The balance between supply and demand is a fundamental factor that determines how successful real estate investments are. Based on this simple rule, rental property investors in Mobile, Alabama might very well have a banner year.
At the beginning of the year, demand for residential real estate in Mobile outpaced supply by more than 2:1, according to the Culver College of Business at the Alabama Center for Real Estate.
Climate, culture, economy, job growth and an affordable cost of living are some of the reasons why so many people and businesses are investing in this Gulf Coast city located between New Orleans and St. Petersburg, Florida.
Founded back in 1702, Mobile is the oldest city in Alabama and has always played a significant role in the state’s economic growth.
Today, the metro area is home to industry growth sectors such as aerospace, transportation, and retail. Mobile is often called a miniature melting pot, thanks to the dynamic mix of French, Spanish, British, Creole, Greek, and African cultures.
Read on to learn why investing in rental property in Mobile, Alabama is looking very attractive in 2020.
With about 414,000 residents, the population of Mobile County has stayed more or less the same over the past five years. Predictability is a factor that all real estate investors look for, and Mobile definitely delivers. Even though population growth in Alabama is slowing down, inbound international migration to coastal counties like Mobile is on the rise.
Key Population Stats:
- Mobile has a city population of just over 195,000 people and nearly 414,000 residents in the metropolitan area.
- Over the last ten years the population of Mobile has increased by just 0.1%, according to the U.S. Census Bureau.
- The population base of Mobile County is projected to grow by nearly 26,000 people by 2040, making it the 2nd-largest county in Alabama, according to the University of Alabama Center for Business & Economic Research.
- Mobile is the 4th-largest city in Alabama and ranks 131st among the nation’s largest cities.
- 1.6 million people with a median age of 38 live within 60 miles of Mobile, Alabama.
Kiplinger notes that the Mobile metropolitan area is one of the fastest-growing areas of the state for jobs, due in part to Airbus adding 430 new employees to a new assembly line in Mobile. In fact, the state is seeing the fastest job growth since 2005.
Key Employment Stats:
- The GDP of Mobile is nearly $18.7 billion, growing by 1.6% over the past year and by more than 21% since 2002.
- Job growth in Mobile is 0.4% while the unemployment rate is just 3.2%, according to Forbes.
- In fact, the St. Louis Federal Reserve reports that unemployment in the Mobile metropolitan area has dramatically declined since 2010.
- Median household income in Mobile is $46,495.
- Cost of living in Mobile is 7% below the national average, due in part to relatively affordable cost of housing and renting, as U.S. News reports.
- Mobile Chamber of Commerce research reveals that key industry clusters in the metro area include aviation/aerospace, chemical, shipbuilding, and steel manufacturing.
- The Chamber cites the area’s low business costs, skilled workforce in a right-to-work state, and favorable taxes and incentives as three of the key reasons for investing in Mobile.
- Largest companies and employers in the Mobile area include shipbuilder Austal USA, steel product manufacturing company AM/NS Calvert, Kimberly-Clark Corporation, Mobile County Public Schools, and University of South Alabama and Medical Facilities.
- Largest colleges and universities in the Mobile area include the University of South Alabama, University of Mobile, Bishop State Community College Main Campus, and Spring Hill College.
- More than 86% of the residents of Mobile are high school graduates or higher, and nearly 23% of people 25 years or older hold a bachelor’s or advanced degree.
- Interstate highway I-10 connects Mobile to Jacksonville, Florida and Los Angeles while I-65 extends from Mobile north to Chicago.
- More than 65 motor freight carriers transport products from the Mobile area, with major metro areas such as Atlanta, Houston, Charlotte, Nashville, and Orlando within a 600-mile radius.
- Six railroads serve the Port of Mobile, including CSX, Burlington Northern, Norfolk Southern, and Canadian National Railroad.
- The Port of Mobile is operated by the Alabama State Port Authority and ranks as the 13th-largest full-service seaport in the U.S. based on total tonnage.
- Mobile Regional Airport handles nearly 600,000 passengers per year with flights from Delta and United, while the Mobile Downtown Airport near the Port and Downtown has FedEx air cargo service.
- Mobile Aeroplex is a leading industrial and trade complex accommodating the largest aircraft, along with road and rail access.
Real Estate Market
Although home sales in Mobile County were down through the end of 2019, according to Mitchell College of Business at University of South Alabama, housing sales surged more than 29% in December compared to the same month one year ago.
Key Market Stats:
- Median listing price of a home in Mobile is $165,175 while the median selling price is $137,300, according to Zillow (as of January 2020).
- Square foot listing price of a home in Mobile is $95, about the same as the Mobile metropolitan area.
- Home values in Mobile have increased by 25% since September 2013 based on the Zillow Home Value Index.
- Average days on market is 82.
- During the listing period, nearly 11% of the houses in Mobile have a reduction in the asking price.
- 16.1% of the homes in Mobile have a negative equity vs. 8.2% U.S. average.
- 1.1% of the homes in Mobile have a delinquent mortgage vs. 1.1% nationally.
- Country Club and Overton are two neighborhoods in Mobile with the highest median home values.
- Malibar Heights and Greenwich Hills have the lowest median home values among the neighborhoods in Mobile.
Strong Renters’ Market
For the past 10 years the total homes listed for sale in Mobile has been steadily declining. In fact, since 2009, the total amount of housing stock for sale in the Mobile metro area has gone down by more than 62% while average selling prices have increased by about 30%.
Combined with slowly but steadily rising rents, this imbalance between supply and demand is creating a potentially profitable opportunity for rental property investors buying and holding for the long term.
Key Market Stats:
- Median rent in Mobile is $1,040 per month vs. $1,010 for the Mobile metro area (as of January 2020).
- Rents in Mobile have increased by 2% over the last 12 months, according to RENTCafé.
- 42% of the housing units in Mobile are occupied by renters.
- 45% of the housing units in Mobile rent for between $701 and $1,000 per month.
- 37% of the rents in Mobile are in the $501 to $700 per month rental range.
- Neighborhoods in Mobile with the lowest rents include Georgia Avenue, Hannon Park, and Leinkauf where rents average $610 per month.
- Areas of Mobile with the highest rents include Warwick, Westlake, and Yorkwood where average monthly rents are $931.
- According to RENTCafé, the most popular neighborhoods in Mobile for renters are Overton, Sheldon, and Westhill.
Historic Price Changes & Housing Affordability
Each quarter the Federal Housing Administration (FHA) publishes a report tracking the historic price changes for housing across the U.S.
The most recent FHA 2019 Q3 House Price Index for Mobile, Alabama shows that home prices (including purchases and refinance mortgages) have increased by about 21% over the past five years. Over the last year, home prices in Mobile rose by 6.67%, but decreased slightly by 0.52% from the previous quarter.
In addition to analyzing short- and long-term pricing trends, real estate investors also consider the affordability of housing in the market to help forecast the demand for rental property. Affordability compares the cost median cost of housing to the percentage of income needed to purchase a home in Mobile.
Recent research on housing affordability in Mobile from the Alabama Center for Real Estate noted that Mobile is one of the most affordable metropolitan areas in Alabama to buy a home. Mobile has an AHA Index Score of 217.6, meaning that the average household has a little more than twice the median family income needed to qualify for a loan based on current interest rates and home prices.
Quality of Life
Mobile’s pro-business government combined with a laid-back waterfront lifestyle make the city feel like a little New Orleans. In fact, Downtown Mobile is considered by many to be the social, economic, and creative hub of the entire Gulf Coast.
Key Quality of Life Stats:
- Residents of Mobile give the city high rankings for family living, nightlife, and diversity, according to Niche.com.
- U.S. News & World Report ranks Mobile among the top 125 metro areas to live and one of the best places to retire.
- The Report gives Mobile a Value Index Rating of 6.3, noting that newcomers to Mobile find their dollar goes much further than in other metro areas.
- Mobile serves as a regional medical center for the Gulf Coast region, with four major medical centers in the city limits and a wide range of surgical centers, emergency clinics, and assisted-living facilities.
- Community art walks, ballet, opera, park and museums, and the Gulf Coast beaches make living and working in Mobile hard to beat.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Mobile based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood
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