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Real Data Analysis: How Affordable Is Housing In Alabama?

| February 6, 2018 @ 5:00 am

By Stuart Norton

We’ve closed out the 2017 year in residential real estate, and now it’s time to take a look at the data and put it into context. The big takeaway from the graph is that when compared to the country as a whole, Alabama’s real estate is relatively affordable.

The Alabama Center for Real Estate (ACRE) warehouses sales and price data for every major residential real estate market in Alabama. Only one has a median price above that of the national median price, and it’s the Lake Martin area. But this is a relatively small market with a small sales volume (with 665 total residential transactions in 2017 and 500 in 2016) and many upscale properties. This market is an outlier when compared to the rest of the state.

So we’re back to the big question — how affordable is housing in Alabama? ACRE recently addressed this question with its Alabama Housing Affordability Index. “The statewide housing affordability index is calculated as the ratio of the state’s actual median family income to the income needed to purchase and finance the state’s median-priced home,” ACRE’s official description of the index states. “An index number of 100 means that 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.”

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