 2007 levels. Reach Matt Hawk at matt.hawk@tuscaloosanews.com or 205-722-0213.