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Top 10 Reasons To Invest In Birmingham AL Real Estate Market In 2018

Birmingham AL Real Estate

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 metro area is among the nation’s top 10 best real estate markets for home buyers. The Birmingham AL real estate market continues to take steps in the right direction in 2018. Single family rental homes are the single most common housing type in Birmingham AL real estate, accounting for about 60% of the city’s housing units. Property appreciation rates are so strong in Birmingham real estate market that despite a nationwide downturn in the housing market, Birmingham AL real estate has continued to appreciate in value much faster than most other top performing real estate markets in the US.

Birmingham AL Real Estate

Birmingham AL Real Estate Market Trends & Forecast 2018

Birmingham real estate market trends indicate an increase of $13,250 (7%) in median home sales over the past year. The average price per square foot for this same period fell to $115, down from $117. Trends in Birmingham real estate market show a 7% year-over-year rise in median sales price and a 1% rise in median rent per month. Home values in the Birmingham AL real estate market have experienced three consecutive years of positive growth.

According to Trulia.com:

  • The median sales price for homes in Birmingham for Mar 7 to Jun 6 was $213,500 based on 663 home sales.
  • Average price per square foot for Birmingham was $115, a decrease of -2% compared to the same period last year.
  • The median rent per month for apartments in Birmingham for May 6 to Jun 6 was $900.

According to Zillow.com, the median list price per square foot in Birmingham is $54, which is lower than the Birmingham Metro average of $110. The median price of homes currently listed in Birmingham is $69,900. The median rent price in Birmingham is $850, which is lower than the Birmingham Metro median of $1,025.

Foreclosures will be a factor impacting home values in the next several years. In Birmingham 4.8 homes are foreclosed (per 10,000). This is greater than the national value of 1.6

The percent of delinquent mortgages in Birmingham is 2.6%, which is higher than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Birmingham homeowners underwater on their mortgage is 20.7%.

Single family properties are the single most common housing type in Birmingham, accounting for 59.98% of the city’s housing units. Other types of housing that are prevalent in Birmingham include large apartment complexes or high rise apartments ( 30.56%), duplexes, homes converted to apartments or other small apartment buildings ( 6.99%), and a few row houses and other attached homes ( 1.65%).

According to stats from Movoto.com, the median list price in Birmingham is $70,000. The median list price in Birmingham was less than 1% change from May to June. Birmingham’s home resale inventories is 791, which decreased 2 percent since May 2018. The median list price per square foot in Birmingham is $1,567. May 2018 was $1,567. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in June 2018.

Birmingham AL Real Estate Market Trends 2018

Graph Courtesy – Movoto.com

Real estate appreciation rates in Birmingham’s have tracked to near the national average over the last then years, with the annual appreciation rate averaging 0.11% during the period. Despite a nationwide downturn in the housing market, Birmingham real estate has continued to appreciate in value faster than most communities. Looking at just the latest twelve months, Birmingham appreciation rates continue to be some of the highest in America, at 6.64%, which is higher than appreciation rates in 70.33% of the cities and towns in the nation. According to Neighborhoodscout.com, appreciation rates in the latest quarter were at 0.16%, which equates to an annual appreciation rate of 0.64%.

Here are Neighborhoodscout.com’s highest appreciating Birmingham neighborhoods since 2000:

  1. Birmingham, AL – City Center
  2. Birmingham, AL – Avondale
  3. Birmingham, AL – Five Points South / U of Alabama at Birmingham
  4. Birmingham, AL – 20th St S / Montgomery Hwy
  5. Birmingham, AL – Penthouse Dr / 11Th Pl S
  6. Birmingham, AL – English Village
  7. Birmingham, AL – Forest Park / Redmont Park
  8. Birmingham, AL – Woodlawn Heights
  9. Birmingham, AL – Altamont Park
  10. Birmingham, AL – Ensley

Top Reasons To Invest In Birmingham AL Real Estate Market In 2018

Here are top 10 reasons to invest in Birmingham AL real estate in 2018:

Real Estate Is Affordable

Birmingham AL real estate is affordable for investors. The average home in Alabama was worth $161,853 according to a 2017 USA Today report. CNBC reported in 2017 that housing in Alabama was a quarter less expensive than the national average. 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.

You Can Find Cheap Rental Properties In Birmingham AL

Birmingham AL real estate market remains among the most affordable markets in the nation, which bodes well for homeowners, investors and renters alike. The median home in Birmingham, Alabama is around $60,000. Compare this to a median home price in Dallas, Texas for around $150,000. This means real estate investors could by 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.

There Is Opportunity in the Suburbs, Too

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 median home value was $76,400. The median home value in Adamsville was just under $100,000 while Pleasant Grove homes cost around $150,000. 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 1.2 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 home owners to rent instead.

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.

It Is a Low Tax Haven – For Real Estate Investors

While federal tax rates may change under the Trump administration, the reality is that 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. Birmingham ranked #2 for lowest property taxes. Many people are wondering how the newly instituted tax reforms by the United States Congress is going to affect them. Click on the link to know about the newly introduced “The Tax Cuts and Jobs Act” and its impact on capital gains tax on real estate.

Long Term Growth Is Solid

Birmingham AL real estate values are going up. For example, there was a 2014 median price increase of 12.8%. The current 3-year appreciation forecast of 10.6%. Note that this is simply appreciation of the asset’s value, not return on the investment in the form of rent. Capitalization rates up to 15.0% are being seen. Median rent in the Birmingham metro area rose 3.5% between 2000 and 2015.

Birmingham Is Now on the Map for All the Right Reasons

Dark history aside, Birmingham is an up and coming real estate market, and it is becoming a name for itself for all the right reasons. For example, it was winner of the 2021 World Games. And Birmingham was voted the number one up and coming food city by Zagat voters in a national survey.

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 for years 5%. 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. This is one reason why Birmingham AL real estate is the 8th Hottest Housing Market for 2014 (CNN/Money).

The Birmingham AL Real Estate Market Is Stable

It is easy to get caught up in the excitement about a real estate market that is going up; that’s why California and Arizona had insane housing price increases before crashing in the 2007-2008 collapse. 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 make it a prominent place for new investors to get their feet wet and for anyone searching for a good investment that can create 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.

If you are a beginner in rental property investing, it very important to read good real estate books and learn from the savvy investors who have made fortunes by investing in some of the best real estate markets like Dallas real estate market. We recommend these 6 hottest real estate markets for investors looking to build their portfolio of single family rental homes. Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. Below are some of the best places to invest in real estate in 2018 especially for turnkey rentals.

 

REFERENCES:

Alabama property tax rate
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
Mercedes-Benz and Autocar jobs
http://www.madeinalabama.com/assets/2017/10/2018-Economic-Development-Guide.pdf
cheapest real estate / cost of living
https://www.cnbc.com/2017/05/17/states-with-cheapest-cost-of-living-in-america.html
Zagats
https://www.zagat.com/b/8-must-try-restaurants-in-birmingham-alabama
Median home cost – Birmingham Dallas comparison
https://www.bestplaces.net/cost-of-living/birmingham-al/dallas-tx/50000
cheap suburb housing
https://www.movoto.com/guide/birmingham-al/affordable-birmingham-suburbs/
Millennials buying homes
http://www.builderonline.com/money/top-10-markets-attracting-millennial-buyers_o
Median rent rose 3.5% between 2000 and 2015
https://www.al.com/news/birmingham/index.ssf/2017/01/more_than_half_of_birmingham_a.html                     Highest Appreciating Neigborhoods                                                         https://www.neighborhoodscout.com/al/birmingham/real-estate

*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.


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