Is the Birmingham Real Estate Market Weak?

We like to keep track of the Birmingham real estate market, so it was with a fair degree of surprise that we read an article in the Birmingham Business Journal about our area’s housing market. The article title? “Housing market ‘weak’ but Birmingham is not alone”.

According to the piece, the Birmingham real estate market was rated by the Freddie Mac Multi-Indicator Market Index as weak. The Birmingham metro area received a market index of -3.31, which was good for 34th among 50 metros surveyed. This is below the national average of -2.64, and below the state index of -2.87.

The report assesses markets by examining where it is today versus its long-term stable range. It takes a look at home purchase applications, payment-to-income ratios, the proportion of current mortgage payments in each market, and the local employment rate.

The only metric that Birmingham scored relatively well on was the employment picture, where it received a -1.92 (the national average is -0.66). The payment-to-income ratio, which measures monthly payments versus homebuyers’ income, stood at -4.62, which fell by 0.21 points.

This suggests that monthly payments – representative of home value – isn’t keeping up with income growth, which is an indicator that prices aren’t where they should be.

Judging by this report, is the Birmingham real estate market really weak? Or, is this report just one indicator amid a ton of data about how the market is performing? It’s fair to say it’s a little bit of both. We know that prices are rising, which has helped homeowners considerably. And we know that demand has been rising, even if supply has been falling consistently.

When put against this report, it’s easy to see how Birmingham still has a ways to go to get to a stable, secure market. We’ll continue to follow the market and keep an eye on the market’s overall stability.