Measuring the market
Local realtors have said all through the national housing crisis Pike County hasn’t been hit quite as hard.
And, if the number of new homes constructed in 2009 is any indication, those realtors are right.
For the city of Troy alone, new home construction permits were higher in 2009 than ever before, with 71 new permits purchased in the year.
But, there may be a catch.
While permits were at their peak in the city limits, the value of this new home construction carried less weight than it has in the last three years.
For example, in 2008, there were 55 new home permits purchased in the city. Those totaled more than $8 million. For the 71 in 2009, the total was around $7.5 million.
Similarly, in 2006, 70 new home permits were issued, and the total in construction money was around $10.9 million.
So, when measuring the housing market, what is it that really matters?
Good question. So says Adam Drinkwater, president of the Pike County Board of Realtors, who also publishes a quarterly real estate blog.
“The city measures it based on the value of permits because that’s tax revenue,” Drinkwater said.
But, there’s another side to that same coin.
“I want to see that homes are selling and people are buying, and that doesn’t translate to dollar amounts,” he said. “Would you rather sell a house for a discounted price or not at all?”
Drinkwater said realtors have said Troy hasn’t seen the same housing slump as others in the nation because houses are still being sold.
“The reason we say that is we’re still selling houses and everyone else isn’t,” Drinkwater said. “We’re just selling them at a lower price.”
Still home sales in Pike County have declined in the last year, selling 153 homes in 2008 compared to 144 in 2009.
Sales that don’t include just new home sales were up for homes less than $180,000, in some categories as high as 41 percent. But, for homes higher than that, sales dropped in some price ranges as much as 50 percent.
“Houses in that lower range are selling more,” Drinkwater said. “People are looking for greater affordability.”
Drinkwater said the lower value of homes is not necessarily an indicator the housing market is in a slump, but lower construction values do take a toll on builders.
“Builders have to adjust to current prices,” he said. “It definitely impacts how many houses they’re willing to build. If an area isn’t selling well, they’re not likely to build in that area.”
“Home builders are adjusting to the lower market demand and new construction permits are expected to remain slower across the state,” said Drinkwater in his blog on adamdrinkwater.com, attributing the Alabama Center for Real Estate.