We asked local real estate expert and broker, Melvin Upchurch do give us his opinion.
What are you forecasting in the local Birmingham real market for this year?
Home sales in our market are at historical lows due to affordability issues and a lack of inventory. In 2024, there was a slight increase in units sold volume (3.50%) and a small increase in home values (3%). Affordability will still be a challenge in 2025 with home prices having risen sharply post-pandemic and with interest rates currently in the 7% range. The Fed funds rate has been at a 23 year high since July of 2023. My forecast is for there to be a slight increase in the number of homes sold and for prices to remain stable. In other words, a repeat of 2024 with some modest gains.
Where do you see local inventory and interest rates headed this year?
I think we will see a gradual increase in inventory. Life changing events push people to buy or sell a home. Inventory has been sluggish because people are delaying their moves hoping for lower interest rates. These delays have hurt inventory. But over time, life events will force people to accept the current interest rate environment and move. I think interest rates will drop some this year but not below 6%.
What advice would you give a want-to-be buyer who doesn’t want to give up their current low interest rate?
There is a saying in our industry: Date the rate, marry the house. Meaning, interest rates will come down. Our country will likely be facing inventory challenges for the next decade. That will translate into a steady increase in home values. In other words, now is a great time to buy and take advantage of rising home values. Interest rates will ultimately come down and you can refinance at that time.
What are the top 3 things seller’s need to do to get top dollar for their house?
- Paint: Any outdated colors need to be replaced with current trending colors. Online shoppers keep looking if the paint colors are dark or outdated.
- Kitchen Refresh: I do not recommend a full kitchen remodel but often some refreshing is all a kitchen needs. For instance, kitchen cabinets can be painted or refaced instead of replaced. New light fixtures make a difference. Also, a new appliance package might be less than you think.
- Staging Consultation: Try to visualize your home the way someone on Zillow will see the home online. Interior decorators and staging consultants specialize in helping sellers with de-clutter, de-personalization, furniture flow and curb appeal ideas. Their suggestions help sellers get their home ready for pictures.
Homes seem so expensive currently and interest rates are higher than they were several years ago. How are so many people seemingly able to afford these expensive homes?
There are lots of factors. But this is an interesting statistic, the average age of a homebuyer in 2024 according to the National Association of Realtors was 56. That means that proportionately more Baby Boomers were buying homes. Older Americans have more equity in their homes and have accumulated more wealth allowing them to pay cash and avoid the current high interest rates. In addition, wages growth has been outpacing inflation since January of 2023 resulting in more Americans being able to pay more for a home even with the higher interest rates.
There’s so many apartments/condos being built in the greater downtown area. Who’s moving into all these places? The rate of construction seems to outpacing the population growth.
It just seems that way. Nationally, we have a severe housing shortage with estimates ranging from 1.5 to 5.5 million units with the consensus being around 4 million homes. The creation of new households is outpacing new construction. The new construction you are seeing now has a long way to go to absorb the current housing deficit.
If you have any questions about your house or the local market, contact Melvin at melvin@listbirmingham.com or call him at 205-223-6192.
