The housing market in Alabama continues to be an advantageous one to a savvy buyer. The state plays host to mid-size metropolitan living with amenities that rival the world class premium lifestyle of coastal cities like New York and San Diego; however, it also provides an exciting opportunity for those buyers and investors who are looking for a more traditional Southern Americana slice of life.
Would be investors have plenty of choice when it comes to financial partners. Virtually every international major bank is well represented in the state. The military presence from Gunter and Maxwell Air Force Bases funds the commerce needed to uphold local credit unions as well. Finally, many regional banks such as Regions Bank hold court in Alabama, specializing in real estate financing for local families and smaller development projects. A savvy investor will find relatively low mortgage rates for real estate as compared to similar properties in comparable cities around the United States. Let’s take a look at today’s rates and see if the trend will continue into 2016.
What are the Current Alabama Mortgage Rates?
Mortgage rates in the state of Alabama have been very competitive for the past decade. For 2015, the average was around 3.5 percent for a 30 year fixed loan. Buyers with good credit could get anywhere from a half point to full point discount on the 30 year interest rate under a variable loan package. A 15 year fixed loan could be acquired for an interest rate around 2.8 percent, for a buyer with good credit.
Because of the competition between the different types of banks around Alabama, lenders definitely conceded to a buyer’s market. Those buyers with the room to negotiate between lenders found themselves on the better end of some great deals. Many lenders were looking to get out from underneath foreclosed properties following the 2008 dual housing and banking crises, and some out of town investors took full advantage of the market at that time.
Because of the relatively low cost of real estate in Alabama, most of those buyers stayed in the area, choosing to rent instead of flip properties. The result was relative stability throughout the state that lasted until the year 2015. New in-state buyers returned to the market starting in 2013 and added to its stability, piggybacking off of millions of dollars in real estate investments in places like Montgomery and Birmingham. Because of the municipal investments, even the lower grade properties in larger metropolitan areas around the state gained the advantage of subsidized upgrades and maintenance, especially in the downtown areas.
The family oriented lifestyle in Alabama also adds to the stability of the state’s real estate markets. Important statistics such as
– living in same house 1 year & over, percent, 2009-2013, and
– homeownership rate, 2009-2013
Both outpaced the national average, the homeownership rate decidedly so. Once people move into a piece of Alabama real estate, they tend to stay there. They also tend to care for the property, raising the value of the surrounding properties.
What Does This Mean for 2016?
Although there are no guarantees in any housing market, there is no reason to believe that the Alabama real estate market in 2016 will exhibit anything other than the advantageous conditions that it has showcased for the past decade. The industries that keep Alabama commerce moving are stable. The families that inhabit most of Alabama’s real estate are stable. The overall housing market in the area is stable, and the financial lifeblood that keeps money moving in the area is stable. As a matter of fact, many of these markers are looking up for the state.
Both the residential and the commercial real estate investments in Montgomery and Birmingham paid off in spades for the state as a whole, providing plenty of income to expand production in the more rural areas around the state. Farmers and other agricultural professionals have been lobbying local politicians for money for years, and 2016 may be the year that they get it. If this happens, expect to see a great deal of expansion in places like Alabaster, Slapout, and many overlooked, rural parts of the state that have been in need of an upgrade for quite some time.
Additional investments are coming into the state in large order. Google chose Opelika as one of the test cities for its proprietary city-wide Google Fiber technology. The result has seen millions of dollars pour into the state along with national investors from the tech industry. John McAfee, the charismatic founder of McAfee security products, now calls a local small business hub known as Roundhouse his home-base.
With private investors and public subsidies ready to move all over the state, 2016 will likely be a good year for people who are already in the Alabama real estate market. If you have been thinking about getting into Alabama, you may want to get in while the interest rates are still competitive ahead of the future investments.
What’s The Bottom Line?
According to the numbers and opinions of professional investors, the opportunities of the past few years in Alabama will likely continue into 2016. This means low rates for people who are looking to enter the residential market and business owners who are looking to develop property. Take advantage of the opportunity that Alabama affords before the wind changes!
2 Point Highlight
Would be investors have plenty of choice when it comes to financial partners.
The state plays host to mid sized metropolitan living with amenities that rival the world class premium lifestyle of coastal cities like New York and San Diego; however, it also provides an exciting opportunity for those buyers and investors who are looking for a more traditional Southern Americana slice of life.
