The Real Deal

By Sharman Egan Lagniappe columnist

In the last Real Deal, we looked at the housing market in the Mobile Bay area, comparing Mobile and Baldwin Counties. We saw two dramatically different pictures: Baldwin County looks like much of the U.S. (not so good…) while Mobile County is bucking the national trend.

Why is there such a big difference? After all, we’re talking about a few miles across the Bayway, an easy commute by Birmingham or Atlanta standards.

One reason is the huge disparity in house prices (Baldwin’s average sales price in 2007 was 79 percent higher than Mobile’s) combined with a much smaller difference in incomes (Baldwin’s average income is only 20 percent higher). It seems Baldwin County, like many other markets in the U.S., is suffering from the run-up in housing prices over the last few years, much more so than Mobile County. Without that run-up in prices, Mobile County is less susceptible to the so-called real estate bubble.

Another reason is the overall optimism in Mobile. That’s overcoming all the negatives out there from the imploding mortgage market to exploding gas prices. It doesn’t take a rocket scientist (or even a business columnist) to see that the real estate market, and the economy in general, is driven as much by the mood of the average person on the street as it is by interest rates, the mortgage market and other issues beyond the control of most of us.

So why can’t we all just agree to be perpetually optimistic and avoid all these unpleasant recessions? Geez, if I knew that, I’d be rich enough I wouldn’t care if we ever had another recession. I’m just happy there’s some good news to report.

So just how good is the housing market in Mobile? The best way to characterize it is…relatively good. Meaning it’s good compared to the last few decades. And good compared to much of the rest of the U.S.

But still, it’s a somewhat mixed picture. On the negative side, the number of homes sold per year has been going down since 2005 (an unusually good year due to the Katrina effect). And the number of homes on the market has increased over the last year or so.

On the positive side, prices rose almost 10 percent in Mobile County between 2005 and 2007, a figure that translates to an average of over $16,000 per home sold. That’s a nice cha-ching for the average seller.

So what does all this look like in raw numbers? (After all, I promised in my last column to give details about the Mobile County market, in addition to the usual pontification.)

• 5089 homes were sold in 2007, down about 10 percent over 2005 (Baldwin was down over 50 percent for the same period.)

• 3022 homes were listed for sale at the end of 2007 (compared to 6022 in Baldwin)

• A seven-month supply of homes were listed for sale (compared to 22 months in Baldwin)

• The average sales price in 2007 was $158,661, up just over 10 percent since 2005 (compared to a decline of 11.5 percent in Baldwin over the same period)

Clearly the Mobile County housing market is much healthier than the Baldwin market.

This just in: an update on the Gulf portion of the Baldwin market. On May 3rd, just after my last column went to press, there was a big condo auction in Gulf Shores. I’m talking 60 condos for sale at Crystal Towers, with 30 being sold at absolute auction with no minimum bid.

I don’t even want to think about what the auction company spent promoting this shindig. There were ads everywhere, including billboards along Hwy. 59 and large display ads in the Atlanta Journal-Constitution (not to mention some nice catering from Hazel’s and plenty of beer at 11 a.m. – it’s 5 o’clock somewhere). I figured this was as good excuse as any for a drive down to Pleasure Island.

I expected a good crowd, maybe 100 people or so (auctions there usually draw maximum of 25 to 30 people). OMG, I could hardly get close to the place. A typical Gulf-Coast-style monsoon hit about 37 seconds before the auction was scheduled to start. I couldn’t even see the 20-story tower until I was two blocks away. You’d think that would run off the curious seekers with empty wallets like me. Well, maybe it did, but there were still hundreds of people there. An auction company rep told me they had over 300 registered buyers.

The same rep said units sold last summer for $450,000 to $559,000. Before the auction, I found a few units for sale on the Baldwin County MLS for $389,000 to $520,000.

The results of the auction? While I was there, larger corner units (1,204 sq. ft.) sold for $265,000 to $310,000. Interior units (1,042 sq. ft.) sold for $250,000 to $315,000. There was a 10 percent buyer’s premium on top of these prices. And some of these units were furnished.

Woo-eee. Somebody got some bargains. But what does this auction tell us about the Gulf market? That there are buyers out there willing to brave monsoons to buy at the right price. Of course that doesn’t help owners who are upside down because they bought in the heady post-Ivan/pre-Katrina market. But for everyone else, if you’re willing to price your property to the market, you can sell.

Thanks to Reid Cummings of The Cummings Company for the statistics on the Mobile housing market.

Sharman Egan is Lagniappe lagniappe columnist. Contact her at Sharman@SharmanEgan.com.

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