Before the coronavirus pandemic, the only things obstructing regional residential growth was the construction industry labor shortage and a desperate shortage of housing inventory.
Still, during the pandemic, there is nothing – at least nothing new – slowing the residential housing market in North Alabama. Not a virus, not consumers, not builders, not banks, not regulation, and not the economy.
Home-buying and homebuilding are booming.
“We have sold more homes in 2020 than were sold at the same time in 2019,” said Josh McFall, CEO of the Huntsville Area Association of Realtors. “Even amidst the stress of a pandemic and busy housing market there was no slow down, and in fact, the only thing the association has seen take a downturn is housing inventory.
“I don’t even think we can classify the inventory problem as directly related to the pandemic. Beginning in January, we reported the lowest number of homes available for sale in the MLS since the MLS has been keeping track of those records in the mid-1990s.
“Madison County has been the big driver of that because we have the most MLS listings due to the denser population. Inventory is low, but we consistently slide down the entire MLS because our average days on market has also slid down.”
He said the days on market number for North Alabama combined is 42 days but, in Madison County, that number is 26 days and consistently falling.
“I remember five years ago we were reporting 80 or 90 days on the market and here in 2020 and during a pandemic, as of June that number is 26 days,” he said. “So, we had this housing shortage before COVID.”
Last month, around 840 homes were sold in Madison County. Of those, 600 were resales and 230 were new construction. Those 230 are either new construction, a prospect build that was sold, or a custom build that entered the MLS.
“So, what we are saying is, more builders are feeling more confidence in the local economy, so they’re ramping up their building, while at the same time, they have a lot of pressure on them due to the labor shortage and rising supply costs,” McFall said. “But if you look at all the MLS to date, there were 2,307 available homes on the entire market; 926 are in Madison County.”
One-third of houses under construction sell every month so the industry must build a lot of houses to keep up with demand,
“Sales prices are continuing to tick up from month to month so you can see it is a supply and demand issue,” said McFall.
How are people feeling about buying or building a home during a global pandemic?
Apparently, completely unfettered.
“Buying a home during COVID-19 was almost no different than our previous purchases,” said David Fields. He and his wife Meredith bought a home right around the highpoint of the pandemic this spring. “Our Realtor was very supportive and took all the necessary precautions including the use of PPE and social distancing. Overall, it was a great experience.”
“We’re getting lots of activity on the housing side of our business,” said Joey Ceci, president of the Breland Companies. Breland’s commercial division is developing the 525-acre Town Madison off I-565.
“At Pike Place at Clift Farm off Balch Road in Madison we already have several townhouses built and sold,” Ceci said. “At Town Madison, they are getting calls from people who are downsizing and who want to get away from a large yard and out from underneath the maintenance of a large house.”
While Breland builds a variety of housing products, they also contract with homebuilders such as Regent Homes of Nashville. Regent built homes at the Village of Providence and is building The Heights District at Town Madison.
Ceci said all Breland developments, whether they are cottages, single-family homes, or townhouses, are continuing to go up all over North Alabama. The Ledges of Oakdale in Athens, Meadowbrook in Cullman, and The Retreat in Meridianville are selling quickly, while Pebble Creek at River Landing in Madison is sold out.
“The impact on the economy with all these houses being built and sold are keeping home values up for existing homeowners,” Ceci said. “It’s good for our local economy too to be able to say we are not just swapping houses. We were pretty sure all these people would be moving here to take jobs with the FBI and Toyota, and now they are here. There are a lot of new people coming into the area.”
Stone Martin Builders who has developed Celia’s Garden, Allen Acres and Copper Creek in Huntsville, has continued to build throughout the pandemic, according to sales manager Ashley Durham, despite hurdles caused by supply shortages and subcontractor delays.
“The labor shortage is the building industry’s greatest challenge currently and it has a direct impact on low inventory,” said Durham.
One of the ways they are addressing the problem is to build strong relationships with subcontractors to help them grow their companies alongside their own.
“As a growing company, Stone Martin Builders finds value in helping our business partners grow and become great so we can in turn, overcome all types of industry challenges together,” Durham said. “That in addition to seeking opportunities with local technical programs to enhance the workforce, we are all helping each other.”
One of those technical programs is the North Alabama Homebuilding Academy started by the Huntsville-Madison County Builders Association to address the problem and they have already graduated their second class, even during the pandemic.
The North Alabama Homebuilding Academy trains people to be a homebuilder. Upon graduation, they can work as a contractor in training or in one of the ancillary trades. It was an 18-month endeavor but since January, the Academy has graduated 47 students.
According to Barry Oxley, Executive Officer of the HMCBA, the gap in skilled construction and construction-related labor goes back 30 years to the No Child Left Behind Act when school systems retooled education.
“There was for a long time, the idea that you have to go to college to be successful and as schools began to do away with trade school classes, a stigma developed around trades that said you were not meant for college,” said Oxley. “But the construction industry is made up of a lot of small businesses. If you are a skilled plumber, electrician, window or flooring installer or masonry expert, you do quite well.”
The Academy’s focus is on the 30 percent of school kids who are not able or do not want to go to college.
The program is an eight-week session with a cap of 18 to 20 students. The fourth session started in early July with 19 students and every class through September is booked to capacity.
“We have been talking about the labor shortage for a long time, so we decided to do something about it,” said Oxley. “They apply through our website and we invite them to an open house. We have been doing those virtually since the shutdowns started.
“We send them an invitation to sign up for a class. It does not cost them anything to attend and we back up the classes with ongoing job fairs where we bring in employers who hire our students. These students are going from minimum wage jobs to making $14 to $16 an hour.”
“We will always strive to build homes efficiently and with great quality … and we will continually seek to find growth opportunities for our organization in the North Alabama market to help offset the housing shortage,” said Stone Martin’s Durham. “We are still accomplishing this goal and our customers remain positive.
“We keep them informed of any affects the pandemic will have on the construction process, and there has been very little disruptions in our builds, so customers continue to be eager and excited about their new home.”
Durham believes it is the commitment their company made to colleagues, customers, and the building team to support one another throughout the crisis. The minute COVID-19 began to challenge the building industry, Stone Martin Builders acted.
“We identified fellow business owners that may be negatively impacted by the pandemic, and we found ways to become their patrons,” she said. “Many of these business owners were Stone Martin buyers, and we believe it is our duty to give back when we have the ability to do so.”
Some of the steps they took included renting tents from an event resource company whose events had been cancelled.
“To offset their losses, we used these tents for outdoor closings and information gathering stations to offset the cancellation of open houses in North Alabama,” she said. “Our goal was to find ways to use the product of a struggling customer to help offset the struggles we were having.”
Durham said some of their processes with customers also changed.
“Upon our first meeting with a customer, we seek to understand the ‘Why?’ they are building a new home,” she said. “COVID changed that process slightly in that we now need to understand how a homeowner is going to function in their new home.
“COVID is requiring the home be multi-functional and that looks different for every homeowner.”
For instance, they see an increase in the need for home offices, quiet rooms for schooling or reading, functional kitchens with people cooking at home more, and good natural light for being home in day time hours.
“We are creating home plans that meet those needs,” said Durham.
“We continue to see high demand for housing in Madison County, and especially in Madison,” said Madison Mayor Paul Finley. “The City instituted a Growth Impact Committee in 2017 that documented inventory and anticipated growth. Using this data, the Madison School Board, supported by the City Council, defined 12 mills as the proper number for managing this growth via the property tax referendum.”
The mill rate is the amount of tax payable per dollar of the assessed value of a property.
“This passed in September 2019 and we are now building the needed schools to manage the growth,” he said.
To support this managed growth, the Madison City Council formulated and instituted a Growth Policy in mid-2019. Town Madison’s residential growth was factored into the Growth Impact Committee’s study and they continue to build out both the residential and retail portions.
A new townhouse development on Kyser Boulevard is a perfect example of how managed growth can work for all parties.
“The developer focused on providing 366 townhouse units on industrial property,” Finley said. “Our growth policy dictated that the only way we would change this zoning was if significant city objectives were achieved.
“Working with the developer and schools, we defined two significant objectives: connecting Westchester Road to Kyser Boulevard allowing school buses a more direct and safer route to Sullivan Street; and extending the Bradford Creek Greenway from Palmer to historic downtown. These two objectives are estimated to cost $4,000,000 and will now be built and paid for by the developer.
“The developer also agreed to spread the building out to eight years with a 50 unit maximum per year and will not include second stories or a swimming pool, keeping their focus on non-school age purchasers.”
“If you think back 10 years to the recession, Huntsville was not hit as hard as some places, but some of the bigger builders either scaled down or consolidated,” said McFall. “You may notice tracts of land still sitting empty in the back of neighborhoods that were built out for new homes in 2009 and 2010.
“Now they are exploding because builders have bought them. You can drive all over town and see construction in neighborhoods where one builder built the homes in one section of the development, but another builder is completing it.
“The bottom line is people need a place to live, whether they are moving up or moving down. Marry that with the best interest rates seen in the mortgage industry in a long time, it explains the good housing numbers.”