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Housing affordability is one reason U.S. News and World Report rates Huntsville as the best place to live in the country. It is also a reason the Milken Institute ranks the Rocket City among the top performing large cities in America.
But a Yahoo Finance story published in April warns not to get used to affordability. You won’t be able to afford to live in Huntsville by 2030, it claims.
Citing a 20.6% growth in home sales prices in the past year, it projects the average home price in Huntsville to be more than $1.1 million at the beginning of the next decade.
“I felt like that was a helpful article to look at,” Huntsville Realtor Matt Curtis said. “I don’t think we’ll see a million by 2030. I think we’ll see the average sales price in the $500,000-$600,000 range by then.
“Yes, that does become unaffordable to a lot of the market.”
In the story “In Less Than a Decade, You Won’t Be Able To Afford a Home in These Cities,” Yahoo Finance cites a study by GOBankingRates that seeks to determine which major U.S. cities are on track to lose their label of affordability.
“GOBankingRates took the overall U.S. median home value and projected its growth over 10 years using Zillow’s September 2022-23 one-year forecast,” the story said.
The projection was compared to the projections of 537 U.S. cities that currently have home prices below the national median of $325,677, with those surpassing the national median in the next 10 years (plus projected growth rate over the same period) being deemed “not affordable,” the story said.
Huntsville and Auburn are two Alabama cities the story said will be unaffordable within the next decade.
“If you end up living in one of these cities 10 years down the line, you might want to check out other, more affordable real estate markets instead,” the story said. But it also conceded using a one-year projection might not be a fair way to judge a housing market.
“Additionally, Zillow’s estimated home values don’t necessarily reflect the list prices or sale prices in each market,” it said.
“That’s a crystal ball I can’t look at,” said Tim Knox, of Revolved Realty, of looking ahead more than five years into the future. “I don’t think we’re going to end up like California, where you just can’t afford to buy a house. The thing here is the average income is so much higher as well. That has a lot to do with it. I’m not sure we’ll ever get to the point where you can’t afford to buy a house here. I don’t see that happening.”
Current affordability issues
“Here’s a stat to talk about, the consumer index of housing prices, back in 2005, we were at 200,” Curtis added. “Huntsville just got below 100 for the first time in March. I think we’re at 88 right now. Housing affordability is definitely declining.
“On the flip side, we’re still $100,000 below the median sales price nationally. We’re less affordable, but we’re more affordable than the rest of the country,” he said.
According to Stuart Norton, associate director for the Alabama Center for Real Estate at the University of Alabama, the median sales price was $322,300 in the first quarter in Madison County, up 21.8% from a year ago. The median sales price in Limestone was $313,600, an increase of 21.2% compared to a year ago.
And increased interest rates are not helping.
Impact on millennials
“The big untold story is how this is going to affect millennials,” Curtis said. “A lot of them are just getting priced out of the market with higher prices, higher interest rates, and then getting locked into apartment complexes that are going to continue to raise the rates with the rates of inflation.”
But Knox thinks a lot of millennials “are just not buying into buying a house.”
“It’s kind of that generation that rather than get bogged down in a mortgage, they like to have more control of their money,” he said. “I know a lot of the millennials just aren’t making the money to buy a house right now, so that may have something to do with it. Millennials as a generation, I just don’t think home ownership is as important to them at this point in their lives as it was to us when we were younger. That was always our goal.”
Scott Turner reports from Huntsville for AL.com.
