Since the beginning of 2020, the national real estate market has seen property values climb, and this trend has trickled down to Alabama's four main cities, Huntsville, Montgomery, Birmingham, and Mobile. But there's one metropolis that really jumps out.
Many people are hesitant to make what could be the biggest purchase of their life because of rising housing prices that set new records every month and persistent (though unfounded) worries of a bubble.
Huntsville's home prices were already considerably higher than those in any of Alabama's other major cities. According to Zillow, the typical home in Huntsville was valued at approximately $187,000 in January 2020, while the next highest value city, Mobile, had an average home price of only $116,000.
The chasm between them has widened. Something new happened in Alabama's big real estate markets this past February. Home prices fell between February and June in all three of these cities, with Birmingham witnessing the largest decline. Property prices in the Magic City dropped from roughly $145,000 in February to barely $125,000 in June, a drop of 14% during that time period.
However, home prices in Huntsville increased at an even quicker clip during this time period, surpassing $300,000 for the first time in June.
It is expected that this year, Huntsville will surpass Birmingham as the most populated city in Alabama. The typical sale price of a property in Huntsville and the rapidly expanding town of Madison, both of which are located close by, has increased by $100,000 since January 2018. The typical property price in Huntsville is currently $267,000, whereas, in neighboring Madison, it's $280,000.
Huntsville AL Housing Market Report
Home sales 2016-2020
Keep reading if you're interested in the real estate market in Huntsville, AL, with the purpose of making a financial investment. Huntsville, Alabama, is the state capital and the biggest city. It serves as the county seat for Madison County.
Compared to the 2010 census, the anticipated population of Huntsville in 2020 was 215,070, an increase of 20%. The Huntsville metropolitan region is home to almost 1,250,000 people.
The Huntsville MSA is a major urban center located on Alabama's northern border. Huntsville is the major city in this metropolitan region, which also includes Limestone and Madison counties and is centered on the latter.
Rocket City is a moniker given to Huntsville because of the city's significant relationship with NASA. The city of Huntsville, AL, sometimes known as "The Rocket City," has developed rapidly in recent years. So that you may always be aware of the most recent developments in the Huntsville, AL, real estate market, let's examine data from a number of different sources.
According to ACRE's Huntsville Residential 1st Quarter Report 2022, the number of homes sold in the first three months of 2022 was 1,883, down from 1,970 in the same period the year before. Huntsville's first-quarter median sales price of $322,314 was up 21.8% year-over-year. This is in contrast to 2020 and the years before.
The number of Huntsville apartments and condos for sale dropped by 4.6% from the first quarter of 2021 to the first quarter of 2022. The number of months of supply, calculated by dividing the rolling average of inventory by the rolling average of sales, was 0.9 months, down 23.8% year over year.
What’s Huntsville popular for?
Each year, more and more high-paying, cutting-edge positions in the aerospace and technology industries open up in Huntsville. The city's entertainment options have greatly increased with the addition of Top Golf and the minor league baseball team Trash Pandas and their brand new home at Toyota Field.
The city of Huntsville is a great location for both living and working. Social service providers report that the COVID-19 epidemic has contributed to an already pressing need for inexpensive housing in the city and a plethora of other community services, including rental help and mental health requirements.
The average price of a property in the Huntsville region has been rising since 2015, with a more rapid increase beginning in the first few months of 2021. During the pandemic, there was a precipitous drop in the number of homes available for sale or rent.
Buying a home in Huntsville is more difficult than ever due to the city's red-hot real estate market, an influx of new residents, and record-low mortgage rates. Local and real estate professionals have reported bidding wars, which may drive the price of property up by more than $30,000 compared to the asking price.
Particularly scarce are properties priced at less than $200,000. According to Wilkins, this price bracket is where the majority of first-time homebuyers are shopping, making it that much more challenging for those with lower incomes and less experience to locate an affordable house.
The availability of low-cost rental property is bleak, and that's true even for those who aren't actively house hunting. Because of the fear that COVID-19 would disrupt supplies of building materials, which would, in turn, drive up prices for both rent and new construction, this issue has been a source of community worry for some time.
What I Need to know about Huntsville
In and of itself, it is a mystery. Marshall Space Flight Center, Redstone Arena, and a number of research parks may all be found in that area. Participants include some of the world's most brilliant engineers from a wide range of fields.
As a result, the city is home to people from all walks of life and has a prosperous economy as a result. Everywhere you go, from Baptist churches in Korea to Vietnamese food to Bollywood films in the theaters.
Huntsville is ahead of the curve when it comes to technology, and the arrival of Google Fiber has made it one of the few places in which Google is actively growing in this market at the present time. Rates are a little wrong because there is only one utility provider, but the grid itself is reliable. Seeing how Comcast provides cable service, you might initially check Google, although both Dish and DirectTV are available in the region.
The area's healthcare infrastructure is second to none with two state-of-the-art hospitals and some of the best doctors in their respective specialties. As a patient, it's fantastic; as a worker at the larger hospital, it's awful; but such is life.
As a result of its location in the Tennessee Valley, the area is second only to the Midwest in terms of the frequency with which it experiences tornadoes. Winters are moderate, with hardly little snow. However, ice storms are somewhat regular. The air is humid and clammy during the summer months, much like stepping into a damp towel.
The quality of education offered by the public school system can vary widely. It is home to both Calhoun Community College and the University of Alabama in Huntsville.
If you limit your search to locations within a one-hour drive of the city, the options for fun are practically limitless. Many outdoor activities are available in the area, such as canoeing and kayaking on the Tennessee River, caving, skydiving, hiking in a handful of State Parks, a Greenway, and bicycle groups.
Outside-the-box options include the Space and Rocket Center's domed IMAX cinema, food truck evenings, and park concerts, but remember that many of these events only run at specific times of the year.
It's not exactly a hotbed of nightlife, but if you're willing to go in the legwork, you can find everything from "Hipster snowflakes" to "back-hole brawler bars" if you so choose. Also available for entertainment are a symphony orchestra, a theater, a museum, and a music hall.
Huntsville is conveniently situated between the major musical hubs of Nashville, Birmingham, and Atlanta; furthermore, the Von Braun Center often hosts top-notch performances.
Why is real estate so cheap in Huntsville, Alabama?
Living costs in Huntsville and Madison County are often higher than in other parts of Alabama. Those surprised by the low price have likely never lived anywhere else (most areas outside the southeast). Incredibly high real estate costs in California, the northeast, Colorado, the northwest, and most major regions shock Alabama transplants.
Simply said, economics is the driving force behind it, as it involves most things involving cash. There isn't a huge need for new homes in the state, and there isn't a lot of regulation, so the market determines the price.
Because of the large number of well-paying employments being brought to the area by the Toyota/Mazda factory, the FBI, Blue Origin, Aerojet, etc., real estate values in Huntsville are expected to climb at a faster rate than the average for the region. As a result of its prominence in the IT industry, many businesses are relocating to this area.
What is Huntsville, Alabama, like?
It's fair to say that Huntsville is an unusual metropolis. The population boom of the 1950s and 1960s gave the city a chance to mature, and mature planning has led to a well-designed and laid-out urban environment. Also, there aren't a lot of people born there; most residents are either immigrants themselves or the children of immigrants.
As a result of its low cost of living and relatively well-educated and well-paid populace, it ranks well among developed nations. Because the federal government established a site there during WWII to produce chemical weapons and then expanded Redstone Arsenal to focus on rocket and missile development, the area has been dominated by the arms industry ever since.
Because of this, I have never before encountered such a high concentration of engineers and other technical professionals in one place. This has spread to other South, West, and Northeast parts. In many ways, Huntsville is a microcosm of the United States.
To that end, it's a rather varied place to call home. The standard of living is really high. There are some disadvantaged neighborhoods in Huntsville, but residents seem to be doing rather well on average.
The city's infrastructure is cutting edge and reflects the city's forward-thinking attitude. Huntsville has done an outstanding job in the last decade of diversifying its economy away from reliance on federal subsidies (primarily defense). As a result, it's a wonderful location to call home, full of promising prospects and exciting possibilities.
What Makes Huntsville unique?
1. Growth in the Population
According to Real-Time News, Huntsville is the unstoppable metropolis of Alabama. However, there is more to the story than a simple increase in population during the past decade.
The first residential neighborhood in the city to have average house sales of $1 million or more has been established. Meanwhile, commercial development projects like the Facebook data center and the $1.6 billion Mazda Toyota USA Manufacturing complex bring in additional individuals seeking work.
Huntsville's population has increased by 1.2% in the past year and by around 19% since 2010. Huntsville, which was predicted to overtake Birmingham as Alabama's largest city in 5 years, did so in only two years. By 2030, the Huntsville metro area's estimated population is expected to grow to about 530,000.
The housing market is considered stable when the population size and disposable income remain constant. Birth, mortality, and migration rates all have a role in determining its long-term viability. The home market will begin to shrink in a few years if young people leave for jobs.
Stronger expansion in the housing market is likely if people are relocating there for the job unless the supply of homes is increasing at the same rate.
A large percentage of families in Huntsville consist of children, and the population's median age is lower than the national average. People are moving there for jobs, and many of them are keeping their families there because of the thriving economy. Just that fact alone helps the real estate market in Huntsville, AL.
2. Good Economic Conditions
For the same reason that the city's economy has been booming, the population of Huntsville expanded by nearly 5% between 2010 and 2015, whereas the national average was just 3.2%. The unemployment rate in Huntsville is under 4%, which is more than a quarter of a percentage point lower than the rate in Birmingham.
Huntsville improved even further during the Great Recession, which didn't stop until sometime in 2016. Birmingham had 14% unemployment during the height of the Obama Recession, while Huntsville's rate was 9%.
The Huntsville metro region had the fastest rate of economic recovery in 2021, according to a report by Stessa, a top provider of real estate technology services. Huntsville ranked first because of its low unemployment rate (2.2%), rapid increase in available jobs, and consistent demand for new dwellings (as measured by sales and permits). According to the data, the economic recovery is being led by areas with high rates of job creation and housing sales.
Even while the United States as a whole has yet to catch up to its pre-Covid employment levels, Huntsville has. Huntsville's population rose by more than 2 percent between 2019 and 2020, one of the country's greatest growth rates, both due to the city's thriving economy and the influx of new residents seeking out the many possibilities it presents.
3. Incredibly Low Prices
The relatively high cost of housing in Huntsville, AL, can discourage potential investors. If plenty of people can afford to purchase, there's no point in investing. Truth be told, around 20% of Huntsville, AL residents are now renting. Various people call this area home, including service members, students, and the financially disadvantaged.
The median price of a property in the Huntsville Metro area is $295,000. With the average home costing roughly $150 per square foot, a smaller, beginning home might be had for far less. For the price of a typical home in a city on the West Coast, a smart investor may purchase several low-cost dwellings to rent out.
Since its inception, "Rocket City" has been home to a sizable number of people working in the technological industries. A result of this is a rise in the price of ultra-luxury housing. The most expensive area in all of Alabama is not even a ritzy part of Birmingham. In contrast, Mountain Brook (zip code 35213) is the correct answer. Nearly half a million dollars is the median value of a property in this area.
That's comparable to the cost of a studio apartment in New York or a three-bedroom house in California, but in a region where the median household income is below $50,000, it's still astronomical. This paves the way for "cheap" luxury real estate investments like purchasing and flipping properties or renting to young executives on short-term contracts.
4. Tolerant Environment for Property Owners
Huntsville, AL's landlord-friendly real estate market is a major draw for investors. If renters in Huntsville, Alabama, don't pay rent for several months and you have to fight to remove them, your investment's return will suffer.
Although the standard one month's rent is the maximum allowed for a security deposit, there is no cap on the additional amount required to cover pet damage. There are no legal caps on late fees, yet an exorbitant one will likely result in a court ruling against you.
You'll most likely need to give 30 days' notice to end your lease. The tenant must go if the landlord does not offer to extend the lease. You can be evicted, but it will take at least 17 days and probably more to complete the procedure. In the event of a lease violation, the tenant has just four "corrections" before being subject to eviction.
5. Strong Rental Industry in Huntsville
Since most service members don't want the hassle of being landlords, the rental market in areas with a high concentration of enlisted soldiers tends to be very competitive. The Marshall Flight Center, the Missile Defense Agency, the Army's Missile Command, and a logistics wing have all called Redstone Arsenal in Huntsville home at various times.
That equated to about 2,000 full-time employees, plus another 10,000 contract workers, at the facility. Because of the Defense Base Realignment and Closure Commission's efforts to consolidate military installations, some of these duties have been relocated. For example, the ordnance school that had been located here for a century has been moved to Fort Lee in Virginia.
Space Flight and the Missile Defense Agency are two of NASA's remaining operations. As a result, the military and the businesses that provide it have lost personnel, but they have not disappeared. Real estate investors in Huntsville, Alabama, may benefit greatly from this trend since it generates a high-quality, long-term tenant pool.
Real estate investors may strike gold near a university, as students almost always need somewhere to live. Within a radius of just 50 miles from Huntsville, Alabama, you may find no less than 12 different institutions. Huntsville is home to three prestigious educational institutions: Alabama A&M University, J F Drake State Technical College, and the University of Alabama in Huntsville. A large portion of Huntsville, Alabama's rental market may be attributed to the University of Alabama in Huntsville.
In 2022, apartment rents in Huntsville, Alabama, will typically range from $609 to $1,079. The typical monthly cost of a studio apartment in Huntsville, AL, is $609. The median cost of a one-bedroom apartment in Huntsville is $887 per month. The typical monthly rent for a two-bedroom apartment is $1,065. In Huntsville, AL, a three-bedroom apartment will set you back an average of $1,079.
A detached single-family home's monthly rent will be significantly more than an attached apartment's because landlords must account for the added value of its occupants' increased level of privacy and space. If you don't pay too much to start, this, plus the low starting price, adds up to a respectable return on investment.
6. Developing Fields in Technology Sector
Because of Huntsville's early commitment to the space program, this location is now home to a technology and research park. There is currently the largest tech and research park in the South in Huntsville.
The high salaries provide an incentive for the best and brightest to relocate from all over the world to work with you. Those moving here for a job are more likely to rent than purchase since they may need to relocate again in a few years.
While others prefer to rent until they can save enough for a down payment on a house they can call their own. In addition to keeping property prices high, these well-paying employment in Huntsville, AL, also attract and retain a large number of residents.
Huntsville has developed a biotech sector by capitalizing on its strong technological foundation. In Cummings Research Park, which spans over 4,000 acres, the Hudson Alpha Institute for Biotechnology is only one of several biotech research facilities.
Competing with North Carolina's Research Triangle Park, this location is a major center for scientific study. Because of places like that R&D facility, Huntsville is home to a highly educated and financially secure populace.
Since many scientists must frequently relocate in order to accept new grants or advance in their jobs, many of them choose to rent rather than own. These well-paid biotech employees drive up housing demand and prices and rents in the Huntsville, Alabama, real estate market.
Is the Housing Market Slowing Down in Huntsville, Alabama?
The number of apartments and houses listed for sale in Huntsville dropped by 4.6% from the first quarter of 2021 to the first quarter of 2022. The number of months' supply was 0.9, down 23.8%, calculated by dividing the most recent quarter's inventory average by the most recent quarter's sales average.
Trends in housing costs through the years and current availability
Finding locations with high demand from renters and stable, predictable house price increases is a major problem for real estate investors.
With the hope of assisting prospective homebuyers and investors in gauging the likelihood of future rises in house prices, Freddie Mac releases a report every month detailing national house price trends. The most current data from Freddie Mac's House Price Index (FMHPI) for the Huntsville MSA reveals:
Huntsville's house prices have risen by 88.5% during the last five years (seasonally adjusted). There has been a 29.7% price rise during the past year. Huntsville’s house prices have been up 4.6% in the past month.
The Housing Affordability Index (HAI) is a metric that might assist investors in foreseeing how much interest there will be in renting in the near future. As housing prices rise, the demand for rental properties rises to meet the increasing shortage.
The demand for rental property is affected not just by price but also by demographics, lifestyle choices, and supply. This helps to explain why, even in areas like Huntsville, where housing is relatively reasonable, there is still a substantial number of homes that renters occupy.
The Alabama Center for Real Estate utilizes a base affordability index of 100 for its Alabama Housing Affordability Index (AHAI). Assuming constant income and expenses, a market is more affordable the higher its HAI score is above 100.
According to the most up-to-date data from the AHAI, the Huntsville MSA had an HAI of 180 in Q1 of 2021. This means these households have slightly less than twice the median income required to buy a median-priced resale single-family home in the Huntsville metro region.
Total units listed according to the University of Alabama (ACRE)
Units listed 2016-2020
A change in housing demand and consequent cooling of some markets may result from more people returning to the workplace. Longer commutes might discourage people from relocating to more remote areas. They may also have less need for space now that students are returning to traditional classrooms and gyms.
With the Great Unfreezing, consumers now have a lot more options for things to do than shop. Competition for their disposable income comes from a wide variety of sources, including concerts, sports events, vacations, restaurants, and more. It's possible that buyers won't want to spend all of their money on a home if they have other options.
Many purchasers are discouraged by the limited selection of available properties and by the fact that they simply cannot afford the double-digit price rises that have been the norm in the previous year. To put it bluntly, they're fed up. They are waiting for the market to stabilize before making a move.
In April, her company polled builders and found that 20% of purchasers were hesitant to commit due to price increases. It was closer to 40% in May when it came to buyer hesitation.
The housing crash, which many believe triggered the Great Depression, is still fresh in the minds of many. In their eyes, the current market is very similar to the real estate boom of the mid-2000s, when speculators and purchasers rushed the market, driving prices through the roof. They are afraid of buying at the market's peak just to see their investment plummet.
There are fewer houses on the market and more buyers than previously, making a real bubble improbable.
Furthermore, mortgage lending criteria have been tightened to reduce the number of borrowers who are given loans they cannot afford to repay. Mortgage defaults caused the collapse of the economy. Lenders Hale emphasizes that he "doesn't want to lose money." They are concerned that the current price increase will follow the same path as the last one.
The reasons why a temporary decrease in demand might spark a property market recovery
While a cooling real estate market may seem like a good time to buy, it's important to remember that things may change rapidly in the market. Many would-be buyers who temporarily stepped away from the open houses and bidding battles may decide to rejoin the action now that the market is beginning to cool.
The experts agree that only a dramatic increase in mortgage rates will cause the market to cool down. 30-year fixed mortgage rates are now about 3%. In spite of having dropped to around 2% over the course of the past year, mortgage interest rates remain historically low and are therefore more affordable than they have ever been. A shift in the equation will occur if they suddenly rise.
Opinions on the Housing Market
We compiled professional insights into the housing market of the United States as a whole. By looking at the whole picture, we can have a good picture of what is happening in the Hunstville market.
Is the Housing Market Slowing Down in Huntsville Alabama?
Is the housing market slowing down in the United States? What sign have you noticed?
Here is what 7 thought leaders had to say:
Fewer Houses Placed on the Market
House Listings Unsold for Weeks
Strict Lending Requirements Imposed on Borrowers
High Mortgage Interest Rates
Market Attempting to Correct Itself
Attempts in Place to Curb Inflation
Buyers Waiting and a Lack of Inventory
Fewer Houses Placed on the Market
The housing market seems to be slowing down in the United States. I have noticed that there are fewer houses being put on the market, and the ones that are available are not selling as quickly as they used to.
This could be due to a variety of reasons, such as the current economic conditions or the fact that many people are still recovering from the housing market crash of a few years ago.
The housing market is definitely slowing down. For the past few years, houses would be on the market for a week or less before being snatched up, often for much higher prices than the listing price.
These days, I’m seeing houses listed for sale for weeks and weeks without being purchased. Mind you, this does not mean the market is especially slow; it’s only slow compared to how it was. In reality, what we’re seeing is a market returning closer to normal.
One of the most obvious signs that the housing market is slowing down is the strict lending requirements that banks are now imposing on borrowers.
In the past, it was relatively easy to qualify for a loan, even if you didn't have perfect credit. However, today's lenders are much more risk-averse, and they are often unwilling to lend money to anyone who doesn't have a perfect credit score. As a result, many potential homebuyers are being shut out of the market.
In addition, home prices have been rising steadily for the past few years, making it harder for buyers to afford a home. For these reasons, it's likely that the housing market will continue to slow down in the coming months.
The demand for homes is still high, but mortgage rates have risen. Those who are in a rush to buy might have to wait longer than desired. The good news is that we can expect interest rates to eventually come down, offering buyers lower rates.
The inventory is also high, so as early as January we should see a small drop in those interest rates and more buyers shopping.
The market changed very quickly when interest rates skyrocketed, so many sellers will need to moderate expectations—except perhaps for those dealing with a cash buyer, who are in a great position right now because of the rising cost of borrowing money.
But sellers should realize they may still get more for their home than they would have a few years back in many competitive markets.
Buyers need to consider what they can actually afford right now rather than what they thought they could afford a few months ago because it might be a markedly different price point. Overall, this is a correction, not a crash, and demand for homes is still high.
The housing market is certainly slowing down in the US. While some places are slowing down more than others, it doesn't mean it's still not a hot market.
Inventory is still low, however, I have seen properties take a little while longer to sell than before. This is because of higher interest rates that have been implemented in order to slow down inflation. It helps with one thing, but not so much with the other.
Prices of homes seem to be slightly lower than before since fewer people can afford to buy at this time, so purchases have slowed down.
The trick is to let the market tell you what a good price for your home is. Lots of showings mean you're getting close. Lots of offers mean you are right on the spot for pricing.
There are many explanations for why the housing market could slow down. One factor is the lack of inventory. More homes are being constructed than ever, but they need more to sell. In addition, studies point to buyers waiting until summer to buy a home. Lastly, the higher interest rates make buying more expensive and cause difficulty in securing a loan.Benjamin Earley, CEO, HOLT
Smart real estate investment in Huntsville might be the key to your financial stability. When considering an investment, most people first consider purchasing a home. To get the highest returns on your real estate investments, you should search in areas that are seeing rapid population and job expansion. The result of both is a soaring need for more dwellings.
Future security may be within your reach if you invest properly in Huntsville property. Most financiers prefer to put their money into homes first. Markets experiencing rapid population and job growth are ideal places to put your money in the form of real estate. The result of both is a soaring need for more dwellings.
If the number of homes built is equal to the number of people who need them, then real estate investors shouldn't pass up the chance to profit while home prices are still low. In terms of long-term growth, any investor would do well to consider the Huntsville, AL, real estate market.
Do you want to sell your house in Huntsville, Alabama? If so, please get in touch with us here at Veritas Buyers.
Frequently Asked Questions
How is the housing market in Huntsville?
The market for homes in Huntsville is competitive but not too intense. On average, there are four offers placed on Huntsville, Alabama, real estate. Last month, the median house price in Huntsville was $337,000, an increase of 14.2 percent annually. There was a 16.1% increase in the average price per square foot of a home in Huntsville, which now stands at $159.
Is Huntsville, Alabama, A good place to invest in real estate?
Huntsville has been a great place for short-term real estate investors during the past year. Recent quarterly appreciation rates in Huntsville were 8.63 percent, which works out to a whopping 39.26 percent annually.
Is there a housing shortage in Alabama?
There is a severe lack of rental housing in Alabama that is both inexpensive and available to families with earnings at or below the poverty line, which is set at 30% of the local median income. Spending more than half their housing salary is a major financial strain for many of these families.
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