TUSCALOOSA, Ala. – There is good news in Alabama despite the housing and credit challenges that face the nation. According to the Alabama Center for Real Estate at The University of Alabama, the state’s housing is more affordable.
A combination of events in the past several months, including a decline in the average median sales price and a lowering of the composite effective mortgage rate, has produced an increase in the Alabama Housing Affordability Index, according to Shelby Batson, research coordinator for ACRE.
The standard definition used by the Center for the housing affordability index is the ratio of the state’s actual median family income to the income needed to buy and finance the state’s median priced home. An index number of 100 means a family earning the state’s median income has just enough buying power to qualify for a loan on the state’s median priced, single-family home, assuming standard underwriting criteria. The higher the index number is the more affordable the housing.
The median sales price of a home sold in Alabama during the fourth quarter of 2007 was $130,260, down from the previous quarter’s median of $137,480 by 5.25 percent. The composite effective mortgage interest rate for the fourth quarter was 6.42 percent which was a decrease of 4.61 percent from the third quarter mortgage interest rate of 6.73 percent. A decrease in both the median sales price in Alabama and in the fourth quarter composite mortgage rate helped increase the affordability of homes in Alabama, Batson said.
In the fourth quarter of 2007, the Alabama Housing Affordability Index increased to 155.4 from 142.5 during the third quarter of 2007.
“This 9.06 percent change was a strong showing in the shift in the affordability of homes in Alabama,” Batson said. The difference between the fourth quarter National Housing Affordability Index, known as HAI, of 118.9 and the third quarter HAI results of 107.5 percent produced a 10.65 percent increase in home affordability.
Overall, the increase in the Alabama Housing affordability Index means that a family earning the median income of $48,700 had about one and a half times the income needed to qualify for a loan to purchase the statewide median priced home. Across the U.S., households earning the U.S. median income of $59,000 could better afford a $206,200 house which was the median price of a home across the nation.
The median sales price of a home in Alabama in the first quarter of 2007 was $134,957, the second quarter, $135,326, the third quarter, $137,480 and the year end fourth quarter median sales price was $130,260. The state’s final median sales price was down from the year’s starting point by 3.48 percent.
Of the metro area groups in the state, Dothan showed a fourth quarter increase over the third quarter of 11.20 percent. In the county areas, the Lake Martin (Tallapoosa County) area showed a 29.13 percent increase over the previous quarter results.
The other metro areas, after Dothan, for the fourth quarter of 2007 over the previous quarter reported as follows: Lee County (Auburn, Opelika) – 9.55 percent, Baldwin – 9.41 percent, Birmingham -8.27 percent, Tuscaloosa – 7.93 percent, Calhoun County (Anniston) – 7.40 percent, Gadsden -6.80 percent, Huntsville – 6.69 percent and Montgomery – 4.03 percent. Muscle Shoals (Florence) posted a 0.47 percent and Mobile showed a 0.46 percent increase.
For the county areas, the results, in addition to Lake Martin (Tallapoosa Co.), were Monroe County – 24.17 percent, Walker County – 20.38 percent, Talladega County – 13.61 percent and Marshall County with a 10.20 percent increase. Cullman County shows an 8.30 percent decrease from the previous quarter.
Batson said recent actions of the Federal Reserve and the projected national stimulus package would bring moderate increases in Alabama home affordability in the next quarter as home prices continue to fall in response to high supply levels. Longer term, Batson said, as the elevated level of housing inventory is reduced, Alabama home affordability may go the other direction.
Editor’s Note: A chart accompanies this release. Additional charts and graphs illustrating the points covered in the release are available via http://www.arerec.cba.ua.edu/
Note: The statistics included in this report reflect the residential sales of houses, condominiums and townhomes. Historical Monthly Housing Statistics are available on the web at Alabama Center for Real Estate’s homepage – www.acre.cba.ua.edu.
This representation is based in whole or in part on data supplied by the reporting boards/associations of REALTORS® or their Multiple Listing Service. The Alabama Real Estate Center does not guarantee and is in no way responsible for its accuracy. Any market data maintained by the Center does not necessarily include information on listings not published at the request of the seller, listings of brokers who are not members of a local board/association or MLS, unlisted properties, rental properties, etc.
Note: To view a chart for this release, click here.
Contact
Bill Gerdes, UA Public Relations, 205/348-8318, bgerdes@cba.ua.edu
Source
UA’s Alabama Center for Real Estate and the Alabama Association of REALTORS. National data supplied by the Federal Housing Finance Board and the research division of the National Association of REALTORS®.