How is The Housing Market in Birmingham Alabama?
Birmingham, Alabama has come a long way from its Southern roots, though it retains its historic charm. Birmingham recently earned the title of being the South’s “Comeback Town.” The Birmingham AL real estate market continues to take steps in the right direction in 2022. Due to low-interest rates, a lack of inventory, intense competition, and the fact that parents with children in virtual schools were eager for a change, last year was a strong year for sellers.
Price increases in the Birmingham housing market were largely driven by increased demand amid tight inventory. This shift has resulted in price growth in the Birmingham area approaching the state and national averages, at 13 to 14 percent from a year ago. In 2022, home price growth is expected to slow to 7 to 9 percent year on year, as rising mortgage rates and affordability concerns dampen consumer demand.
According to a report published by Alabama Center for Real Estate (ACRE), Birmingham residential sales for the first quarter of 2022 totaled 3827 units, representing a decrease of 298 transactions when compared to 4125 units that were sold in the first quarter of 2021. The median selling price in Birmingham for the first quarter of 2022 was $277,550, a 12.06% increase from the first quarter of 2021’s the median selling price of $247,683. The inventor was down in the last quarter. The residential units available for sale in the first quarter of 2022 decreased by 1535 units when compared to the same period last year.
Birmingham Metro Housing Market Trends & Forecast 2022
Data by Redfin shows that the Birmingham housing market is somewhat competitive. Homes in Birmingham receive 5 offers on average and sell in around 33 days. In March 2022, Birmingham home prices were up 10.5% compared to last year, selling for a median price of $248K. On average, homes in Birmingham sell after 33 days on the market compared to 40 days last year. There were 353 homes sold in March this year, down from 410 last year. 47.0% of homes were sold above the list price and 17.2% of homes were sold with price drops.
The typical home value in Birmingham is $103,431 (Zillow Home Value Index). This value is seasonally adjusted and only includes the middle price tier of homes. Birmingham home values have gone up 23.5% over the past year and 121% over the past decade. According to statistics from NeighborhoodScout, in the past year, Birmingham’s rate of appreciation has been 16.22 percent. The most recent quarter’s house appreciation rates in Birmingham were 6.07 percent, which amounts to an annual appreciation rate of 26.57 percent. It shows that the forecast is positive for this year as well.
Source: Zillow
Latest Birmingham Housing Market Statistics (Residential)
March’s monthly report published by ACRE Media shows that home sales in the Birmingham metropolitan area decreased by 4 percent YoY. According to the Greater Alabama MLS, home sales in the Birmingham area decreased from 1,684 to 1,619 closed transactions. Following seasonal trends, sales increased 42.4% from February. Sales are now down 7.2% year-to-date. Homes sold in March averaged 24 days on the market (DOM), 1 day faster than March 2021 or a 4.0% decrease from one year ago.
Birmingham Housing Inventory: March listings (1,882) increased 21.3% from February and declined 39.0% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.2 months, down from 1.4 months in February and down from 1.8 months in March 2021. The equilibrium point where buyers and sellers have roughly equal bargaining power is 6 months of supply.
Birmingham Home Prices: The median sales price in March was $291,000, an increase of 12.7% from one year ago and an increase of 4.4% from February. The average sales price in Birmingham during March was $333,046, a 10.3% increase from one year ago.
Forecast: March sales were 109 units, or 7.2%, above the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 1,510 sales for the month, while actual sales were 1,609 units. ACRE forecast a total of 3,843 sales year-to-date, while there were 3,827 actual sales through March, a difference of 0.4%.
New Construction: The 211 new homes sold represented 13.0% of all residential sales in the Birmingham area in March. Total sales decreased 11.3% year-over-year. The median sales price in March was $333,335, a decrease of 0.4% from February and an increase of 6.9% from one year ago.
Birmingham Real Estate Investment Overview 2022
Investing in real estate is touted as a great way to become wealthy. Is Birmingham rental property good for investment? Planning to invest in the Birmingham, AL real estate market? Many real estate investors have asked themselves if buying a property in Birmingham is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Birmingham housing market forecast for answers on why to put resources into this sizzling market.
Home prices in Birmingham have been trending up year over year. One of the benefits of the Birmingham AL real estate market is that it is incredibly stable and steady, and investors can purchase Birmingham investment properties for $80,000 to $100,000. This makes it a prominent place for new investors to get their feet wet and for anyone searching for a good investment that can create a stable monthly rental income. It is seeing faster than average appreciation, but it has never been subject to the wild swings that have hit the coasts or other “hot” markets.
For example, a quarter of its population is made up of Millennials, and they’re buying an increasing number of homes. They bought almost a quarter of all homes in the area in 2013, and that ratio is only going to rise. Conversely, this means that you know there are buyers for homes when sold by downsizing Baby Boomers. If you buy Birmingham AL real estate, you know you’ll be able to sell it for what you paid for it if not get a little bit more. Here are the top 10 reasons to invest in Birmingham real estate.
Birmingham Real Estate Is Affordable
Birmingham AL real estate is affordable for investors. The typical home in Alabama is worth $197,667 according to Zillow. The typical value of homes in Birmingham is $103,431 as of March 2022, up 23.5% over the past year. For many considering relocating in search of work, Alabama’s very low cost of living – including housing – is reason enough to move there instead of Texas or Florida. Birmingham AL’s real estate market remains among the most affordable markets in the nation, which bodes well for homeowners, investors, and renters alike.
The median home price in Birmingham is less than $100,000. Compare this to a median home price in Dallas, Texas for around $310,000. This means real estate investors could buy two to three properties in Birmingham for the price of a home in Dallas, sometimes considered one of the hottest real estate markets in the country. You could buy several rental homes in Birmingham for the price of a single property in an expensive market in California.
Suppose you don’t want to buy rental real estate in Birmingham. It is a million person plus metro area, so there are opportunities to invest in the suburbs, as well. Graysville is one such suburb, and its typical home value is $111,803 (ZHVI). The typical home value in Adamsville is $140,069 while a typical Pleasant Grove home costs around $221K. This makes Birmingham AL real estate an excellent opportunity since you can buy upscale suburban homes for less than a fixer-upper in the inner ring suburbs of many other cities.
The Area Is Growing, Both in Population and Rental Demand
There has been a distinct trend of people moving to the largest metropolitan area in the region in order to find the greatest opportunities. The Birmingham area is home to more than 1.1 million people. LendingTree ranked the Birmingham area as one of the least competitive real estate markets in the country. There were more potential buyers than sellers, forcing many would-be homeowners to rent instead.
The U.S. Census Bureau released data last year that showed major growth in several Birmingham metro counties from 2010 to 2020. According to the data, Huntsville is now the largest city, with Birmingham the second largest. But the Birmingham Area Metro is twice the size of the Huntsville Metro. Birmingham’s population is 200,733, that’s down 1.5 percent since 2010. Huntsville has 215,006 people, that’s up 11.2 percent since 2010. The Birmingham Metro population is 1.1 million people and the Huntsville Metro has 491,000.
It Is Landlord Friendly
No one wants to buy rental real estate in a market where it is almost impossible to evict a tenant for nonpayment. Birmingham AL real estate is attractive in part because of how landlord-friendly the area is. Alabama passed laws in 2014 that made things more favorable to landlords. Proposed 2018 legislation would make it easier for landlords to make tenants have to leave if they breached their lease contract.
6. Birmingham Is a Low Tax Haven For Real Estate Investors
The state and local taxes are one of the biggest deciding factors real estate investors need to consider. Alabama has some of the lowest property tax rates in the nation. In 2017, Alabama’s effective tax rate was 0.48% and the average property tax bill was only $776 it ranked #2 for the lowest property taxes. According to LendingTree, the annual median property taxes in Birmingham, Ala. — where homeowners pay the least in real estate taxes — are about $7,700 cheaper than in the New York metro area, where they’re the highest.
Birmingham, Ala., is the only metro where median property taxes are less than $1,000 a year. The median amount of property taxes paid by homeowners in Birmingham is only $909. For comparison, residents in the next two metros with the lowest median real estate taxes — New Orleans and Louisville, Ky. — owe $1,345 and $1,563 a year, respectively.
The Rental Pool’s Incomes Are Rising
Alabama is seeing an increase in incomes and the skills of its privately employed sector. Birmingham is attracting jobs in law, medicine, nursing & engineering. For example, Autocar and Mercedes Benz are investing more than a billion dollars in Birmingham, bringing high-paying jobs to the area. Unemployment has been below 5% for years. As people move to the area in search of work, they often find themselves renting because of how hard it is to find a home.
The latest data shows that Alabama’s preliminary, seasonally adjusted March unemployment rate is 2.9%, down from February’s rate of 3.0%, and below March 2021’s rate of 3.7%. March’s rate represents 65,485 unemployed persons, the lowest ever on record, compared to 68,663 in February and 82,443 in March 2021.
Counties with the lowest unemployment rates are Shelby County at 1.7%, Cullman County at 1.8%, and Morgan, Marshall, and Limestone Counties at 1.9%. Counties with the highest unemployment rates are Wilcox County at 8.8%, Lowndes County at 6.5%, and Perry County at 6.3%.
Conclusion
If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate. Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
Buying an investment property is different from buying an owner-occupied home. Our Birmingham investment properties are designed to make money as rentals, which means you must look at it solely as an income-producing entity just like any other business. These are “Turnkey Cash Flow Investment Properties” located in some of the best neighborhoods of Birmingham.
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Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
REFERENCES
Market Data, Trends, and Statistics
https://www.greateralabamamls.com/
https://acre.culverhouse.ua.edu/research/residential-research/birmingham/
https://www.zillow.com/Birmingham-al/home-values
https://www.neighborhoodscout.com/al/birmingham/real-estate
https://www.redfin.com/city/1823/AL/Birmingham/housing-market
https://www.realtor.com/realestateandhomes-search/Birmingham_AL/overview
Population & Jobs
http://www2.labor.alabama.gov/
https://www.wbrc.com/2021/08/12/birmingham-metro-area-counties-grow-over-last-decade-birmingham-now-2nd-largest-city/
Alabama property tax rate
https://www.lendingtree.com/home/mortgage/real-estate-taxes-in-metropolitan-areas/
https://www.usatoday.com/story/money/personalfinance/2017/04/16/comparing-average-property-taxes-all-50-states-and-dc/100314754
Landlord friendly laws
https://www.al.com/news/mobile/index.ssf/2018/03/post_141.html?__vfz=rtw_top_pages%3D2480300011984
Lending Tree least competitive real estate market, lots of prime credit ubyers
https://patch.com/alabama/birmingham-al/birmingham-one-countys-least-competitive-housing-markets
Millennials buying homes
http://www.builderonline.com/money/top-10-markets-attracting-millennial-buyers_o
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