The Huntsville Area Association of Realtors (HAAR) has released their monthly statistics for the month of October, 2022.

At a total of 630 residential units sold in Madison County, down from 825 in October the previous year, the slowdown is shown in stark relief. Houses stay on the market for an average of 14 days, up from 8 the previous year, however, with Freddie Mac reporting a national average of 51 days on the market, Huntsville’s market is still quite brisk.

The inventory continues to increase, with 1643 houses on the market, more than double the numbers from the previous year.

More detailed weekly statistics, provided to the Huntsville Business Journal by the HAAR, illustrates that the lion’s share of the new inventory coming to the market are priced at or above the $350K price range. The continued brisk pace of sales indicates that there is still strong demand for units at that price point, but with so much of that inventory built with an eye towards that price range, there are two issues that can arise: firstly, that the supply will eventually outstrip demand, forcing these units to sell for less than expected, and secondly, that those in the market for more affordable units will go underserved.

The weekly report for the week ending November 5 examines the housing affordability index, for both single-family houses and townhouse/condo units. The affordability index for condo units has slipped down to 91 – which is to say that the median income of Madison County covers only 91% of the necessary funds to qualify for a median-priced unit at prevailing interest rates. Single unit houses are down to 81. In short, there is much to do in order to put housing within the reach of the average resident of Madison County.

In response to the 30-year interest rate lingering around 7%, buyers are increasingly looking to Adjustable-Rate Mortgages (ARM) to try to save what money they can. A 5/1 ARM has a five-year fixed interest rate, after which the interest rate is adjusted at annual intervals. Freddie Mac reports that the rate for 5/1 ARMs is a point lower than a 30-year fixed mortgage, and as a result, the Mortgage Bankers’ Association reports that 12% of total mortgage applications.

This is an indication that buyers are clearly expecting interest rates to eventually recede. On the one hand, that’s probably a safe bet, given historic trends of low interest rates. On the other hand, five years is a long time – consider just how much has changed since 2017, for instance. Those looking to finance a home with 5/1 ARMs would do well to carefully consider options for caps on increases, whether they are initial caps, subsequent caps, or a lifetime cap. It would be wise to consult with professionals for further explanation of the specifics of an ARM.

As always, the Huntsville Business Journal will continue to bring its readership up-to-date information on the real estate market here in Huntsville.