Economic Snapshot Overview by Dr. Reid Cummings - October 2019
Posted on October 28, 2019 by Dr. Reid Cummings
Greetings, and welcome to the October 2019 Mobile Bay Economic Snapshot.
This month, we take a look at how the area’s real estate markets have performed during the first three quarters of the year and offer comparisons to market activity during the same period in 2018.
Baldwin County, Q1-Q3 2019
Existing single-family unit sales declined 8.8% during the first three quarters of 2019, with 4,273 sales compared to 2018’s 4,683 transactions. Sales volume increased though, finishing 11.8% higher at $1.27 billion through September 2019. The average sales value rose sharply, ending up 20.3% at $219,500. The median sales value was also higher $216,700.
The number of new home sales fell slightly, totaling 1,059 transactions for the first three quarters. Total sales volume also declined, ending 4.7% lower at $286.8 million. The average sales value rose to $271,400 while the median sales value was down 3.1% to finish at $252,600.
Condominium sales were steady, registering only a slight decline to finish with 1,904 transactions. Sales volumes increased however, rising to $687.2 million. Average and median sales values were both higher as well, ending the period at $358,200 and $287,500, respectively.
Commercial real estate activity showed its strongest gains to date, ending the period with 283 transactions on total sales volume of $232.4 million, a 17.7% increase. Average sales value rose slightly to close at $792,500, while the median sales value ended lower at $258,200.
Mobile County, Q1-Q3 2019
Existing single-family home sales were off by 16.7% for the first three quarters of 2019 versus the same period in 2018, with 4,977 transactions. Average and median sales values were both higher gaining 9.3% and 11.1%, respectively. Total sales volume fell 9.6% to end at $666.2 versus $737.1 million in the comparable 2018 timeframe.
New single-family home sales declined slightly with 19 fewer new homes being sold in the first three quarters of the year versus the same period in 2018. Total sales volume also declined, dropping from $55.4 million during the first three quarters of 2018 to $53.9 million in 2019. For the period, both average and median sales values were higher, up 5.6% and 9.7%, respectively.
Condominium unit sales rates dropped 19.9% over 2018. Sales volume for the 140 units changing hands totaled $21.3 million for the period. The average sales value finished ahead 2.5% at $151,200, while the median sales value fell sharply to $94,000.
Commercial real estate sales for the year have seen declines across the board. Sales volume was down 54.1% finishing at $211 million for the period. Sales activity also declined, totaling 21.9% less than last year. Average and median sales values were both lower, ending the period at $727,800 and $219,500, respectively.
At this point last year, following a quarter-point increase September 27, 2018, our commentary highlighted the possibility of continued interest rate increases by the Federal Reserve. At that point, seven such increases had occurred in the previous three years and the Fed was expressing concern over the need to slow the economy down a bit. It acted on December 19 by raising rates another quarter of a point, but at the same time, indicated rate increases were over for the foreseeable future. The trend since then has been one of reversal. After cutting rates in July for the first time in years, the Fed acted again in September dropping its benchmark overnight lending rate to a target range of 1.75%-2%. So, the question now is whether there are more cuts ahead? Based on the fed funds futures rate—which is currently suggesting a 93% chance of a rate cut when Federal Reserve Board Governors meet this week—the answer appears to be yes, for now. What happens next, as always, is anyone’s guess.
Until next time, from everyone at the Center, we wish you and yours all of the best.