There exists today a void. A void of new construction single family homes for sale in the Birmingham real estate market between the price of $150K and $200K. This is particularly true in popular residential areas such as Pelham, Helena, Hoover, and Alabaster.

The New Construction Void

Over the past two or three years, new construction has exploded throughout the Birmingham area. Neighborhoods featuring garden and patio style homes popped up from Trussville to Montevallo. This vast selection of homes was a boom for the new construction market and home sales soared. Demand was high, and as a result, the prices of these new garden homes increased. The increased price in garden homes rippled throughout the entire new construction market generating price increases across the board. Now, what used to be affordable for people looking to "move up" from their garden home has become slightly too expensive, creating a gap of quality family sized homes at or below $200K.

Let's look at a scenario.

A few years back, one established neighborhood in particular, witnessed a new development open right next door. Home sales slowed in the established neighborhood, while the new construction neighborhood experienced a boom. Over time, home values increased in the established neighborhood. In response to the interest in the neighborhood by potential buyers, the new development raised their prices as well. Eventually, bringing the basic garden home to within the price range of the established family sized homes of the established neighborhood. The new developments homes comparable in size were initially priced comparable to the established neighborhood. But now three years later, there exists a fifty to sixty thousand price differential between comparable new construction homes and this established neighborhood, creating what I like to call, the void.

An Interesting Market Condition

Here is where it becomes interesting. New construction sales have slowed over the past year, and builders are having to leave their homes on the market for longer periods. As a result, the builder's expenses increase while their profits decrease. Eventually, the expenses increase to a point where the builder cannot afford to reduce the price without suffering a substantial loss. As a result, the builder is more likely to accept an offer slightly below the asking price to stop any more profit loss from the vacant new home that has been sitting on the market. You could refer to this scenario as a buyer's market, and quite frankly, it is, but...

It is turning into a feeding frenzy for persons living in the family sized homes valued within the price gap between new construction garden homes and new family sized homes. The demand for these established family sized homes has increased dramatically in certain areas and certain developments. What has developed in the Birmingham real estate market is a micro-sized neighborhood and price dependent seller's market!

For example

Recently, a young couple with a family sized home in an established neighborhood wanted to make the jump to the new construction version of their home. Knowing that home sales in their neighborhood had slowed during the winter months of 2006, I expected the home to take a little longer than normal to get under contract and sold. The home was on the market for twelve days. That's right, twelve days. Even though the home was priced at the higher end of the scale for the neighborhood, the home sold in less than two weeks, for $5000 more than the asking price! It gets even better when you take into account that their home was the highest priced sale for that style of home in that neighborhood to date!

Then, because of the buyer's market conditions at new construction developments, the young couple, with the help of their real estate agent, negotiated a contract price on their new construction home well below the builder's asking price.

Now is the time!

The above example is why persons living in the void that are considering moving, need to get the ball rolling before the void disappears. Market conditions change and who's to say how long this particular scenario will last. But one thing is certain, this is a very unique opportunity for home owners in established neighborhoods to sell their homes and take advantage of the current buyer's market that exists throughout the Birmingham Alabama new construction market.

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