Photo by Erin Nelson.
New homes are under construction in a new subdivision at The Bray in Liberty Park on Feb. 1.
More than 700 existing homes were sold in Vestavia Hills in 2022, with 19 newly constructed homes sold, according to data from the Greater Alabama Multiple Listing Service.
The 723 existing homes sold is down from the 826 existing homes sold in 2021, and the overall total of 742 homes sold is the lowest since at least 2018, according to MLS data.
Data shows the number of homes sold in Vestavia increased in 2020 and 2021 but declined last year, while the number of new homes has decreased in the past five years. In 2018, there were 85 new homes sold, followed by 38 in 2019, 95 in 2020 and 37 in 2021.
For existing homes, there were 733 homes sold in 2018, followed by 801 in 2019, 833 in 2020 and 826 in 2021. While there were fewer homes sold last year, home prices were up. The average price of an existing home in 2022 was about $541,000, up from about $506,000 in 2021.
In the past five years, the price of existing homes sold has increased each year from about $393,000 in 2018, the data shows.
There is only a half-month’s supply of existing homes on the market, according to MLS data. As of Jan. 10, there were 35 homes still active on the market. There were 18 new homes on the market — currently an 11-month supply in Vestavia Hills.
Mark Gualano with Vestavia Title said he is “cautiously optimistic” about the market and that there is still business out there. Higher prices have come as a result of lower inventory, he said.
Homebuyers are having to change their budgets on what they can afford as a result of higher mortgage rates and higher home prices, he said.
Looking ahead to the rest of this year, Gualano said he expects the market to remain about the same.
Charles Kessler, a local developer, said that a lot of people cannot qualify on the higher end of home sales and that some builders are having a hard time finding financing.
While new home construction was down last year compared to previous years, that number is set to rise in the coming years as build-out of the new Bray development continues in Liberty Park.
THE BRAY
The project will bring The Bray Town Center, a 102,000-square-foot commercial development that will include a hotel, restaurants, specialty retail and general business, and possibly a medical office, to Vestavia Hills. Along with the commercial growth, the project will also bring more than 600 single-family homes to Liberty Park.
Site work began immediately following the council’s approval of an incentive package and an amendment to the annexation agreement, the latter of which authorized the additional single-family homes.
John Bonanno, vice president of Liberty Park Daniel Communities, which is developing the project on behalf of Liberty Park Joint Venture, said mass grading is being wrapped up for the town center, with final plat approval coming sometime in early summer.
While Bonanno said no names can be given at this point, the commercial parcels have received “a lot of interest.” By the end of the summer, Bonanno said he hopes to see vertical construction on the town center.
The key component of the town center will be a new hotel, he said. Other components, such as retail and restaurants, will also come, he said. As opposed to other developments, Bonanno said he and his colleagues are working to curate the tenants they want, instead of simply saying “yes” to whoever calls.
Three acres of green space will be developed into a park, Bonanno said. There will be an area for kids to play and options for parents and others to dine while enjoying the park and its amenities, he said. Goodwyn Mills Cawood, which is planning that project, is tying park components to Liberty Park’s coal mining history.
On the residential side, 59 single-family lots and 46 townhome lots were approved in November for construction to begin, Bonanno said. Daniel Communities is now working to design 150 lots to bring on board in the next couple of years, targeting empty-nesters, he said.
In the current market, while there is no problem selling the lots, which are averaging around $600,000, Bonanno said the homes are a bit smaller because of construction costs. Still, the area is popular, he said.
“Liberty Park is going to be a place where people want to be,” Bonanno said. “It’s a great place to be.”
Work also continues to redevelop libertypark.com, the neighborhood’s website, Bonanno said. The idea is to help visitors know who is coming to the town center and keep them abreast of updated site plans, he said.
IMPACT OF INTEREST RATES
The market is doing well, despite mortgage rates rising about two percentage points from 2021 to 2022, said Jason Kessler with KADCO Homes. The average interest rate as of mid-February was 4.5%.
The average interest rate for a 30-year fixed mortgage had fallen below 3% after the COVID-19 pandemic hit, dropping as low as 2.65% in January 2021. That was the lowest rate in history and encouraged many people to move or build because they could borrow money at a lesser price and afford a bigger house.
But the Federal Reserve steadily raised short-term interest rates throughout 2022 in an effort to control inflation. The result was that the average 30-year mortgage rate edged up from 2.75% in December 2021 to 4% in March 2022, 5.25% in May and 7% in October, according to Freddie Mac.
There is “a lot of activity” in the market, Kessler said. Homes are being sold, and more contracts continue to come in, he said. The spring market is picking up, and people are “coming to terms” with higher mortgage rates, Kessler said.
The price of new homes is the highest it has been in at least five years, according to data. The average price of new residential construction in Vestavia Hills in 2022 was about $947,000, up from about $716,000 in 2021.
The most expensive area for new homes were in Liberty Park, with an average sale price of roughly $925,000 of the three homes sold there in 2022. Four homes were sold in the Southbend neighborhood, with an average sale price of about $895,000. Four other homes were built throughout the city at an average cost of about $822,000.
Kessler and KADCO are focused on new construction, building both single-family homes and townhomes, he said. The homes they are building aren’t huge, falling somewhere between 3,000 and 3,500 square feet. That is just below the citywide average, which was a five-year high of 3,732 square feet for new construction.
The average size of existing homes sold has remained about the same in the last five years, with an average of 2,816 square feet last year, according to MLS data.
New homes are being bought quickly, Charles Kessler said, often being sold as soon as specs are out, before the home is completed.
Cahaba Heights has seen a lot of new construction, though it comes at a price, Charles Kessler said.
“If you’re going to build in Cahaba Heights, you’ll have to tear down,” Kessler said.
While everyone is feeling the impact of inflation, the price of lumber has come down after the material’s cost rose significantly due to supply chain issues related to the COVID-19 pandemic, Kessler said, and other than a slight price appreciation in home values, there has not been much change.
“I do think that with construction nationally slowing down some, they do expect material and labor to slow down,” Kessler said.
In the future, Kessler said he expects a rebound to continue and is “encouraged” by what he is seeing. There are, so far, more buyers than anticipated.
– Community Editor Leah Eagle contributed to this report.
