Alabama waterfront real estate market: A look at the forecast for the rest of 2023
By Trent A Taylor of Lake & Coast Real Estate Co.
April 26, 2023
Despite an ongoing climate of economic uncertainty nationwide, we anticipate Alabama’s attractive coastal and lakefront real estate markets to continue seeing a steady pace of growth in 2023, while buyers may find more advantages as interest rates inch upwards in the Fed’s attempt to curb inflation.
To give an abbreviation of the current Alabama waterfront real estate market and where we predict it is heading, we’ll take a look at two areas in which we specialize in selling real estate: Lewis Smith Lake and Orange Beach. These two markets are the most popular and active in the state as far as sales, giving us valuable insight into both the lake and beachfront markets that are increasingly drawing attention to Alabama from potential buyers far and wide.
Lewis Smith Lake AL
At Lewis Smith Lake, one of the premier waterfront real estate markets in Alabama, we still have low inventory contrasting with pent-up demand. But with increasing interest rates, we are seeing our Smith Lake sales volume slow down compared to the same time last year. We are also seeing our inventory tick upwards compared to housing inventory around this time in 2022.
One of the main factors affecting inventory numbers is the large number of “proposed construction homes” that are showing in our Multiple Listing Service (MLS). But if we remove those from our inventory numbers, it drops our total current supply of homes down by 1.5 months. If the Fed continues raising interest rates throughout 2023 to combat inflation, sales will likely continue to stay lower than last year.
Another factor that will affect Smith Lake waterfront home sales in 2023 is the slowing trend in 1031 exchanges, which fueled a large number of sales in the $1 million-plus range in 2021 and 2022. If new homes on the market continue to increase at the current rate, we should slide into a buyer’s market by early to mid-summer of this year.
We don’t expect any significant price reductions in the waterfront lake market, but we do see prices flat-lining and sales returning to a normal pre-pandemic rate, which will open up opportunities to a wider range of buyers.
Located on one of the state’s cleanest and clearest bodies of water, surrounded by pristine nature (see Bankhead National Forest), yet within easy driving distance from some of Alabama’s most booming metro areas, Smith Lake homes and properties are particularly well positioned to grow in desirability over time. Furthermore, ongoing economic growth in the North Alabama region, particularly in Huntsville and its surrounding areas, is likely to drive even more interest in these properties.