Autumn sees a rise in housing inventory
Housing inventory in the U.S. and locally in Madison County has risen in recent months, potentially giving buyers an advantage going into the holiday season.
In September, the nation’s number of available housing units for sale rose to 1.60 million units – up from 1.9% in August and 4.6% the previous September – according to the National Association of Realtors.
According to a Huntsville Area Association of Realtors report for the week ending Oct. 17, the inventory of available single-family homes in Madison County grew 16.9% to 2,382. Inventory of townhomes and condos in Madison County increased 31.9% to 211 during that same time period.
“The last time we had this many [single-family] homes on the market takes us back a decade to November of 2016, when our current inventory topped 2,500,” said Rob Abercrombie, a Huntsville-based Realtor and founder of The Abercrombie Group at Capstone Realty. “We stand at 4.3 months of inventory, which means that it would take just over four months to sell every available home on the market at the rate we sold homes over the past month.”
Most real estate economists consider a six-month housing supply to be a neutral market.
New listings of single-family homes in Madison County for the week ending Oct. 17 grew 5.9% year over year, to 143. New single-family home listings here topped 200 earlier in the month, with 208 new houses on the market in Madison County the week ending Oct. 3. The number of new single-family home listings dropped to 154 the week ending Oct. 10 – still a 17.6% year-over-year increase.
“Inventory is increasing while the buyer pool is shrinking,” Abercrombie said. “This will pave the way to more days on the market, more price drops, and will allow buyers a stronger hand in the negotiation process.”
While the colder months tend to be slower for home sales nationwide as families settle into their school-year routines and then enter the holiday season, homebuyers may be able to work the slower season to their advantage.
“Unless a buyer or seller is serious with a pressing need to make a move, many people will begin preparation for their move during the early part of the new year and into spring,” Abercrombie said. “Due to a softening market, it is common to see sellers offering incentives to buyers in the form of mortgage rate buydowns, closing costs and more room to negotiate on price.”
In October, the U.S. Department of Housing and Urban Development announced that build-to-rent, or BTR, properties would now be eligible for certain types of funding through the Federal Housing Authority. Under the new guidance, HUD now accepts mortgage insurance applications for these multi-family rental properties made up of single-family homes, duplexes or triplexes.
“In plain terms, the government will now back loans on build-to-rent communities the same way it has backed apartment loans for decades,” explained Rex Warner, development manager for Landmark Properties. Landmark developed the 231-unit BTR community The Everstead at Madison.
Warner said that Landmark typically doesn’t use HUD financing on its projects, so the new guidelines likely won’t change that company’s underwriting or project pipeline. But he added, “What’s most exciting to us is what it signals. Ten years ago BTR barely existed as a category. Now it’s being treated like traditional apartments by HUD, the agencies and the big institutional investors, which is yet another strong indicator that BTR is a real, permanent asset class and not a fad.”
BTR properties can qualify under two programs: Section 221(d)(4) for new construction, and Section 223(f) for purchasing or refinancing recently built BTR communities. Eligible properties must meet requirements such as being developed for long-term rental housing and having five or more homes on site that are professionally managed as one cohesive rental property.
