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Friday, February 17, 2023

Is Alabama a Good State To Buy a Home?

Alabama, City Home Buying Guide

Is Alabama a Good State To Buy a Home?

Chances are, if you’re thinking about calling Alabama home, part of the attraction is the cost of living. Given how inexpensive it is to live in this part of the south and its growing economy, Alabama has many perks for its residents! But is this the best state for you to buy a home?

Let’s break down the various factors that go into deciding if a state is a good bet to buy a home. Assessed factors include the overall cost of living, property taxes, and the advantages of Alabama.

Alabama Advantages

Alabama collects a lot of check marks, starting with the beautiful scenery. The southern end runs up to the Gulf of Mexico for 60 miles of stunning white beaches. The northern end is part of the Piedmont Upland, a stretch of rolling hills and small, scenic mountains. In between are verdant farmlands and part of the coastal plain.

beautiful landscapes in Alabama

If you like to be warm, Alabama is a great choice. The average temperature ranges from 46F degrees in January to 87F degrees in July. The weather promises lots of sunshine, balanced with rain showers, mostly during summer. Winters can be chilly, but the further south you go, the milder they will be.

Fresh, farm-to-table food will keep your appetite satisfied. Alabama’s culinary scene is prized for its fresh seafood, barbecue, and soul food. Get ready for fried catfish, green tomatoes, pickled vegetables, and a healthy helping of gravy. Oh, and don’t forget the peaches! Georgia’s not the only state growing this luscious fruit. Alabama’s agriculture abundance is plentiful and supplies the state’s cities and farmer’s markets with the best flavors all year round.

Another claim to fame for Alabama is its deep musical traditions. It’s known as the birthplace of jazz and blues, and musicians frequently tour around the state. Aretha Franklin, Jimmy Buffet, and Nat King Cole came from Alabama.

And if you like football, Alabama delivers. The state may not have any major professional sports, its collegiate teams are dynasties. Locals are avid Crimson Tide fans.

While these advantages make living in Alabama interesting, it’s not all “sweet home Alabama.” Like every state, it has its downsides.

Alabama Disadvantages

Before you buy a home in Alabama, consider the potential drawbacks.

low crime rate in Alabama

The good news is the crime rates have been dropping, particularly property crime. However, the crime rate is higher than the national average. The state overall ranks no. 3 for violent crimes, so safety is definitely a concern. In some cities, crime rates are significantly above average.

The poverty rate is also among the nation’s highest, with 1 in 5 children living in poverty in 2022.

Severe weather is a concern in Alabama. Tornadoes and tropical storms may occur throughout the year. The tornado season is especially long in spring and summer. In recent years, strong tornadoes have devastated Tuscaloosa and Selma. The state can experience EF5 tornadoes, the strongest classification available.

For tropical storms, the low-lying coastal area can be prone to storm surges that push miles inland. Heavy rains and wind can cause damage in central and northern areas inland.

Economically, Alabama is in the bottom quarter, but it is better than many of its surrounding states. While still highly agricultural, it’s experiencing economic growth spurred by diversifying through the manufacturing and technology sectors. Higher education institutions stabilize various cities, while the aviation industry brings millions to northeast Alabama.

Alabama, in many areas, is still very traditional culturally. While the cities are very modern and progressive, don’t be surprised if everything shuts down on Sundays in a small town. There are regulations around when and what type of alcohol can be bought.

Cost of living

Alabama’s overall cost of living is about 16% lower than the national average. Housing costs are particularly attractive, with an index score of 56.6 (100 is the national average). Utility and health care costs run above average, but you’ll find savings in groceries and transportation.

Cost of Living in Alabama

According to the Bureau of Economic Analysis, individuals living in Alabama had an estimated average cost per year of $35,859 in 2021. That makes it the fourth cheapest state to live in the United States. Locally, only Mississippi was cheaper.

In that year, average housing costs were $562 to $1,186 per month, while utility costs were $400. That includes electricity, utilities, water, and cable.

Real Estate Market

The housing prices far lower than the national average are part of Alabama’s low cost of living. The median home price in December 2022 was $268,300, well below the national average of $400,000. Those prices were up 2.4% year-over-year.

Of course, home prices vary widely across the state. The most expensive markets in 2021 were:

  • Daphne, $284,928
  • Huntsville, $256,425
  • Auburn, $235,140
  • Birmingham, $210,425

Gadsen, Auburn, and Gulf Shores reported some of the highest year-over-year pricing gains, with Gadsen increasing 62.1%.

Each and every market is different. A local real estate agent is your best resource for understanding the Alabama market you’re most interested in living in.

Alabama Job Market

job market for professionals in Alabama

The job market is neither stellar nor poor, with the state sitting just below the middle of economic rankings. Historically it was considered blue-collar with agriculture and mineral resourcing. However, the state’s economy is diverse. Financial services, tourism, and aerospace industries drive the state’s gross domestic product. It has an attractive business climate with fundamentals that are attracting interest.

Automobile manufacturers such as Mercedes-Benz and Hyundai call Alabama home, while Toyota and Mazda opened a new plant in 2021.

Huntsville is the home of the US Space & Rocket Center and the Davidson Center for Space Exploration. You’ll find Lockheed Martin, Boeing, and GE Aviation with manufacturing in the state.

Meanwhile, Cummins Research Park near Huntsville is the US’s second-largest technology and research park. Fortune 500 companies use it as a base of operations, as do international tech enterprises.

Bioscience is another thriving industry, with research centers like Southern Research near Birmingham. And with the Port of Mobile along the Gulf Coast, transportation and chemical manufacturing is another top sector.

One of the brightest spots is the state’s employment. The December 2022 unemployment rate was 2.2%, below the national average.

Alabama Property Taxes

Property taxes in Alabama are on the lower side compared to other states. The effective tax rate on properties in the state comes to 0.41%. Calculating annually against the median home price, that translates into an average payment of $587 per year! Out of all the states, Alabama is among the lowest for property taxes – only Hawaii beats it.

Property tax rates can range and are set by the county the property is located in. Local taxes are calculated based on 10% of the property’s value. One mil is equal to $0.001 in value, which means that for a taxation of $1000, one mil amounts to a single dollar.

Alabama Taxes

Alabama Taxes

The good news is residents have one of the lower overall tax burdens, coming in as the 8th lowest in the nation.

Alabama residents pay an individual income tax, ranging from 2-5% based on their income. Some municipalities may also charge a tax.

The state levies a 4% sales tax on goods and services. Cities can impose a sales tax, but at a maximum rate cap of 7.5%. The average combined rate is 9.14%.

The state has no inheritance or estate tax, but it does charge income taxes for retirees except for social security.

Alabama Crime Rate

The crime rate in Alabama is, unfortunately, one of its drawbacks. In 2021, the violent crime rate per 100,000 people was 518, which was only less than Louisiana and Arkansas. Property crimes are even more common, with a 1-in-39 chance of experiencing this kind of crime. That includes porch piracy.

Crime rates vary across metros and towns. Neighborhood Scout reported Sweet Water, Waverly, and Millerville as some of Alabama’s safest communities.

Best Places to Live in Alabama

The best places to live in Alabama will depend on your lifestyle requirements. Families may be drawn to a city like Huntsville, home of the US Space & Rocket Center and the Davidson Center for Space Exploration. Birmingham is an up-and-coming city that offers quality entertainment and a walkable downtown area. Montgomery is loved for its cultural attractions and affordable housing.

aerial view of Montgomery Alabama

Based on some of the media sites, the top picks for the best places to live in Alabama are:

Huntsville, the nicknamed Rocket City, is one of the largest cities and most technological. In 2022, it was the nation’s Best Place to Live in US News and World Report. It scored top marks for housing affordability and overall quality of life.

Birmingham is a vibrant city with plenty of green spaces and entertainment. Your amenities include craft breweries, a bustling live music scene, and two top-tier college teams to root for.

Montgomery is the state’s capital, known for its outstanding museums and history. Enjoy shopping and entertainment along the Riverfront District. The art scene has three museums, two performing arts centers, and a Shakespeare Festival.

Mobile is the state’s waterfront city, famous for its incredible seafood and beautiful beaches. It has one of the largest coastal wetland systems and many manufacturing jobs.

Homewood, a Birmingham suburb, is known for its small-town feel and excellent public schools. Niche.com ranks it the best place to live in Alabama thanks to top-tier public schools and affordable housing.

Should you buy a home in Alabama?

Overall, Alabama is a great place to live and buy a home, offering affordability, low taxes, and numerous job opportunities.

From the temperate climate and scenic views to the lower cost of living and vibrant culture, Alabama has plenty to offer its residents. The real estate market in Alabama is also showing signs of growth, with prices steadily increasing over the past few years.

So is the state right for you to buy a home? Affordability is the advantage, but you’ll have to weigh other factors like the job market, education, and safety in the cities where you are. A local real estate agent can help you find where to live in Alabama that has the lifestyle you want.

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Preston Guyton

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