Real estate spotlight: Tight Trussville home market loosening in 2024

In 2023, Trussville experienced one of the tightest residential real estate markets in recent memory.

Driven by higher interest rates, record-high home prices, and low inventory, only 554 homes in Trussville were sold in 2023, down 22% from 713 in 2022, according to statistics from the Greater Alabama Multiple Listing Service.

The 2023 total marks a significant decrease over the previous six years. In 2018 and 2019, the number of homes sold stayed fairly steady at 745 and 765. The high-water mark was in 2020 when 850 homes were sold during the COVID-19 lockdowns, and sales began to settle to 794 in 2021.

Last year’s downturn was largely the result of interest rates spiking above 8% which caused many homeowners who otherwise may have been interested in selling their house to reconsider, according to Tandi Smith, a realtor with ReMax Hometown Properties and a Trussville native. 

“Inventory was incredibly low. Interest rates were higher than we have seen in the last couple of years,” Smith said. “That kind of scared people a little bit, and so people were moving because they had to move, not because they wanted to move. And that really showed in our numbers.”

Smith said 2023 was one of the most atypical years she has experienced in her 25 years in real estate. She said that even though the demand for homes in Trussville remains high, local homeowners were reluctant to put their houses on the market due to interest rates that spiked to 20-year highs in 2023. 

Smith said the primary reason many homeowners decided not to put their homes on the market is the rise in interest rates, which could prevent them from upgrading their new home. For that reason, many homeowners took a wait-and-see approach in 2023, she said.

“Nobody wanted to give up their 3% interest rate to take a 7.5% or 8% interest rate,” Smith said. 

“Doubling an interest rate from 3% to 6.5% or 7% really increases the monthly payment,” she said. “So people realized that if they move, the house that they can afford now with the same monthly payment is going to be way less than what they currently live in. So a lot of people just decided to stick it out and see what happens.”

High demand

However, with one of the state’s top school systems, a vibrant business community and many attractive neighborhoods, Trussville remains a hot community for home buyers. The ever-increasing demand for housing combined with a low supply means home prices rise. Add an overheated economy with 30-year high inflation rates into the equation, and the natural result is high home prices. 

High demand and inflation have driven the average cost of an existing home in Trussville to $385,153 in 2023, up slightly from $380,909 in 2022 but up 40% from $255,708 in 2018, MLS statistics show. A new home is even more expensive, averaging $554,840, up from $477,605 in 2022. 

In 2023, there were 131 new home sales, accounting for 24 percent of total sales in Trussville and 46 fewer than in 2022, MLS stats show. There were 182 new homes sold in Trussville in 2020, 183 in 2021 and 177 in 2022.

The majority of new homes were located in the Stockton Crest community (76), followed by Longmeadow (23) and Winslow Park (17).

Inflation has dramatically impacted new home construction as costs for materials, particularly lumber rose sharply in 2023. Over the four years from 2020 through 2023, the cost of a new home in Trussville rose from $372,640 to $554,840 — an increase of 49%. 

Another reality is the lack of available land for new construction to accommodate the demand for housing in Trussville. According to Smith, Stockton is built out, and the anticipated Glendale Farms project prioritizes public amenities — including a proposed new elementary school, athletic fields and a town-center-style commercial district — over the construction of new homes. 

With the decreasing amount of land available for home construction, Smith said the new trend she is seeing is smaller, older homes being razed and new houses being built in their place, especially within the Cahaba Project. Smith said the need to accommodate the current homebuyer should be balanced with efforts to preserve the area’s character and historic charm.

“There’s just not really a whole lot of land left in Trussville for building, which is unfortunate because they start tearing down, which is what’s happening in the historical district,” Smith said.

“I understand both sides of it. Some of these houses just can’t be fixed,” Smith said. “But the flip side of it is, the thing that makes the historical project so desirable is the area’s aesthetics.”

Looking ahead

Despite the recent challenges in the local housing market, Smith said she is optimistic that 2024 will be a strong year for home sales. With interest rates for 30-year mortgages dipping to 6.77 percent as of mid-February, there is reason to believe Trussville’s residential real estate market could rebound in 2024, Smith said.

Each year, usually in the spring, there’s a particular day when she fields multiple phone calls and emails from prospective buyers and homeowners interested in selling. She refers to this pattern as “the day,” the moment when the spring real estate season begins in earnest. 

Typically, she said, “the day” occurs as early as March and as late as May. However, Smith said “the day” may have started early this year. By mid-January, Smith said she had offers on three of her listed lots and a possible offer on a house she hadn’t yet listed, and she booked five home inspections within an hour on Jan. 17.

“I have worked in the real estate industry for 25 years, and this is the earliest I have seen the spring selling season start,” Smith said. 

“I feel like many people spent the last year sitting on the fence waiting to see what the housing market would do,” Smith added. “People are tired of waiting, and with interest rates rumored to go down, they are trying to get a jump on the market.”

While mortgage interest rates are trending down at the time of this writing, they are still nowhere near the 3% and 4% rates that many homebuyers enjoyed for several years. However, there are options for homebuyers in the current housing market. 

Tonya Golden, a loan consultant with Loan Depot and a longtime Trussville resident, said she believes interest rates will continue to fall throughout 2024 and settle between 5% and 6% by the end of the year. Additionally, Golden said the recent dip in rates has sparked interest among potential homebuyers, and, like Smith, she is optimistic that 2024 could be a good year. 

“I’ll be honest, when January hit, I was so excited because it’s like maybe people are just tired of sitting on the fence and they’re just ready to sell their homes,” Golden said. “I’ve had so many more people contact me for pre-approval, shopping for homes now, and it’s just very encouraging.”

However, she cautions homebuyers not to wait too long to purchase a house in Trussville, especially if they find the perfect home that meets their needs. 

“That’s one of the things that I talk to my buyers about, asking them if they remember how things were so competitive when the rates were lower. You might have five people make an offer on one home. It was very competitive,” Golden said.

“This is a great time to purchase because I feel like there is not as much competition out there,’ Golden said. “I just tell people to marry the house and date the rate because you can always change that interest rate, but at least you’re getting the home you want. You’re really investing in the home more than the interest rate.”

For those homebuyers for whom the interest rate is an issue, Golden said there are several programs of which they can take advantage to keep their monthly payments manageable. For instance, she said a 3-2-1 buydown — a loan in which the interest rate is reduced for the first three years of the term with the original rate applied for the life of the mortgage at the beginning of the fourth year — is an option to help home buyers during periods of high interest rates.

However, she advises homebuyers interested in buying into the Trussville market to consider the long-term value of the house even if the interest rate and monthly payment are high in the short term. 

“Even if your payment is higher today than you would like for it to be, at least you’re gaining equity in a home,” Golden said. “We’ve seen appreciation in great numbers for years now, and I just feel like you’re just making an investment in a home that you’ll normally never regret.

“You just don’t see people losing money on a home these days,” Golden added. “They buy a home, and a year or two later they can easily make 50 grand, and that’s a lot of money to go towards another home.”