How Does Alabama’s Homeownership Rate Compare to the National Average?

How Does Alabama’s Homeownership Rate Compare to the National Average?

Topics: Research, Residential Real Estate

Markets: Athens (Limestone County), Baldwin County - All, Baldwin County - Condo Only, Birmingham Metro, Calhoun County, Cherokee County

The Census Bureau has tracked homeownership rates across America since 1994. Nationwide, homeownership rates reached an all-time high in the second and fourth quarters of 2004 at 69.2 percent, while they bottomed out at 62.9 percent in the second quarter of 2016. However, homeownership rates have gradually increased to their current level of 64.3 percent during the second quarter of 2018, up slightly from 64.2 percent during the first quarter of the year.

In addition to nationwide data, the Census Bureau also produces quarterly homeownership rates by state. Mirroring national trends, Alabama’s homeownership rate peaked in first quarter of 2005 at 77.1 percent. The Great Recession played a significant role in dragging homeownership rates downward from 2007 to 2009. But, surprisingly, rates were lower in the aftermath of the Great Recession than they were during it. Alabama’s homeownership rate bottomed out at 67.2 percent during the fourth quarter of 2014. Alabama’s current rate is 71.9 percent during the first quarter of 2018, up from 69.9 percent during the first quarter of the year.

Alabama’s homeownership rate is consistently above the national average. Alabama’s county and local governments incentivize homeownership by having some of the lowest effective property tax rates in the nation. And real estate in Alabama, generally speaking, is more affordable than the nation as a whole. A recent analysis by the Alabama Center for Real Estate found that a family earning the statewide median family income of $60,200 had a little over 1.86 times the income necessary to qualify for a loan to purchase the statewide median priced home ($164,803). Nationwide, families earning the national median family income of $70,100 have approximately 1.37 times the income necessary to qualify for a loan to purchase the nationwide median price home ($266,533).

So how does homeownership in Alabama compare to other states? Let’s begin by comparing Alabama to neighboring states: Alabama’s 71.9 percent is equal to Mississippi, slightly higher than Tennessee (70.6 percent), somewhat higher than Florida (65.1 percent), and significantly higher than Georgia (62.1 percent). Only one state in the deep south currently has a higher homeownership rate than Alabama and it’s South Carolina with 74.1 percent.  

Homeownership rates fluctuate over time due to recessions, home price trends, interest rates, student loan debt, and other factors. The impact of these factors, however varies greatly by age group. Not surprisingly, the “under 35” age category has the lowest homeownership rate at 36.5 percent while the “65 and over” category has the highest rate at 78 percent. Rates also vary significantly by state with West Virginia currently having the highest homeownership rate in the nation at 74.6 percent, while the lowest is in the District of Columbia at 40.1 percent.

Highest homeownership rates in America:

  1. 1.   West Virginia: 74.6 percent
  2. 2.   South Carolina: 74.1 percent
  3. 3.   New Hampshire: 73.6 percent
  4. 4.   Indiana: 72.9 percent
  5. 5.   (Tie) Michigan and Utah: 72.5 percent
  6. 6.   (Tie) Alabama and Mississippi: 71.9 percent
  7. 7.   Pennsylvania: 70.8 percent
  8. 8.   (Tie) Tennessee and Kentucky: 70.6 percent
  9. 9.   Wyoming: 69.9 percent
  10. 10. Minnesota: 69.3 percent

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