Surge in house prices ranks state 15th in U.S.

Friday, June 01, 2007
SHERRI C. GOODMAN
House prices across Alabama, buoyed by strong growth in Mobile and Huntsville, rose 7 percent in the last 12 months, outpacing most states and the national average.

The state ranked 15th in home price appreciation nationwide, according to an Office of Federal Housing Enterprise Oversight study released Thursday. Utah led the list with a 17 percent gain in home prices during the period. The nationwide average was 4.3 percent.
Home prices in the Birmingham metro area, meanwhile, increased 4.7 percent over the past 12 months. The study didn't give home sale prices, only a rate of change.

"Low interest rates and unemployment rates continue to prop up house prices in most markets," said Patrick Lawler, chief economist for the federal agency that did the study. "Prices are rising slowly in most areas, however there are some exceptions. For the first time in seven years, two states - Massachusetts and Michigan - experienced four-quarter price declines."
Area real estate experts say the modest growth isn't a reason for concern. Instead, they say, it should reassure homeowners in the Birmingham area.

"To me that continues to send the message that our market is solid and stable," said Tommy Brigham, chief executive of RealtySouth, Alabama's largest residential real estate company. "We don't have exuberant growth some other areas have experienced. Instead, people can expect it to be very stable."

By comparison, cities in Michigan, which has been hard hit by auto industry layoffs, and in Florida and California, where prices soared for years, actually saw home prices fall.

Garth Day, executive director of the Greater Birmingham Association of Home Builders, said the area's home price growth has been dragged down by lower prices in the city's urban core.

"Many people have seen much more significant appreciation values that 4.7 percent," he said.
Birmingham's low unemployment and strong economy have ensured that the city has "healthy, sustainable growth with no risk of the bottom falling out," Day said.

There are signs the Birmingham area housing market has slowed after rising for years at a record pace. The University of Alabama's Real Estate Research and Education Center reported in February that it was taking longer to sell a home in the Birmingham area and said 3,000 more houses were listed than a year ago.

The Birmingham association said last month that the median price for existing and new homes in metro Birmingham fell to $158,000 in March from $163,900 a year earlier. Median prices were down in three of four sectors, climbing only in the north region that includes Gardendale, Fultondale and Norwood.

According to Office of Federal Housing Enterprise Oversight, home prices in the Birmingham area have advanced 33 percent in the past five years and 184 percent since 1980.

The agency's study said Mobile led the state's top cities in home price growth in the 12-month period, with an 11.2 percent jump. Huntsville followed with an 8.6 percent increase.

Open for business:
The Retirement Systems of Alabama's restoration of the Battlehouse Hotel in downtown Mobile and the landing this month of the $3.7 billion, 2,700-worker ThyssenKrupp steel plant signal that "Mobile is open for business," Brigham said.
"The opportunities there are real strong," he said.

High-tech continues to spur growth in Huntsville, he said. Tuscaloosa, which had a 5.5 percent increase in home appreciation during the period, and Montgomery, which saw home prices rise 5.3 percent, are benefiting from the ripple effects of nearby auto plants.