Recently MSN.com posted an article quoting new homes were up unexpectedly by 4% for the month of April nationally. Since April, I have seen a real rise in new home sales in Mobile, AL and Spanish Fort, AL. This has been a very encouraging sign along with the offers we have received on new homes being for asking price or just below asking price, all very reasonable offers. Why is Mobile county and Baldwin county Alabama seeing an upswing in new homes sales?
First, I think Mobile, AL and surrounding areas of Baldwin county, AL are positioned for a period of growth. With job growth from the new steel mill, Thyssen Krupp, and the potential of the new air tanker plant, Northrop Grumman, economic growth will be moving into the area. Actually, many national media outlets have ranked Mobile, AL as the fastest growing metropolitan area in the country. The new jobs created by these businesses are starting to show themselves and we are seeing the beginnings of people moving and transferring into the area.
Secondly, the new home market is finally adjusting itself. After Hurricane Katrina there was a shortage of housing available on the market. Home builders went on a building frenzy trying to produce enough homes for what the market demanded. Home builders did not anticipate the flattening out and ultimate decline in new home sales after hurricane victims needs were met. Unfortunately, this left a surplus of new homes in the Mobile and Baldwin county market. We are starting to see this surplus inventory beginning to sell through. Builders are now adjusting their speculation building to correspond with the current demand level.
Market equilibrium has started to take effect and the decrease in home prices is one of the first to be noticed. At J. Craig Homes we have always believed in pricing our homes correctly from the start, unlike some in the market that price high and then reduce after the home sits and sits. Though some home builders have been slow to come to this conclusion I believe new homes prices are starting to find their leveling out point. It began with home builders cutting prices and is now trickling down to developers needing to lower lot prices to turn empty developments. All of these adjustments have Mobile, Alabama;Spanish Fort, AL; Daphne, AL and Fairhope, AL in a good place for stabilizing the new home real estate market and returning new home prices to where they belong.
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