House shoppers and Real Estate agents across the nation are well aware of the recent challenges presented by the housing market, particularly with regard to increased prices and low stock. Although the Huntsville area did not experience these difficulties to the same extent as other regions of the country, recent data indicates that it has not been immune to stresses on the market.

The Alabama Center for Real Estate’s (ACRE) February 2022 Huntsville Residential Report indicates a consistent upward trend in home prices over the past year, with median sales prices rising from $262,000 to $323,992 between February 2021 and February 2022. During the same period, the number of homes sold decreased from 589 to 574.

According to ACRE, average residential sales prices have historically increased by 3.8% between January and February over the past five years. This year’s current average price, on the other hand, increased 6.3% between those two months.

Home sellers are not only reaping the benefits of higher selling prices, but they’re also selling significantly more quickly than in past years. The five year average for days on market (DOM) is 56, dropping from a high of 88 in 2017 to only 20 by February 2021. This number decreased further in 2022, with houses remaining on the market for an average of around 11 days.

Competition is steep, driving potential homeowners to jump on new listings quickly. The total number of homes on the market in the month of February has also dropped precipitously from a five-year average of 1,336 to only 511 in 2022, declining from the 549 homes listed in the previous year.

Despite these issues, the Huntsville area housing market remains red hot, especially with respect to millennial home buyers. According to the National Association of Realtors (NAR) 2022 Home Buyer and Seller Generational Trends report, the combined share of younger millennial (23 to 31 years old) and older millennial (32 to 41 years old) home buyers rose to 43% in 2021, compared to 37% in 2020.

Technology is playing an increasingly important role in the home buying and selling process for this age group, with 65% finding their homes on the internet. Eighty-seven percent of all buyers purchased their home through an agent, with 92% of younger millennials and 88% of older millennials doing so.

Having the ability to work remotely during the pandemic played a role in many millennials’ ability to afford homeownership.

“Some young adults have used the pandemic to their financial advantage by paying down debt and cutting the cost of rent by moving in with family. They are now jumping headfirst into homeownership,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “While young buyers use new tech tools, they also use real estate agents at higher rates than other buyers to help find the right home and negotiate the terms of the transaction.”

Buyers from all generations agreed on the top reasons for using a professional Real Estate agent: they wanted help finding the right home to purchase, negotiating the terms of sale and negotiating the price. The silent generation – those between the ages of 76 and 96 – as well as younger millennials were also more likely to want their agent to help with paperwork.

Sixty percent of recent buyers were married couples, 19% were single females, 9% were single males, and 9% were unmarried couples. Single-female buyers significantly outnumbered single-male buyers across all generations.

The study also found that 81% of younger millennial home buyers were purchasing their first homes, while just 48% of older millennials were first-time buyers. Boomers made up the largest share of home sellers at 42%.

“Many factors can contribute to the decision to buy or sell a home,” Lautz said. “For all home buyers under the age of 57, the main driver was the desire to own a home of their own. Among those 57 and older, the desire to be closer to friends and family was the top reason, followed by the desire for a smaller home.”

Debt continues to be a significant barrier for many prospective home buyers, with both Generation X and younger boomers delaying purchasing homes for five years due to debt. Younger millennials had the highest share of student debt at 45%, with a median amount of $28,000.

Twenty-seven percent of younger millennials cited that saving for a down payment was the most challenging step in the home buying process, and nearly one in three younger millennials received down payment assistance in the form of a gift or loan from a friend or relative and 24% lived with friends or family, directly saving on rental costs.

Still, most buyers have a positive outlook on homeownership, with 86% of all buyers reporting that they saw a home purchase as a good investment. In addition, 89% said they would recommend their agent for future services.

“A truth across all generations is that homeownership is seen as a cornerstone of the American dream,” said NAR President Leslie Rouda Smith, a Realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “From building personal wealth and fostering communities, to strengthening social stability and driving the national economy, the value of homeownership is indisputable. Home buyers continue to turn to Realtors as a trusted resource for helping find the right home and successfully navigating this increasingly complex process.”