Alabama Cities Where You Can Afford to Buy a Home with $65,000 Annual Income
According to the Alabama Housing Affordability Index (AHAI) for the second quarter of 2019, there were five metro areas identified as cities where the average Alabama family making roughly $65,000 a year can afford to own a home in the state of Alabama.
- 1. Gadsden
- 2. Anniston-Oxford-Jackson
- 3. Decatur
- 4. Mobile
- 5. Dothan
The index uses median family income, median home sales price, a twenty percent down payment, and the current composite interest rate (4% in Q2 2019) to calculate monthly and yearly payments, required income, and an Alabama Housing Affordability (AHA) index score. The AHAI score is defined by the Alabama Center for Real Estate as follows: “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. 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.”
Gadsden has the highest AHAI score of all the metro areas assessed with a score of 229.4 making it the most affordable metro area in the state currently. This score is due to the median family income in Gadsden being $57,100 and a median home sales price of $135,733 for quarter two of 2019. This results in a required income of $24,894 per year and an annual payment of $6,223. Gadsden saw an 8.28% increase in its AHAI score since Q1 of 2019.
The Anniston metro area saw a median family income of $56,200 in Q2 of 2019 and a median home sales price of $136,567. Assuming a 20% down payment and a 4% interest rate, the annual payment for a home in the Anniston metro area is $6,262. The income required to afford this annual payment is $25,047 per year which gives the Anniston-Oxford-Jackson area an AHAI score of 224.4. This means a family in this area making the median family income has more than twice the buying power needed to purchase and finance a median priced home.
The median family income of Decatur is $62,800, while the median home sales price was $154,450 for Q2 of the year. The Alabama Housing Affordability Index calculated an AHAI score of 221.7 for the Decatur metro area, a 6.08% increase from Q1 of 2019. Therefore, the median home in Decatur would have annual payments of $7,082. The required annual income to afford these payments is $28,326.
The second quarter of 2019 showed a median family income of $60,600 and a median home sales price of $155,300 in the city of Mobile. Applying a 20% down payment and a 4.00 percent interest rate, we see that the annual payments on a median home in Mobile are $7,121. This leads to a required income of $30,850 and an AHA index score of 213.6 meaning a family making the median yearly income has more than twice the buying power they need to purchase a median-priced home in the area.
The city of Dothan saw a median home sales price of $163,800 and a median family income of $57,500 in the second quarter of 2019. An income of $30,041 is required to make the annual payments on the home of $7,510 per year. This results in an AHAI score of 191.4, a 1.25% increase from the first quarter of 2019.
There are also several non-metro areas throughout Alabama where a family with an annual income of $60,000 or less can afford to purchase a home.
- 1. Cullman County
- 2. Marshall County
- 3. Monroe County
- 4. Talladega County
- 5. Tallapoosa County
- 6. Walker County
The median family income in Cullman County is $53,100 and the median home sales price for Q2 of 2019 was $162,400. This results in an annual payment of $7,446 and an AHAI score of 178.3. Cullman County saw a 3.60% increase in affordability between Q1 and Q2 of 2019.
Marshall County has a median family income of $54,700. The median home sales price is $139,783. The required income to own a home is $25,636, and annual payments on a home in Marshall County are around $6,409. The AHAI score for the county is 213.4, which is a 4.94% increase from Q1 of 2019.
With an AHAI score of 257.2, Monroe County is one of the most affordable places to buy a home in Alabama. The median family income is $45,000 and the median home sales price is $95,400. A homeowner in Monroe County can expect to make annual payments of $4,374 and will need an annual income of $17,496.
In Q2 of 2019, Talladega County saw a median home sales price of $146,550 and a median family income of $51,200. This results in an annual payment of $6,719 and a required income of $26,877. The AHAI score for Talladega County is 190.5.
Tallapoosa County has an AHAI score of 116.6, making it one of the least affordable counties considered for this list. Still, the median family income is $53,700 and the median home sales price was $251,125 in Quarter 2 of 2019. A family that plans to purchase a home in Tallapoosa County should have an income of $46,057 or more annually and expect to pay roughly $11,514 per year on mortgage payments. Tallapoosa County saw a 16.5% drop in affordability between Q1 and Q2 of 2019.
The median family income in Walker County is $50,600 and the median home sales price is $153,500. A yearly income of $28,152 is necessary to afford the annual payments on a median home in the area which costs roughly $7,038 per year. These factors result in Walker County having an AHAI score of 179.9, a 5.58% drop from the first quarter of 2019.
CCIM 4Q19/1Q20 CRE Insights Report