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10 Reasons To Invest In Montgomery Alabama Real Estate Market In 2018

Montgomery Alabama Real Estate

Montgomery Alabama Real Estate Market was ranked the #8 hottest housing market in the U.S. by CNN Money in 2014. The city has a low unemployment rate. It is a strong cash-flow market due to strong demand for rental housing. And this is not entirely due to the 8 colleges and universities in the city. The cost of living here is 5% lower the U.S. average while there are a number of good paying jobs in the area.

Montgomery Alabama Real Estate

Montgomery Alabama Real Estate – Market Trend And Forecast 2018

Montgomery Alabama real estate market trends show a 3% year-over-year rise in median sales price and a 3% rise in median rent per month. The median sales price for homes in Montgomery Alabama for Mar 7 to Jun 6 was $119,000 based on 373 home sales. As per data from Trulia.com, Montgomery Alabama real estate market trends indicate an increase of $3,600 (3%) in median home sales over the past year. The average price per square foot for this same period rose to $62, up from $62.

Montgomery Alabama Real Market Trends

Graph Courtesy – Trulia.com

Montgomery Alabama Median Price Trends

The median rent per month for apartments in Montgomery for May 12 to Jun 12 was $900.

 AL Real Estate Market Trends

Graph Courtesy – Trulia.com

Montgomery Alabama Real Estate Market Trend

According to Zillow.com, the median home value in Montgomery is $79,600. Montgomery home values have gone up 1.5% over the past year and Zillow predicts they will fall -5.8% within the next year. The median list price per square foot in Montgomery is $67, which is lower than the Montgomery Metro average of $86. The median price of homes currently listed in Montgomery is $121,700. The median rent price in Montgomery is $875, which is lower than the Montgomery Metro median of $925.

Foreclosures will be a factor impacting home values in the next several years. In Montgomery 2.0 homes are foreclosed (per 10,000). This is greater than the national value of 1.6 The percent of delinquent mortgages in Montgomery is 2.1%, 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 Montgomery homeowners underwater on their mortgage is 23.4%.

Zillow has 2358 homes for sale and 440 homes for rent in Montgomery AL. Trulia has 1,215 resale and new homes in Montgomery lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

According to NeighborhoodScout.com, single-family detached homes are the single most common housing type in Montgomery Alabama housing market, accounting for 69.62% of the city’s housing units. Other types of housing that are prevalent in Montgomery Alabama real estate market include large apartment complexes or high rise apartments (18.06%), duplexes, homes converted to apartments or other small apartment buildings (7.00%), and a few row houses and other attached homes (3.12%).

Montgomery Alabama real estate appreciation rate notably has been below the national average for the last ten years. The average annual home appreciation rate in Montgomery Alabama during the period has been just -1.41%, which is lower than 80% of US communities. Over the last year, Montgomery appreciation rates have trailed the rest of the nation. In the last twelve months, Montgomery’s appreciation rate has been 2.44%, which is lower than appreciation rates in most communities in America. In the latest quarter, NeighborhoodScout’s data show that house appreciation rates in Montgomery were at 2.44%, which equates to an annual appreciation rate of 10.12%. This makes Montgomery one of the highest appreciating communities in the nation for the latest quarter, and may signal the city’s near-future real estate investment strength.

10 Reasons To Invest In Montgomery Alabama Real Estate Market

It is a Massive Student Market

Student housing offers stable income and better than average returns. The cap rates on student housing properties sold in the last quarter of 2017 were around 6%.
Students care as much or more about safety, walking distance to school and amenities than they do price. This is why cap rates for properties within half a mile of campus are so low; they rarely come on the market, and when they do, there is a bidding war. Investment opportunities do exist in older student housing that can be renovated and now rented out at a premium.

You’ll see steady turnover as people graduate, replaced by incoming freshmen. These tenants will never buy a home until after graduation, and if they have trouble paying the rent, getting a roommate is an acceptable solution. This makes the Montgomery Alabama real estate market perfect for those who want to invest in student housing, since there are simply more universities in the area.

A Large Rental Market for Multi-Family Housing

While the cost of living and housing are both relatively low in Montgomery, many residents can’t earn enough to afford to buy a home. This created a relatively strong market for multi-family housing. In May 2018, the average apartment rented for $833. That was a nearly 2% increase over the prior year. This means that owners of apartment buildings see very good ROI, since property itself is cheap. One bedroom apartments rented for about $750 per month, a more than 6% increase year over year. Two bedroom apartments rented for about $820 per month.

A Strong Single Family Rental Home Market

Montgomery Alabama real estate is more than apartments for locals and students. The 2017 Realtors Confidence Index Report described the outlook for single family homes in Alabama as “very strong”. Buyer traffic for Alabama was seen as strong. For seller traffic, Alabama was rated in that report as having moderate seller conditions, but all of the surrounding states were projected to be “weak” in that category.

Affordable Access

Montgomery Alabama real estate is cheap. The average home price here is a little over $83,000. Compare this to the median sale price of homes across Alabama in the first quarter of 2018: that value was $156,000. This means you can buy two of the average homes in Montgomery for the price of a single rental elsewhere.
Home prices are flat right now, so you won’t see high appreciation, but you won’t have to worry about the price of your next acquisition being 10% higher, either. Montgomery Alabama real estate is a deal today, and property values are likely to remain stable.

Just like Montgomery Alabama, Tampa investment properties are also affordable with good annual appreciation potential.

Suburbs with Potential

Prattville is located near Montgomery, Alabama. Capitol Hill Golf Course is located here; that’s the site of the Nationwide Tour. The town’s population has grown by half in the past ten years. This is an excellent place to consider buying a rental home whether you’re catering to snowbirds or people relocating to the area before finding a permanent residence. The median home here is worth around $150,000, a deal compared to other up-and-coming golf communities.

Strong Cash-Flow

The median rent charged in Alabama is $1000 a month according to Zillow. If you put $13,000 down on the average home in the Montgomery real estate market and secure a $70,000 30-year mortgage at 5%, monthly payments will be $429. Add in lower property taxes, insurance and occasional repairs for expenses of $700 a month, and you’re still clearing $300 a month on a typical rented out single family home.

Opportunities for Deals Abound

Foreclosures are a ripe opportunity to find cheap homes, though they may require fixing up. The average foreclosure rate in the U.S. is 1.6 homes per 10,000. In Alabama, that rate is 2.3. This means you’ll find significantly more homes available as foreclosures in Montgomery. Nor will these opportunities go away, given that a sixth of homeowners are underwater on their mortgage.

There Is an Upscale Market

Suburbs around Montgomery offer safety, space and more modern amenities. Small towns around the city provide wide open spaces and privacy. That’s why homes in Wetumpka have a median price of around $160,000 while rent for apartments there as of mid-2018 were $1200 per month, 20% more than the state average. This is where you can find luxury homes and apartments to buy as investment properties while still paying a fraction of the cost of one in a bigger market.

Tax Friendly State

Alabama has incredibly low taxes. The state and local tax burden typically ranks among the top ten (best) in the U.S. It has a 5% state income tax, which is low, and a 6.5% maximum corporate income tax rate. The combination of state and local sales taxes is around 9%, but that generally doesn’t affect landlords. Do you know that capital gains tax on real estate is an important factor when it comes to calculating annual return on your investment property?

Not to mention there are some tax benefits of investing in real estate. You have the advantage of deducting certain expenses every time you file your annual income tax. When you get rental income from the rental of a residence unit, there are some expenses you may deduct on your tax return. These expenses include mortgage interest, property tax, operating expenses, depreciation, and property repairs.

Excellent Long-Term Trends

The city has roughly 200,000 residents and has grown 7% over the past decades. That fact alone guarantees appreciation of existing real estate and continued demand for housing. Another factor to consider is demographics. Montgomery has a median age of 34.3 – many of its residents are starting or raising families, guaranteed to continue the population growth in the area even if the influx slows down. Expect Montgomery Alabama real estate to remain stable or increase in value as the next generation starts buying homes of their own.

Should You Invest Montgomery Alabama Real Estate?

The Montgomery Alabama real estate stands out for its affordable properties, relatively high rents, and numerous opportunities for deals. The relative breadth of its student housing market is remarkable given its small size.

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 Tampa FL Real Estate Market and Chicago real estate market. We also recommend these 8 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:

Prattville data                                                                                  https://www.nerdwallet.com/blog/mortgages/home-search/best-towns-alabama-young-families/

Montgomery growth

https://www.bestplaces.net/city/alabama/montgomery

Alabama taxes

https://taxfoundation.org/state/alabama/

single family home market is strong

http://www.acre.culverhouse.ua.edu/real/stories/home-price-expectations-for-alabama

2018 Alabama median house price value and median rent

https://www.zillow.com/al/home-values/

Rental rates

https://www.rentjungle.com/average-rent-in-montgomery-rent-trends/

Student housing rates of return / cap rates

http://www.nreionline.com/student-housing/buyers-return-student-housing-sector

Wetumpka Real Estate
https://www.trulia.com/real_estate/Wetumpka-Alabama/

MONTGOMERY HOME APPRECIATION RATE                        https://www.neighborhoodscout.com/al/montgomery/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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