The Montgomery real estate market continues to make small but important improvements in 2016. Although still below the national average, home prices for Montgomery real estate are up from a year ago, as the first-half of the year experienced better-than-expected prices. Home appreciation, including total equity, also fared well during the first-half. Gains in the past three years have extended the trend of positive price growth since the recession, which benefits investors and homeowners alike.
Factors supporting the Montgomery housing market during the first-half of 2016 included the local economy, home affordability and new housing construction. Foreclosures and REO (real estate owned) properties also had a hand in the housing market in 2016, especially from an investor’s perspective. Moving forward, the Montgomery real estate market should continue its positive trajectory during the second-half.
Montgomery, AL Real Estate Market Statistics:
The Montgomery real estate market experienced minor improvements in home appreciation. One-year and three-year appreciation rates were 1.4 and 5.2 percent during the second quarter, compared to the national average of 4.9 and 17.7 percent respectively. Despite lower gains, price appreciation and principle payments in the last three years have boosted total equity growth since the recession. For those considering Montgomery real estate investments, the following highlights appreciation gains in previous years:
- Homes purchased in the Montgomery, AL housing market one year ago have appreciated, on average, by $4,372. The national average was $14,963 over the same period.
- Homes purchased in the Montgomery, AL housing market three years ago have appreciated, on average, by $14,486. The national average was $46,878 over the same period.
- Homes purchased in the Montgomery, AL housing market five years ago have appreciated, on average, by $24,188. The national average was $82,353 over the same period.
- Homes purchased in the Montgomery, AL housing market seven years ago have appreciated, on average, by $26,239. The national average was $77,054 over the same period.
- Homes purchased in the Montgomery, AL housing market nine years ago have appreciated, on average, by $14,285. The national average was $31,126 over the same period.
Total home equity gains for Montgomery real estate, although below the national average, continue to reward both investors and homeowners in 2016. In fact, the last nine years have witnessed consecutive gains in home equity, with homes purchased in year seven appreciating by $26,239 — its highest total in the last nine years. That said, Montgomery real estate investing should see a bump in coming months, especially as investment opportunities began to form.
According to RealtyTrac, there were 615 properties in some stage of foreclosure during the month of October, which represented a 20 percent decline from the previous month and three percent less than the same time last year. REO properties also decreased during October. The number of REO properties fell 46.7 percent compared to the previous month and 39.6 percent from the same time last year. The decline in foreclosures could be a sign of investment activity heating up, which could bode well for Montgomery real estate investors and homeowners.
Montgomery, AL Real Estate Market Summary:
- Current Median Home Price: $145,700
- 1-Year Appreciation Rate: 1.4%
- 3-Year Appreciation Rate: 5.2%
- Unemployment Rate: 6.3%
- 1-Year Job Growth Rate: 1.1%
- Population: 201,332
- Median Household Income: $44,765
Montgomery, AL Real Estate Market (2016) — Q2 Updates:
The Montgomery real estate market continues to make up ground since the last recession. The median home price for Montgomery real estate was $145,700 during the second quarter, compared to the national average of $239,167. Although prices have slowed in recent months, home prices for Montgomery real estate are up from a year ago. In addition, home appreciation rates continue to rival the rest of the country. One-year appreciation rates were 1.4 percent during the second quarter, while three-year rates reached 5.2 percent. In comparison to the national average, gains in home appreciation remain low, but the Montgomery real estate market continues to push on.
Another factor influencing the Montgomery real estate market in 2016 is the local economy. While Alabama’s economy continues to grow relative to last year, which has impacted employment in Montgomery for the better, unemployment still lags behind national average. The unemployment rate during the second quarter was 6.3 percent, whereas the national average saw a rate of 4.9 percent. Although local employment has grown, the rate of growth is poor in comparison to other markets and needs to improve. One-year job growth in Montgomery was 1.1 percent during the second quarter, compared to the national average of 1.9 percent.
Further supporting factors also include new housing construction and home affordability. Homeowners paid 7.6 percent of their income to mortgage payments during the second quarter, half the national average, which paid 15.8 percent. The Montgomery housing market is among the most affordable markets in the country and the trend is expected to continue in the second-half. In addition, new housing construction could influence affordability down the line, for better or worse. The current level of construction in Montgomery is 52.3 percent above the long-term average, despite single-family housing permits falling to 3.1 percent. In comparison, the national average saw single-family housing permit reach 10.6 percent. However, construction is on the rise relative to last year, which suggest that local inventory has stabilized.
Moving forward, the Montgomery real estate market is anticipated to see weaker price growth in the next 12 months compared to the rest of the U.S. According to the National Association of Realtors (NAR), home prices for Montgomery real estate are forecasted to grow by 3.3 percent, compared to the national average of 3.6 percent. Moreover, the positive trend of growth should continue for the Montgomery real estate market in the second-half of the year.
