How is The Housing Market in Montgomery, Alabama?
Montgomery Alabama Real Estate Market is hot in 2022. It is a good cash-flow market due to the strong demand for rental housing. And this is not entirely due to the 8 or more colleges and universities in the city. The cost of living in Montgomery is lower than the U.S. average while there are a number of good-paying jobs in the area. Montgomery has seen the job market increase by 1.1% over the last year. Future job growth over the next ten years is predicted to be 30.3%. With affordable home prices, lower taxes, and a low cost of living, Montgomery is a great city to live and invest in real estate
The median sales price in the Montgomery area was $215,000 in March 2022, an increase of 10.8% from one year ago and an increase of 5.5% from February, according to the Montgomery Area Association of REALTORS. The median home sale price — is the midway point of all the houses or units sold over a period of time. It offers a more accurate view of what's happening in a market. There is an acute shortage of inventory in the Montgomery area housing market. At the current sales pace, all the active inventory on the market would sell in just 1 month.
According to the quarterly report published by Alabama Center for Real Estate (ACRE), Montgomery residential sales for the first quarter of 2022 totaled 1,359 units, representing a decrease of 1.3% when compared to1,377 units that were sold in the first quarter of 2021. The median sales price in Montgomery for the first quarter of 2022 was $206,292, a 7.8% increase from the first quarter of 2021's median sales price of $191,445.
The average number of days on the market in the first quarter of 2022was 54, representing a decrease of 34.8% from 83 days on market in the first quarter of 2021. The residential units available for sale in the first quarter of 2022 decreased by 29.2% when compared to the same period last year. The quarterly average of inventory for sale divided by the current quarterly sales average equals the # of months of supply, which was 1.1 months, down 30.6%. The market is considered to be in balance at approximately 6 months of housing supply.
Montgomery Alabama Housing Market Trends 2022 (Monthly)
Sales: According to the Montgomery Area Association of REALTORS, March home sales in the area decreased 8.4% year-over-year (Y/Y) from 581 to 532 closed transactions. Following seasonal trends, sales increased 23.7% from February. Sales are now down 1.3% year-to-date.
Pricing: Montgomery Alabama real estate market trends show a 10.8% year-over-year rise in median sales price based on 532 home sales. The median sales price in March was $215,000, an increase of 10.8% from one year ago and an increase of 5.5% from February. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.
Inventory: March listings (526) increased 9.4% from February and declined 18.6% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.0 months, down from 1.1 months in February and down from 1.1 months in March 2021. Homes sold in March averaged 48 days on the market (DOM), 32 days faster than March 2021.
Forecast: March sales were 31 units, or 5.5%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 563 sales for the month, while actual sales were 532 units. ACRE forecasted a total of 1,417 residential sales year-to-date, while there were 1,359 actual sales through March, a difference of 4.1%.
New Construction: The 60 new homes sold represented 11.3% of all residential sales in the area in March. Total sales decreased 27.7% year-over-year. The median sales price in March was $364,091, an increase of 19.5% from one year ago and an increase of 3.2% from February. New homes sold in an average of 63 days, 24 days faster than March 2021.
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Montgomery Alabama Housing Market Forecast
Some of the lowest real estate appreciation rates in the country over the last ten years have been in Montgomery, where house values have increased just 20.54%, which is an annualized rate of 1.89%. This rate is lower than the appreciation rate found in 90% of the cities and towns in America. Over the last year, Montgomery's appreciation rates have trailed the rest of the nation.
In the last twelve months, Montgomery's appreciation rate has been 14.33%, 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 7.52%, which equates to an annual appreciation rate of 33.63%.
According to Zillow.com, the typical home value in Montgomery County is $138,826. Montgomery County home values have gone up 20.7% over the past year and 34.78% over the past decade (since May 2012). Similarly, the typical value of homes in the Montgomery MetroMontgomery Metrohousing market is $178,769, up 17.4% over the past year and 46.5% over the past decade. The Montgomery, Alabama Metropolitan Statistical Area (commonly known as the Tri-Counties or the River Region) is a metropolitan area in central Alabama.
The current housing demand: According to Realtor.com, the median listing home price in Montgomery County, AL was $169.9K April 2022, flat year-over-year. The median listing home price per square foot was $97. Montgomery County has affordable townhomes and affordable condos. There are 6 cities in Montgomery County where Realtor.com has active listings. Cecil has a median listing home price of $495K, making it the most expensive city. Montgomery is the most affordable city, with a median listing home price of $160K.
Montgomery Real Estate Investment Overview
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. Here are some of the reasons to consider investing in Montgomery real estate.
A Big Student Market
Student housing offers stable income and better than average returns. 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.
Montgomery Real Estate is Affordable
Montgomery real estate is cheap. The typical home value in the Montgomery area is $178,769 whereas, in the city, it is $129,700 (Zillow Home Value Index). ZHVI is a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type. It reflects the typical value for homes in the 35th to 65th percentile range.
While that is far lower than the national average, it is considerably cheaper. That said, affordability should continue to be the driving force of both supply and demand in the area. First-time buyers and Millennials should find the Montgomery home market more enticing than most others. Hence, Montgomery real estate investing should experience a boost in activity as well.
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. As of May 17, 2022, the average rent for a 1-bedroom apartment in Montgomery, AL is currently $675. This is a 12% decrease compared to the previous year.
- The average rent for a 2-bedroom apartment in Montgomery, AL is currently $900, a 16% increase compared to the previous year.
- The average rent for a 3-bedroom apartment in Montgomery, AL is currently $1,095, an 8% increase compared to the previous year.
- The average rent for a 4-bedroom apartment in Montgomery, AL is currently $1,395, a 16% increase compared to the previous year.
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.
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 typical home here is worth around $240K, a deal compared to other up-and-coming golf communities.
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 was $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 rank among the top ten (best) in the U.S. 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. The median property tax in Montgomery County, Alabama is $435 per year for a home worth the median value of $121,000. Montgomery County collects, on average, 0.36% of a property's assessed fair market value as property tax.
Montgomery County has one of the lowest median property tax rates in the country, with only two thousand five hundred thirty-eight of the 3143 counties collecting a lower property tax than Montgomery County. The average yearly property tax paid by Montgomery County residents amounts to about 0.74% of their yearly income. Montgomery County is ranked 2719th of the 3143 counties for property taxes as a percentage of median income.
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.
Market data and trends
Student housing market