Alabama has had a significant role in the shaping of our nation. At one time, it was at the epicenter of the slave trade in the pre-war south. Fast-forward a hundred years and it became the birthplace of the Civil Rights movement. Alabama has undergone all of these things and become a center for industry, high tech research, and education. Automobiles make up the majority of Alabama’s top export, and it is a 2 billion dollar industry in the state that employs nearly 50,000 employees. Thousands of Mercedes Benz, Hyundai, Honda, and Toyota roll off an Alabama assembly line each and every year. Along with the automobile industry, the state has a renowned reputation for the field of science and technology. NASA’s U.S. Space and Rocket Center is located in Huntsville, and the University of Alabama is home to one of the nation’s top-notch medical research programs. In fact, The University’s cell biology and surgery departments are ranked first and second nationally in terms of research grants handed out by the National Institutes of Health. Its treatment program for the AIDS virus was recognized as the fourth best globally by U.S. News and World Report’s annual survey. Couple all of this with Alabama’s gulf coast tourism industry and you get the idea that the Alabama real estate market must surely be thriving.
What do all of these things mean for the 2015 housing market in Alabama? It means that the jobs are there. And where there are jobs, there is a need for housing. The Alabama real estate market isn’t seeing the growth at the same rate that other regions in the nation have, but it is seeing growth nonetheless. According to the Alabama Center for Real Estate (ACRE), sales for newly constructed homes, existing homes, and condos have slowly increased since 2009 (along with the median sales prices). Alabama has a rich history and continues to see job growth. The outlook for the Alabama real estate market is altogether positive. You can compare this year’s market to the prior 2013 Alabama real estate market.
Influencing Factors for the 2015 Alabama Housing Market
Home appreciation rates for Alabama real estate have risen 3% in the past year.
- Zillow shows a home value index of $122,000 for the state of Alabama. Housing market predictions show a 3.6% increase for the upcoming year.
- Alabama has a median list price of $169,000, and a median sales price of $157,000. Alabama in large part is a buyers market. When sales prices are lower than the list price this usually reflects that the buyer has an advantage in negotiations.
- Homes spend an average of 101 days on the market, down from 142 days back in January of this year. The market might not be as strong as in other states but this does indicate that it is improving as homes sell.
- According to web sites like Zillow, Trulia, and Craigslist Alabama has a median rent price around $900. Rental units are in high demand in the downtown metro areas of Alabama’s larger cities. As new apartments and condos are constructed look for this number to increase.
- Alabama has a foreclosure rate of 5.8 homes per 1,000. This is higher than the national average of 3.8 per 1,000. Foreclosures hurt surrounding home property values if they remain vacant for an extended period of time.
Best Places to Live in Alabama
As recently as June, Birmingham AL real estate sales experienced a seasonal improvement of 6% over May’s dollar sales, and 7% over dollar sales in June 2014. This increase confirms not only a strong summer season, but also consistent growth overall throughout the year. The total unit sales in June of this year were 1,598 compared to 1,582 at the same time in 2014. What do these numbers mean? The larger increase in dollar sales over unit sales suggests improving prices. This also is an indicator that there is a lower level of inventory. In fact total inventory is 18% lower than a year ago. This is making Birmingham more of a seller’s market at this time and also means that it is a good market environment for builders.
Birmingham is the most populated city in the state. According to Trulia Birmingham AL has a median sales price of $179,700. So while the real estate is moving, at this time it is still relatively affordable.
Located on the Alabama River in the Gulf Coastal Plain, Montgomery is the second most populated city in the state. Montgomery has a diverse mix in its population demographics. The city has a strong military presence as it houses the Maxwell Air Force Base, and thousands of college students descend on the city each fall at the city’s several college campuses. Because of the amount of people that the city must accommodate Montgomery is a great place to live and work. USA Today voted Montgomery “Best Historic City,” and named “Top City For Job Growth” by ziprecruiter.com in 2014. The city takes pride in this recognition and as such Montgomery al real estate is continually improving its aesthetics with ongoing downtown revitalization and new urban projects. There is a large demand for downtown living space and there are currently over 500 apartments under construction. Montgomery’s east side is the fastest growing area of the city. This area contains the 250-acre Wynton M. Blount Cultural Park, and the Montgomery Museum of Fine Arts. According to Zillow Montgomery AL has a median home value of $81,300, and a median rent of $800, making the city an affordable place to live.
Mobile AL real estate is the largest community on the Gulf Coast between New Orleans, Louisiana and St. Petersburg, Florida. It is one of the Gulf Coast’s cultural hubs with several art museums, a symphony orchestra, and a professional opera and ballet company. It is also one of the most ethnically diverse cities in the country. The French, Spanish, Creole, and African-American inhabitants that call the city home influence Mobile’s culture. Because of its great location and the opportunities the city offers, Mobile real estate has become heavily sought after. Median home values have increased 2.4% in the past year and housing market predictions have this number increasing another 3% in the next year.
Stepping away from the Gulf Coast Huntsville AL real estate is a hot commodity located in the center of the northern region of the state. Huntsville may not be a city on the water but it has its own distinct character which is why it was named to the National Trust for Historic Preservation’s “America’s Dozen Distinctive Destinations for 2010” list. The city’s main economic contributions come from the aerospace and military technology sectors in the city. Huntsville is the center for rocket-propulsion research for the Army and NASA. This atmosphere leads to a higher educated demographic in the city, and a higher than average median income of $41,074. The last quarter actually saw median sales prices drop 4% while the list price actually rose 2%. At the same time homes are still selling at a good rate. Trulia shows that 437 homes were recently sold in the city. This number is down from last year when Huntsville saw an unusually high amount of sales. So those that were expecting to sell their home with the same ease as last year are finding that they have to sit on their real estate longer than they anticipated. This means that Huntsville real estate is a buyers market as sellers are forced to come down in price in order to close a sale.
To the southwest of Huntsville lies another of Alabama’s most sought after housing markets in the city of Tuscaloosa. So what makes Tuscaloosa AL real estate so attractive? The city has a strong economy with industry, commerce, healthcare, and education as dominant presences. And 25% of the labor force in the Tuscaloosa metro area is employed by some form of government agency. But more than any other industry it is the University of Alabama that is the dominant economic and cultural force in the city. Tuscaloosa is known for its collegiate athletics, in particular the Crimson Tide football team. The university pumps millions of dollars into the local economy through its sporting events.
Much like Huntsville, Tuscaloosa saw an unusually high volume of sales last year. While sales are down this year, the numbers are not concerning. Homes are selling, but last years pace could not sustain for too long. This means sellers are sitting on their homes and if they want to make a sale they must come down in price. This is great news for homebuyers.