Housing inventory in Montgomery is at an historical low, with the months of supply at just 1.1 (as of April 2022), according to the Alabama Center for Real Estate (ACRE).
Months’ supply refers to the number of months it would take for the current inventory to sell at the given current sales price. The NAR reports that in markets with less than six months of supply, prices tend to rise more rapidly, which is exactly what is happening in Montgomery.
Montgomery is the state capital and is located alongside the Alabama River in south-central Alabama, roughly equidistant between the Gulf Coast city of Mobile to the south and Birmingham to the north.
Industries such as agriculture, defense, manufacturing and education help keep job and population growth stable. The city was also a center of the Civil Rights Movement and is proud of the variety of government and nonprofit civic organizations that call Montgomery home.
Read on to learn more about how the Montgomery, AL real estate market might perform in 2022.
Population growth in the Montgomery metropolitan area has declined by about 1.3% over the past decade, according to the most recent data from the U.S. Census Bureau, matching the rate of population change in Alabama’s other large cities of Birmingham and Mobile.
Key Population Stats:
- Montgomery is home to nearly 201,000 people in the city and more than 386,000 residents in the metropolitan area.
- Population in Montgomery declined by 0.19% last year but has been trending upward since 2016.
- Montgomery is the 3rd most populous city in Alabama and is the 119th-most populous in the U.S.
- Over 614,000 people live within a 50-mile radius of Montgomery County, Alabama.
Under the brand “Made in Alabama," the state recently set a new record with $8.7 billion in new investment and created 17,000 new jobs. As the capital city of Alabama, Montgomery receives its fair share of economic stimulus and activity.
Key Employment Stats:
- GDP of Montgomery is nearly $15.8 billion, according to the Federal Reserve Bank of St. Louis.
- Forbes also ranks Montgomery as one of the top 200 places for business and careers and the cost of doing business.
- Montgomery has received more than $500 million in investments, thanks to the Made in Alabama initiative.
- Job growth in Montgomery increased by 5.27% last year, according to Data USA.
- Unemployment rate in Montgomery is 2.4% and has been declining over the past year, based on research from the U.S. Bureau of Labor Statistics.
- Median household income in Montgomery is $49,608, a little less than the amount in Alabama.
- Cost of living in Montgomery is 8% below the national average and ranks lowest among the other Southeastern state capital cities, according to Forbes.
- Key industries in the greater Montgomery area include military and defense, advanced manufacturing, cyber & tech, medical, and automotive.
- Largest employers in Montgomery County include Maxwell/Gunter Air Force Base, State of Alabama, Montgomery Public Schools, Baptist Health, ALFA Insurance Companies, City of Montgomery, and Wind Creek Casino & Hotel Wetumpka.
- Industrial employers in Montgomery include Hyundai Motor Manufacturing Alabama, automobile parts manufacturer MOBIS Alabama, Koch Foods, GKN Aerospace, International Paper, and Kowa Pharmaceuticals America, Inc.
- Alabama State University, Troy University, Auburn University at Montgomery, University of Alabama Birmingham, and Faulkner University are among the biggest public and private colleges and universities in Montgomery.
- 87% of the residents of Montgomery are high school graduates or higher.
- More than 33% of the people in Montgomery hold a bachelor’s or advanced degree, about 1.25 times the rate in Alabama.
- Interstate highway I-65 connects Montgomery to Birmingham and Huntsville, and I-85 leads northeast to Atlanta.
- Montgomery Regional Airport is served by American Airlines and Delta with direct flights to Atlanta, Charlotte, Dallas, and Washington, D.C.
Real Estate Market
There is still more demand for homes in Montgomery than supply, although rental property investors may begin to find good deals. According to the Alabama Center for Real Estate, even though inventory is down 21% year-over-year, the demand for homes in Montgomery has declined by 20%.
Key Market Stats:
- Median listing price of a home in Montgomery is $160,000, according to Realtor.com (as of April 2022).
- Square foot listing price of a home in Montgomery is $93.
- Home values in Montgomery have increased by 21.1% over the past 12 months, based on the most recent information from Zillow (April 2022).
- Over the past five years, home values in the Montgomery region have grown by over 42%.
- Inventory is down 36% year-over-year, with only a 1.1 month supply of homes for sale in Montgomery, according to the Alabama Center for Real Estate.
- Sales of homes in Montgomery are down 20% year-over-year (April 2022), while median sales prices have increased 17% over the last 12 months.
- Average days on market was 49 days.
- Of the 18 neighborhoods in Montgomery, Hampstead is the most expensive to buy a house, while Cypress Creek is the most affordable neighborhood with the lowest median listing prices.
Attractive Renters’ Market
Montgomery is ranked by WalletHub as one of the best cities for renters, and the 50th best area in the country for the rental market and affordability. Montgomery also has one of the best rent-to-income ratios in the U.S., making it very attractive for people to rent where they live instead of looking for a house to buy and a good market for rental property investors.
Key Market Stats:
- Median rent in Montgomery is $1,095 per month for a three bedroom home, according to Zumper (as of June 2022).
- Rents in Montgomery have increased by nearly 10% over the past 12 months.
- 40% of the housing units in Montgomery are renter occupied.
- Most affordable neighborhoods for renters in Montgomery, Alabama are Highland Park, Garden District, and Capitol Heights, where rents average between $795 and $895 per month.
- Old Cloverdale and Brentwood are two of the most expensive neighborhoods for renters in Montgomery, where rents can go for $1,050 and more per month.
Historic Price Changes & Housing Affordability
Analyzing historical price changes and the affordability of housing are two metrics real estate investors use to help forecast the potential performance of rental property in a given market.
Every month, the FMHPI by Freddie Mac reports historic price changes for housing markets throughout the United States.
The most recently released FMHPI for Montgomery shows that seasonally adjusted home prices have increased by nearly 39% over the last five years. Over the last 12 months home prices in Montgomery have risen by 16.6% and by 1.3% month-over-month (as of April 2022).
Housing affordability compares the median cost of housing in a given market compared to the median income needed to purchase a home.
The Alabama Housing Affordability (AHA) Index uses 100 as a baseline number to provide an index score by market. The further from 100 the AHA Index score is, the more affordable a housing market is, all other things being equal.
The First Quarter 2021 Alabama Housing Affordability Index report from the Culverhouse College of Business at The University of Alabama gave Montgomery an AHA Index Score of 204, while Mobile received a score of 177 and Birmingham a score of 180. This means that, based on the AHA Index Score, buying a house in Montgomery is more affordable than Birmingham or Mobile.
Quality of Life
Many people moving to Montgomery are amazed by the warm Southern hospitality, low cost of living and high quality of life. The job market is a balanced blend of production and service sectors. World-class culture, vibrant retail and dining, and state-of-the-art healthcare give Montgomery a small-town charm that’s hard to find in other cities of similar size.
Key Quality of Life Stats:
- Montgomery receives high ratings for amenities and cost of living from AreaVibes.
- U.S. News & World Report gives Montgomery County strong scores for population health, economy, and infrastructure.
- Niche.com ranks Montgomery as one of the best cities in the U.S. for low cost of living and one of the best places to retire in America.
- Montgomery has been featured in 13 different movies, including The Rosa Parks Story, Heavens Fall, and Selma.
- Metropolitan Montgomery serves as the region’s healthcare hub and is home to several hospitals including Baptist Medical Center South and Jackson Hospital.
- Forbes recently wrote about the arts scene in Montgomery, spotlighting the Montgomery Museum of Fine Arts and the National Memorial for Peace and Justice as two of the city’s many must-see attractions.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Montgomery 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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