Even here, however, there are some indications that the real estate market is beginning to slow. Median home prices rose by less than a quarter of one percent during the last three months of 1999. Part of the fall in home prices reflects the normal, seasonal slowdown in the housing market that generally occurs during the winter. However, it does appear that the Federal Reserve s attempt at slowing the economy is beginning to have an effect. December sales of existing homes in Alabama declined from earlier months and selling time had begun to lengthen toward the end of the year.
Housing is generally the first sector to suffer when interest rates increase.
With the Fed s most recent interest rate increase, the fourth in the last six months, and expectations of more rate hikes to come in the future, we look to additional slowing for the housing market in 2000. Mobile-MA, which is made up of Baldwin and Mobile counties, is atypical because of the higher concentration of vacation properties located in Baldwin county. Because these vacation homes have much higher prices than owner-occupied properties, the HAI understates housing affordability for the Mobile Metro Area.