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Home Mortgage Rates in Alabama

Bienville Square and Park in Downtown Mobile, AL.

Alabama goes by several names including “The Yellowhammer State,” “The Heart of Dixie,” and “The Cotton State.” It is the thirtieth largest state by area, and it has the twenty-fourth largest population in the United States. Alabama is a historically rich state with several important landmarks in the American Civil Rights Movement, including the Rosa Parks Museum and Martin Luther King Jr's historic church. When you pair this with the broad cultural environment, it makes Alabama an excellent state to raise a family.

People are drawn to Alabama for a broad range of reasons including the low cost of living, which ranks as the fourth lowest in the nation. The Alabama Crimson Tide and the large universities draw a lot of college-aged people, and the historical significance of this state also brings many tourists and permanent residents to this state every year.

The people in Alabama as a whole have a strong work ethic, and this can help to attract many new businesses to the state each year. People move here because of these new companies, the culturally diverse background, the rich historical significance of this state, and the low tax rates. Currently, Alabama ranks sixth for the lowest tax rates in the nation. There are also a wide range of cities, suburbs, and rural areas to choose from, along with coastline and beach communities.

However, people are also leaving Alabama for several key reasons. Many students move out of the state once they finish their college education for their first jobs. Also, even though there are companies moving into the state at a quick pace, there aren't enough jobs to sustain people. Alabama also has lower wages, and their housing markets in the larger cities are slightly higher. This can create a drain that sends people to other states with more job opportunities and higher wages.

Current Alabama Real Estate Trends

Depending on the area you want to purchase a home in, you may have a slight difficulty finding one. The larger cities are experiencing a high demand for homes, and this is driving the housing costs up. However, if you look at statewide trends, Alabama has one of the most improved housing markets as an overall state in the nation as of 2016.

Statewide, the Alabama housing market has experienced a steady increase since it hit bottom in 2013. This steady rise hit a slight peak in mid-2016 and plateaued out until it began to rise once again at the start of 2017. It has been on a steady rise ever since, and it shows no sign of slowing down.

As of today, Alabama's real estate market is higher than it was before the housing market crisis, and this is in part because of the companies that are coming in and adding more jobs to the economy. Additionally, housing market prices are predicted to rise between 3% to 4% in the oncoming year and the demand for houses increase. All of this means that people who are currently looking for houses will most likely face steep competition in the form of other buyers and rising prices.

Historic Alabama Real Estate Trends

The early 1990s until late 1999 saw a steady increase in Alabama real estate market with a few slight peaks in 1996 and 1998. In early 2000, there was a sharp increase in the housing market that leveled off by early 2001. Once again, Alabama's housing market began to climb steadily until 2007, when it saw a slight increase that continued until early 2008.

By the third quarter of 2008, housing prices suffered a steep drop only to rise once again in 2009. Once 2009 came and went, home prices went into a rocky free fall. In mid-2010, there was a slight peak in the housing market before it continued to fall. From 2011 to 2013, there were a few peaks and falls until the market hit rock bottom at the start of 2013. The market began to recover slowly, and 2016 saw another peak and plateau, but it has been on a steady rise ever since.

Birmingham saw a steep by steady climb from the 1990s up to the end of 2000. From the end of 2000 until mid-2001, there was a sharp increase in the housing market. This peaked and continued to steadily climb until 2008 with one minor drop at the end of 2007.

Housing prices in Birmingham dropped sharply at the end of 2008, only to rise to another peak in 2009 before starting to descend into a rocky fall. There were several other peaks and losses from 2009 until 2011 when the housing market hit its lowest point. Since 2011, the housing market has started to rise in shaky patterns with peaks and setbacks. However, as of the middle of 2016, the housing market has been on a steady incline that shows no signs of stopping.

Homeownership rates across the state rose from 66.5% in 1988 to a peak of 78% in 2004 and gradually declined back to 69.7% in 2016.

Places to Live

Metropolitan Areas

AL Rank US Rank Metropolitan Area 2016 Pop 2010 Pop Change % △
1 49 Birmingham-Hoover 1,147,417 1,128,047 19,370 1.72%
2 117 Huntsville 449,720 417,593 32,127 7.69%
3 128 Mobile 414,836 412,992 1,844 0.45%
4 142 Montgomery 373,922 374,536 -614 -0.16%
5 161 Columbus, GA-AL Metro Area 308,755 294,865 13,890 4.71%
6 190 Tuscaloosa 241,378 230,162 11,216 4.87%
7 213 Daphne-Fairhope-Foley 208,563 182,265 26,298 14.43%
8 262 Auburn-Opelika 158,991 140,247 18,744 13.36%
9 271 Decatur 152,256 153,829 -1,573 -1.02%
10 287 Dothan 147,834 145,639 2,195 1.51%
11 289 Florence-Muscle Shoals 146,534 147,137 -603 -0.41%
12 351 Anniston-Oxford-Jacksonville 114,611 118,572 -3,961 -3.34%
13 377 Gadsden 102,564 104,430 -1,866 -1.79%
14 401 Albertville 95,157 93,019 2,138 2.30%
15 411 Talladega-Sylacauga 90,684 93,830 -3,146 -3.35%
16 436 Cullman 82,471 80,406 2,065 2.57%
17 477 Fort Payne 70,900 71,109 -209 -0.29%
18 577 Scottsboro 52,138 53,227 -1,089 -2.05%
19 586 Enterprise 51,226 49,948 1,278 2.56%
20 598 Ozark 49,226 50,251 -1,025 -2.04%
21 684 Alexander City 40,727 41,616 -889 -2.14%
22 698 Selma 40,008 43,820 -3,812 -8.70%
23 728 Atmore 37,728 38,319 -591 -1.54%
24 777 Valley 33,843 34,215 -372 -1.09%
25 784 Troy 33,286 32,899 387 1.18%
26 830 Eufaula, AL-GA Micro Area 28,300 29,970 -1,670 -5.57%

Popular Alabama Cities

Alabama is home to several prominent cities that are popular for their culturally diverse backgrounds, entertainment venues, education opportunities, and their historical significance.

Birmingham

Birmingham, Alabama Skyline.

Birmingham is the most populous city in the state of Alabama with a population of 212,157 people as of 2016. It is part of the Birmingham-Hoover Metropolitan area and combined they have a total population of 1,147,417 people. This metro area encompasses around one-fourth of Alabama's total population, and it continues to grow.

This city was founded on the steel industry, and it was affectionately called the “Pittsburgh of the South” due to this economic base. This continues to be a pillar of the local economy, but it has also shifted to banking, biotechnology, and medical research. You'll also find several prominent engineering companies here, and two of the largest pop-bottling companies are found here as well.

If you visit or live here, you'll be living in a humid or subtropical climate zone. You'll experience very hot and humid summers, mild winters, and a lot of rainfall year round. The lowest temperatures come in mid-January, and they're around 46 degrees Fahrenheit, with the highest temperatures commonly seen in July in the upper 80s to low 90s. Additionally, it isn't unusual to experience strong thunderstorms in the spring and fall months due to cold fronts moving through.

Birmingham is billed as the art and cultural center for all of Alabama, and there are dozens of events and museums to visit. The Birmingham Museum of Art is located here, and it is the largest art museum in the Southeast portion of the nation. You can find the Alabama Jazz Hall of Fame here, along with the Civil Rights Institute. Additionally, the Sidewalk Moving Picture Festival draws thousands of tourist through the city each year.

There are several notable educational institutions found in Birmingham as well. Students can choose between eleven universities and technical colleges found in this city, and this includes University of Alabama at Birmingham, the Miles Law School, and the University of Montevallo.

You'll find a major portion of the nation's banking industry in Birmingham, and this includes Regions Financial Corporation. Another notable employer in this city is the UAB Hospital. This Level 1 Trauma Center is the largest employer in the city, and the second-largest employer in the state of Alabama with over 23,000 staff members. Finally, another notable employer is Blue Cross Blue Shield of Alabama who has their headquarters here.

The local economy continues to grow as more and more companies become interested in the area. It is a great place to find steady work, and it has consistently been ranked as one of the best cities to live as the low cost of living and steady work opportunities provide a comfortable living for its residents.

The median home price in Birmingham is around $62,600, and this represents just over a 1% increase over the past year. The price per square foot is also relatively low at $53. However, when you compare this to the Birmingham Metro area, you see that the prices are almost on opposite ends of the spectrum. The Metro area's median home price is $132,400 with a price per square foot of $103. This price has increased over 1% in the past year with a projected 3.3% increase coming this year.

Montgomery

Montgomery, Alabama Skyline.

The second largest city in the state of Alabama is Montgomery with a population of 200,022 people. It is also the capital of the state of Alabama, and it is the 115th largest city in the nation. The Montgomery Metro area has a total population of 373,922 people, and this makes it the fourth-largest metro area in Alabama.

Montgomery's economy relies heavily on several key crops including soybeans, cotton, and peanuts. Other sections that complete this city's economy include government jobs, a busy industrial hub, the school system, and healthcare. The military plays a large roll in employing people in Montgomery as well.

This city has a humid subtropical climate, and this means you get hot summers and mild winters with a lot of annual rainfall. December and January typically see the lowest temperatures of the year at around 40 degrees Fahrenheit, and June through August sees the highest temperatures topping out at 88 degrees. The spring and fall weather is typically warm with severe thunderstorms and moderate rainfall.

Montgomery has one of the biggest art scenes that you'll find anywhere in the United States. The Montgomery Zoo is home to more than 500 animal species, and it sprawls over 40 acres. You can also visit the Hank Williams Museum, or take a day tour of the Davis Theater of the Performing Arts. There is also a huge Shakespeare Festival that runs each year.

The Montgomery Public School system has over 32,000 students enrolled and over 2,000 staff members. There are 32 elementary schools, 10 middle schools, 5 high schools, and several charter and alternative schools in this system. Alabama State University is also found here, along with Huntingdon College, and several smaller technical and private colleges.

The diverse employment opportunities it this city draw a lot of people each year. The largest employer in Montgomery is the Maxwell-Gunter Air Force Base with around 12,500 employees. The state of Alabama comes in as the second largest employer with almost 10,000 employees, and the Baptist Health Center comes in third with just under 9,000 employees.

The economic outlook for Montgomery is steadily improving. Its unemployment rate is dropping, but it is still slightly higher than the national average. However, the economy is projected to improve by almost 30% in the next ten years, adding thousands of new jobs and giving the economy a boost.

The median local home price for the city of Montgomery is $119,900 with a price per square foot around $64. This is a 2% increase in the past year, with projections of more growth in the coming years. The Montgomery Metro area's median home price is slightly lower at $113,000 and a price per square foot of $84. The Metro area's prices have increased by 5% in the past year, and it is predicted to continue to increase at least another 3% in the coming year.

Mobile

Mobile, Alabama Skyline.

Mobile had a population of 192,904 as of the 2016 census, and this makes it the fourth-largest city in the state of Alabama. It is the largest city in Mobile County and the largest municipality on the Gulf Coast. The Mobile Metro area is the third-largest metro in the state with a population of 414,836 people.

Mobile has several important economic support systems including aerospace, the steel industry, shipbuilding, retail, construction, and medicine. It is also home to Alabama's only saltwater port, and this brings a lot of shipping business through this city. The economy saw a surge of growth in the mid-1990s with several companies coming in, and this trend continues to grow.

The residents of Mobile enjoy a subtropical climate year round, and this comes with hot, humid summer weather and mild, wet winters. This city also sees some of the most rainfall out of anywhere in the United States year round. Temperatures are at their lowest points from December to January, and they typically stay around the low 40s. Spring and summer in Mobile bring temperatures in the low 90s with humidity and rain.

Mobile has a rich cultural history that pulls heavy influences from Spanish and and French history. This city is the birth place of Mardi Gras, and each year the annual Carnival celebrate brings thousands of tourists out each year. You can also visit the Mobile Museum of Art and the Greater Gulf State Fair.

The Mobile County Public School System has over 65,000 students enrolled, and it is one of the largest employers in the city. The Alabama School of Mathematics and Science is also located here, and there are several universities and technical colleges to attend. The University of Mobile and the Bishop State Community College are two large educational institutions.

The top three largest employers in Mobile are based in education and health care. The largest employer is the Mobile County Public School System with just over 7,750 employees. The second-largest employer is Infirmary Health System and it has 5,460 staff members. Finally, the employer that rounds out or top three largest employer list is University of South Alabama with 5,300 employees.

Mobile's economic outlook looked bleak in the early 1990s, but it's taken a turn for the better with dozens of companies coming in and offering employment opportunities. The unemployment rate is still higher than the national average, but this is predicted to drop within the next ten years, and employment opportunities continue to grow.

The median home price in Mobile is relatively inexpensive at $110,400, and the price per square foot is $90. This represents a 1.2% growth over the past year, and it is supposed to continue to grow another 3.2% in the coming year. The Mobile Metro area is slightly cheaper when it comes to median home prices. Currently, the median home price for the Metro area is $110,300 with a price per square foot of $90.

Huntsville

Downtown Huntsville.

Huntsville is the third-largest city in the state of Alabama with a population of 193,079 and this population has been quickly climbing. It is projected that Huntsville will soon take the title of the third-largest city in Alabama. This city is part of the Huntsville Metropolitan area, and the metro area's population as of 2016 was 449,720 people. This population puts the Huntsville Metro area as the second-largest in Alabama.

The main economic influences in the city are military technology and aerospace. This technology-driven economy has seen steady growth over the past year. This city ranked as the sixth best in the nation for business in 2005, and also as one of best places for engineers to work. Retail also makes up another large portion of the economy with several large shopping centers and strip malls located here.

Huntsville is also classified as a humid subtropical climate, but it differs from the other cities in Alabama as it experiences large amounts of rainfall in the winter and spring months, but not in the summer months. The average temperatures in December and January hover right around 45 degrees Fahrenheit, and July through the end of August usually has temperatures in the high 80s to low 90s.

There are several historical districts in Huntsville along with several museums, parks, festivals, and activities going on year round. The US Space Camp is found here, along with the US Space and Rocket Center museum. There are also over 57 state parks to explore including the Big Spring International Park and the Rocket City Brew Fest helps to bring tourists in each year.

The Huntsville City Schools are one of the top ranked in the nation with 77% of its students scoring at or above national levels on their ACT exams. There are 53 schools in this system with over 22,800 students enrolled. Students can also attend the Alabama A&M University or the Ross Medical School. Along with these colleges, there are several satellite courses and technical colleges available as well.

There are several large employers in Huntsville with the largest one being NASA's Marshall Space Flight Center. This is closely followed by Cummings Research Park whose Huntsville location makes it the fourth-largest in the world. The third-largest employer in this city is the military base Redstone Arsenal.

The economy in Huntsville is continuing to grow at a rapid pace. The various technological companies draw people from all over the United States, and the availability of jobs is expected to grow by over 34% in the next ten years. The lower cost of living is also another big draw for this area.

Huntsville has a median home price of $138,900 and a price per square foot of $96. Over the past year, the home prices have risen 1.2%, and they're expected to rise at least another 3% in the coming year. The Huntsville Metro area has a higher median home price, and it comes out around $221,900 with an average price per square foot of $95.

Tuscaloosa

The University of Alabama's Bryant-Denny Stadium.

The city to round out our top five largest cities in Alabama is Tuscaloosa, and Tuscaloosa had a population of 99,543 people as of 2016. This city is part of the Tuscaloosa Metropolitan area, and the greater metro area has a population of 241,378, and it is the fifth-largest metro area in the state of Alabama.

A major cornerstone of Tuscaloosa's economy is the education sector followed closely by manufacturing and the service industry. Federal, local, and state government agencies make up over 20% of the economic sector in this city. Tuscaloosa also ranked as one of the top cities in the nation to start a business in 2010. Assembly plants and the healthcare industry make for a strong economic outlook.

Tuscaloosa experiences a climate that is typical of the deep south, and it has a humid subtropical climate with four seasons. Spring and fall can bring a lot of rainfall along with severe storms and tornado activity. Winters are mild, and they last from mid-December until the end of February. You'll experience temperatures in the mid to upper 30s during this time. From mid-May until the end of September you'll have summer weather with temperatures up in the low 90s.

Several performing arts organizations call this city home, and there are dozens of museums and festivals to keep people entertained all year round. The Bama Theatre is a huge hub for the performing arts, and it holds over 1,900 people. The Moundville Native American Festival and the Dickens Downtown festival draw tourists each year as well.

The University of Alabama is located in Tuscaloosa, and it has over 36,000 students enrolled each year. Students can also attend Stillman College or the Shelton State Community College. The public school system in this area is also large, and there are over 10,000 students spread across the city.

There are a few notable employers in the city of Tuscaloosa, and the largest one is the University of Alabama with over 10,000 staff members. The DCH Regional Medical Center claims the second-largest employer spot with 4,500 employees. Finally, the third-largest employer is Mercedes-Benz U.S. International Inc with 3,600 people.

Despite all of the companies that call this city home, the unemployment rate is still higher than the national average. However, this is slated to change in the next ten years with job potential growing over 31%. The lower cost of living may continue to draw people to this area, but the lower wages will have a negative impact as well.

The Tuscaloosa median housing price experienced a slight decline in the past year, and it now sits at $140,600 and the price per square foot is $115. The housing price is expected to rise over 3% in the upcoming year. The Tuscaloosa Metro area has a median house price of $145,900, and this is a 2% increase over the past year. The housing price will continue to rise over the next year, and the price per square foot is $109.

Other Areas to Consider

Real estate prices remain affordable across the state. Some of the fastest growing cities in the state include Auburn, Madison, Dephne, Phenix City and Fairhope.

Alabama Census Data

According to the United States census an estimated 4,863,300 people live in the state of Alabama. The state has 50,645.33 mi² of land area, which gave it a population density of 96.03 per mi². Here is a list of cities with more than 5,000 residents, with their estimated population as of June 2016 & the 2010 United States Census. For Census Designated Places (CDP) where there was no population estimate available for 2016, the 2011-2015 American Community Survey 5-Year Estimates data was used.

All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.

Rank Geography County 2016 Pop 2010 Pop Change % △ Land mi² Pop Den mi²
1 Birmingham Jefferson & Shelby 212,157 212,237 -80 -0.04% 146.07 1,452.43
2 Montgomery Montgomery 200,022 205,764 -5,742 -2.79% 159.57 1,253.51
3 Huntsville Madison & Limestone 193,079 180,105 12,974 7.20% 209.05 923.60
4 Mobile Mobile 192,904 195,111 -2,207 -1.13% 139.11 1,386.70
5 Tuscaloosa Tuscaloosa 99,543 90,468 9,075 10.03% 60.23 1,652.71
6 Hoover Jefferson & Shelby 84,978 81,619 3,359 4.12% 47.16 1,801.91
7 Dothan Houston, Dale & Henry 68,468 65,496 2,972 4.54% 89.4 765.86
8 Auburn Lee 63,118 53,380 9,738 18.24% 58.07 1,086.93
9 Decatur Morgan & Limestone 55,072 55,683 -611 -1.10% 53.67 1,026.12
10 Madison Madison & Limestone 47,959 42,938 5,021 11.69% 29.59 1,620.78
11 Florence Lauderdale 39,959 39,319 640 1.63% 26 1,536.88
12 Phenix City Russell & Lee 37,132 32,822 4,310 13.13% 27.75 1,338.09
13 Gadsden Etowah 35,837 36,856 -1,019 -2.76% 37.16 964.40
14 Prattville Autauga & Elmore 35,606 33,960 1,646 4.85% 32.85 1,083.90
15 Vestavia Hills Jefferson & Shelby 34,688 34,033 655 1.92% 19.41 1,787.12
16 Alabaster Shelby 32,948 30,352 2,596 8.55% 25.04 1,315.81
17 Opelika Lee 29,869 26,477 3,392 12.81% 59.59 501.24
18 Enterprise Coffee & Dale 28,024 26,562 1,462 5.50% 31.24 897.06
19 Bessemer Jefferson 26,511 27,456 -945 -3.44% 39.85 665.27
20 Daphne Baldwin 25,913 21,570 4,343 20.13% 16.24 1,595.63
21 Homewood Jefferson 25,613 25,167 446 1.77% 8.36 3,063.76
22 Athens Limestone 25,393 21,897 3,496 15.97% 39.54 642.21
23 Northport Tuscaloosa 25,045 23,330 1,715 7.35% 16.75 1,495.22
24 Pelham Shelby 23,050 21,352 1,698 7.95% 39.02 590.72
25 Prichard Mobile 22,185 22,659 -474 -2.09% 25.29 877.22
26 Anniston Calhoun 22,112 23,106 -994 -4.30% 45.64 484.49
27 Albertville Marshall 21,525 21,160 365 1.72% 26.56 810.43
28 Trussville Jefferson & St. Clair 21,422 19,933 1,489 7.47% 33.03 648.56
29 Oxford Calhoun & Talladega 21,120 21,348 -228 -1.07% 30.67 688.62
30 Mountain Brook Jefferson 20,590 20,413 177 0.87% 12.79 1,609.85
31 Fairhope Baldwin 19,421 15,326 4,095 26.72% 12.06 1,610.36
32 Troy Pike 19,191 18,033 1,158 6.42% 27.63 694.57
Tillmans Corner CDP Mobile 19,065 17,398 1,667 9.58% 12.97 1,469.93
33 Selma Dallas 18,983 20,756 -1,773 -8.54% 13.81 1,374.58
34 Helena Shelby & Jefferson 18,673 16,793 1,880 11.20% 20.34 918.04
35 Foley Baldwin 17,607 14,618 2,989 20.45% 25.76 683.50
36 Center Point Jefferson 16,496 16,921 -425 -2.51% 6.12 2,695.42
37 Hueytown Jefferson 15,561 16,105 -544 -3.38% 19.45 800.05
38 Cullman Cullman 15,496 14,775 721 4.88% 19.38 799.59
39 Talladega Talladega 15,451 15,676 -225 -1.44% 23.98 644.33
40 Millbrook Elmore & Autauga 15,413 14,640 773 5.28% 12.81 1,203.20
41 Alexander City Tallapoosa 14,773 14,875 -102 -0.69% 40.84 361.73
42 Scottsboro Jackson 14,677 14,770 -93 -0.63% 50.65 289.77
43 Ozark Dale 14,610 14,907 -297 -1.99% 34.09 428.57
44 Hartselle Morgan 14,471 14,255 216 1.52% 16.26 889.98
45 Fort Payne DeKalb 14,099 14,012 87 0.62% 55.49 254.08
46 Jasper Walker 14,003 14,352 -349 -2.43% 28.46 492.02
47 Saraland Mobile 13,942 13,405 537 4.01% 23.18 601.47
48 Muscle Shoals Colbert 13,831 13,146 685 5.21% 15.53 890.60
49 Pell City St. Clair 13,794 12,695 1,099 8.66% 24.75 557.33
50 Gardendale Jefferson 13,783 13,893 -110 -0.79% 22.55 611.22
51 Calera Shelby & Chilton 13,489 11,620 1,869 16.08% 24.09 559.94
52 Moody St. Clair 12,823 11,726 1,097 9.36% 24.4 525.53
53 Jacksonville Calhoun 12,657 12,548 109 0.87% 9.84 1,286.28
54 Sylacauga Talladega 12,540 12,749 -209 -1.64% 19.49 643.41
55 Eufaula Barbour 12,404 13,137 -733 -5.58% 59.39 208.86
56 Irondale Jefferson 12,359 12,349 10 0.08% 17.31 713.98
57 Chelsea Shelby 12,341 10,183 2,158 21.19% 21.34 578.30
58 Leeds Jefferson, St. Clair & Shelby 11,940 11,773 167 1.42% 22.86 522.31
59 Gulf Shores Baldwin 11,689 9,741 1,948 20.00% 23.16 504.71
Saks CDP Calhoun 10,826 10,744 82 0.76% 12.15 891.03
60 Fairfield Jefferson 10,807 11,117 -310 -2.79% 3.47 3,114.41
61 Pleasant Grove Jefferson 10,177 10,110 67 0.66% 9.89 1,029.02
62 Atmore Escambia 10,022 10,194 -172 -1.69% 21.85 458.67
63 Russellville Franklin 9,815 9,830 -15 -0.15% 13.4 732.46
Forestdale CDP Jefferson 9,716 10,162 -446 -4.39% 6.86 1,416.33
64 Boaz Marshall & Etowah 9,710 9,551 159 1.66% 14.55 667.35
65 Clay Jefferson 9,587 9,708 -121 -1.25% 9.93 965.46
66 Rainbow City Etowah 9,531 9,602 -71 -0.74% 25.46 374.35
67 Valley Chambers 9,377 9,524 -147 -1.54% 11.03 850.14
68 Bay Minette Baldwin 9,312 8,044 1,268 15.76% 8.57 1,086.58
69 Fultondale Jefferson 9,084 8,380 704 8.40% 12.2 744.59
70 Sheffield Colbert 9,025 9,039 -14 -0.15% 6.37 1,416.80
71 Andalusia Covington 8,968 9,015 -47 -0.52% 19.66 456.15
72 Clanton Chilton 8,846 8,619 227 2.63% 21.94 403.19
73 Pike Road Montgomery 8,777 5,406 3,371 62.36% 31.64 277.40
Meadowbrook CDP Shelby 8,752 8,769 -17 -0.19% 4.22 2,073.93
74 Tuskegee Macon 8,722 9,865 -1,143 -11.59% 16.09 542.08
75 Southside Etowah & Calhoun 8,600 8,412 188 2.23% 18.98 453.11
76 Guntersville Marshall 8,437 8,197 240 2.93% 25.39 332.30
77 Tuscumbia Colbert 8,434 8,423 11 0.13% 8.75 963.89
78 Arab Marshall & Cullman 8,340 8,050 290 3.60% 12.98 642.53
79 Spanish Fort Baldwin 8,327 6,798 1,529 22.49% 28.7 290.14
80 Wetumpka Elmore 8,219 6,528 1,691 25.90% 10.11 812.96
81 Greenville Butler 7,781 8,135 -354 -4.35% 21.36 364.28
82 Pinson Jefferson 7,426 7,163 263 3.67% 10.1 735.25
Brook Highland CDP Shelby 7,032 6,746 286 4.24% 2.83 2,484.81
83 Demopolis Marengo 7,019 7,483 -464 -6.20% 17.74 395.66
84 Hamilton Marion 6,739 6,885 -146 -2.12% 38.06 177.06
85 Montevallo Shelby 6,723 6,323 400 6.33% 12.59 534.00
86 Oneonta Blount 6,699 6,567 132 2.01% 15.17 441.60
Moores Mill CDP Madison 6,591 5,682 909 16.00% 13.6 484.63
87 Opp Covington 6,586 6,659 -73 -1.10% 23.66 278.36
88 Lincoln Talladega 6,491 6,266 225 3.59% 25.1 258.61
89 Lanett Chambers 6,393 6,468 -75 -1.16% 6.22 1,027.81
Meridianville CDP Madison 6,270 6,021 249 4.14% 15.54 403.47
90 Tarrant Jefferson 6,268 6,397 -129 -2.02% 6.36 985.53
91 Satsuma Mobile 6,193 6,168 25 0.41% 7.52 823.54
92 Monroeville Monroe 6,072 6,519 -447 -6.86% 13.37 454.15
93 Robertsdale Baldwin 5,990 5,276 714 13.53% 5.45 1,099.08
94 Roanoke Randolph 5,984 6,074 -90 -1.48% 18.73 319.49
95 Orange Beach Baldwin 5,981 5,441 540 9.92% 14.7 406.87
Theodore CDP Mobile 5,942 6,130 -188 -3.07% 7.99 743.68
96 Chickasaw Mobile 5,908 6,106 -198 -3.24% 4.21 1,403.33
97 Attalla Etowah 5,865 6,048 -183 -3.03% 6.98 840.26
98 Brewton Escambia 5,432 5,408 24 0.44% 11.2 485.00
99 Smiths Station Lee 5,341 4,926 415 8.42% 6.59 810.47
Harvest CDP Madison 5,226 5,281 -55 -1.04% 12.33 423.84
100 Midfield Jefferson 5,171 5,365 -194 -3.62% 2.65 1,951.32
Grayson Valley CDP Jefferson 5,160 5,736 -576 -10.04% 2 2,580.00
101 Glencoe Etowah & Calhoun 5,135 5,160 -25 -0.48% 16.93 303.31
102 Daleville Dale 5,101 5,295 -194 -3.66% 14.09 362.03
103 Rainsville DeKalb 5,015 4,948 67 1.35% 20.56 243.92
104 Childersburg Talladega 4,997 5,175 -178 -3.44% 12.35 404.62

Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.

Qualifying for Home Loans

Conforming Mortgages

As of 2018 the conforming loan limit across the United States is set to $453,100, with a ceiling of 150% that amount in areas where median home values are higher. With the state of Alabama having below average median home prices, the $453,100 limit applies statewide.

The homeownership rate in Alabama is close to seventy percent and the most popular type of loan is a 30 year mortgage. Given that homes are quite affordable across the state, 15 year fixed loans are another popular option which helps home buyers build equity faster and save on interest expenses.

Adjustable rate mortgages (ARM) are also an option for potential homeowners who don't believe they will live in the home for many years and want to write off interest payments. Balloon mortgages are another route for aspiring homeowners. Balloon mortgages are when a large portion of the borrowed principle is repaid in a single payment at the end of the loan period. Balloon loans are not common for most residential buyers, but are more common for commercial loans and people with significant financial assets.

Mortgage underwriters prefer debt-to-income ratios to be below 40%, but other factors are considered on the loan application. When qualifying for a loan, a credit score of 720 or better can help secure a favorable loan. As a general rule of thumb, coming to the table with a 20 percent down payment is usually the best approach. This down payment requirement does not apply for Federal assistance programs such as FHA, in which applicants can have a lower credit score and income but still receive financing.

The piggyback loan is another type of mortgage which is simply two mortgages in one. The piggyback loan can eliminate the need for private mortgage insurance by covering 80% of the home's value with the first loan, while the second loan helps to pay for part of the down payment.

Government Programs

Federal Assistance Programs

Prospective home buyers who don't find what they're looking for at one of the state's private banks may want to take a look at some of the mortgage options the federal government offers. One of them is the loan program at the Veterans Administration, which provides mortgages with zero down. On top of that great deal, VA loans do not require private mortgage insurance. The agency does, however, charge a funding fee, and this varies from 1.2% to 3.3%. Making a voluntary down payment will reduce this charge. And in case you're wondering, yes you do have to be a qualified veteran to get one of these unbeatable deals.

If you're not a vet, you may want to consider the Federal Housing Administration's home loan services. The FHA offers loans to people who have a credit score of at least 580 and who can put at least 3.5% down. The government agency also offers mortgages for lower credit scores, but it requires more money down with these loans.

USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan. Given the low population density throughout most of the state, most areas qualify.

State & Local Assistance Programs

The state of Alabama has a few mortgage programs that are designed to help lower-income households obtain home loans. We'll talk about requirements and the application process for each one.

Alabama Mortgage Credit Certificates

The Alabama Mortgage Credit Certificate program is available to both government and private mortgages. This program will give home buyers a tax credit, and this works to reduce the amount of Federal taxes they owe each year.

This tax credit goes off of a percentage of the annual mortgage interest, and the remaining interest can be claimed as a mortgage interest deduction. However, all participants have to meet certain income and sale price limits to be considered eligible. It is also good to note that the amount of interest this program will cover is largely based on the applicant's mortgage loan amount.

Hardest Hit Alabama Fund

  • For loans of $150,001 or greater – You get a 20% credit
  • For loans of $100,001 to 150,000: $2,000/year cap – You get a 30% credit
  • For loans of $100,000 or less: $2,000/year cap – You get a 50% credit

Hardest Hit Alabama is a program that helps homeowners prevent their homes from going into foreclosure. There are several eligibility requirements you have to meet, and there are some things that will automatically exclude you from this program. If you're currently in active bankruptcy, have a mortgage-related felony, you have a rental property, second home, or a seller financed property, you won't be eligible.

If your mortgage is less than $258,690 and your total household income is at or below $77,700, you may be eligible. This program would give you between $30,000 and $60,000 to prevent the foreclosure proceedings if you suffered an involuntary unemployment, divorce, death of a spouse, disability, or medical hardship.

Additionally, this program can also help people who are struggling to pay their mortgages by providing loan modification assistance, lien extinguishment, and short sale assistance.

Home Investment Partnership Program (HOME)

The HOME program helps first-time homebuyers obtain the financing they need to be able to afford their mortgage payments. There is a Single Family HOME and a Multi-Family HOME program to choose from.

This specific program varies by city to city, but it helps you get the financing you need to purchase a 3 bedroom/2 bathroom new home that is priced around $70,000. Your household has to meet certain income requirements to be considered eligible for this program, and you have to be a first-time homebuyer.

Step Up+

The Step Up+ program began in June of this year, and it is a mortgage assistance program. This program is designed to help people who need down payment assistance buy can afford to pay their mortgages. The Step Up+ program takes in a little farther, and it also offers to pay the upfront split private mortgage insurance cost, and this goes up to $1,500.

To be eligible for this program, any prospective home buyer has to prove that their monthly household income is below 80% of their area's monthly income. The income limits vary from county to county, so it is important to know which county you want to purchase a home in.

The down payment funds from this program come in the form of a 10-year second mortgage, and you have to combine them with a 30-year fixed rate mortgage to qualify. Additionally, you have to meet these requirements to apply:

  • HFA Preferred conventional loans only
  • Want to purchase a new or existing home in Alabama
  • 620 or higher credit score
  • Complete a homeowner education course
  • Must use a participating lender

Natural Disasters

Earthquakes

Most of Alabama has a very low earthquake risk, while Birmingham and the northeastern edge of the state near Huntsville has a low earthquake risk. Here are counties which have a low risk: Cherokee, De Kalb, Jackson & Jefferson.

Standard rental and homeowner insurance policies typically do not cover earthquake damage, though they usually cover losses caused by fires which resulted from an earthquake. You can supplement your homeowner's insurance with an earthquake policy.

Flood Insurance

Most of Alabama has a very low risk of flooding. Here are counties with higher risk levels.

  • Low flooding risk: Barbour, Bibb, Butler, Chilton, Clarke, Clay, Coosa, Fayette, Franklin, Geneva, Houston, Lauderdale, Lowndes, Marshall, Perry, Russell, Shelby, Walker, Wilcox
  • Moderate flooding risk: Autauga, Bullock, Calhoun, Chambers, Choctaw, Coffee, Elmore, Greene, Hale, Henry, Jackson, Jefferson, Lamar, Lawrence, Macon, Madison, Marengo, Mobile, Montgomery, Morgan, Saint Clair, Talladega, Tuscaloosa, Washington
  • High flooding risk: Dallas
  • Very high flooding risk: Baldwin
  • Hurricane storm surges: Mobile county has a moderate risk of hurricane storm surges while Baldwin county has a very high risk of hurricane storm surges.

Homeowner's insurance policies typically do not cover flooding.

Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.

The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don€™t incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government€™s costs in the next disaster.

Typically, homes built after 2002, when building code regulations tightened, are subject to lower insurance rates than older homes. On the other hand, homes without hurricane straps, with roofs that do not meet current standards for wind, with older plumbing or with outdated electrical systems may be difficult €“ or very expensive €“ to insure.

Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.

Tornadoes

Much of the state is considered to have a moderate tornado risk, with the norther part of the state having a very high tornado risk. A basic homeowners policy should cover financial damages from tornadoes.

Hail

Hail damage is not uncommon across the state. Damage from hail is typically covered by home insurance policies.

Alabama Real Estate Laws

Alabama State Capitol Building in Montgomery.

Property Taxes

When it comes to property taxes, the state of Alabama has one of the lowest levels in the nation, ranking in with the second lowest percentage behind Hawaii. Property prices are much lower in Alabama than Hawaii, so when the low rate is combined with the low home price this means that on average you can expect to spend around $776 per year on property taxes if your home is valued at the median local home price of $161,853. This does fluctuate slightly by county, and Shelby County has the highest property tax rates in Alabama with a median assessment of $905.00 annually. The Birmingham metro area had an average assessment of $1,229 in 2016.

When you compare this to a national level, Alabama ranks as the 49th state out of 50 for property taxes as a percentage of the average income. This works out to 0.78% of the yearly income for Alabama residents, and 0.48% of the property's value when compared against a national average of a 1.24% assessment against the value of the property.

RESPA (Real Estate Settlement Practices Act) Laws

In 2014, the Federal government passed several laws that governed how mortgage agencies interacted with customers who had defaulted and were in danger of going into foreclosure. A few key points to these laws are as follows:

  • If you are currently more than 37 days out from your foreclosure date and you've requested a loan modification through the proper channels, the lender is forced to stop any foreclosure proceedings and review your situation for loan modification.
  • Foreclosure proceedings must wait a minimum of 120 days from the date you allegedly missed payments on your mortgage.
  • You are able to send an RFI (Request for Information) and an NOE (Notice of Error) to your mortgage company and your mortgage company is required to respond in a timely manner. This can help to stop any wrongful foreclosures.

Foreclosures in Alabama

Alabama foreclosures are done on a recourse basis. This means that if a person defaults on their mortgage, the mortgage lender can sue the defaulted party to make up for whatever mortgage balance they lost during the sale of the property, and any additional damages they incurred during the foreclosure process.

For example, if a person defaults on a mortgage and the balance is $90,000, and the lender sells the home at an auction for $45,000, they'll take a $45,000 loss. However, they can then sue the person who defaulted on the mortgage for the additional $45,000 they lost during the sale.

The majority of Alabama's foreclosure proceedings are done through a non judiciary process. This means the mortgage lender usually won't involve the courts in the foreclosure process. However, the mortgage lender is also able to go through the courts and have a judicial foreclosure if they choose. But, this usually takes more time, so the non judiciary foreclosure proceedings are more popular with mortgage lenders.

Borrowers who have defaulted on their mortgages have up to one year to attempt to redeem their homes. This potentially lengthy redemption period makes obtaining a deficiency judgment difficult. It also makes the foreclosure process somewhat more difficult to execute in Alabama.

Alabama's Foreclosure Processes

Alabama recognizes both judicial and non-judicial foreclosure processes. However, as a general rule, most foreclosures in Alabama use non-judicial foreclosure procedures. This is the case because most modern mortgage instruments issued in Alabama contain a Power of Sale clause that makes it easier to foreclose on a defaulted property.

Here is a brief overview of how each procedure works in Alabama:

Here is how the judicial foreclosure procedure works in Alabama:

The judicial foreclosure procedure works in Alabama only if there is no verifiable "Power of Sale" clause in the original loan provisions. If this is the case, here are the steps that the lender must go through to use the judicial foreclosure procedure:

  1. First, the lender must go to the county where the home resides to obtain a formal right to foreclose.
  2. If the judge agrees that the borrower is unable to make good on the mortgage, the judge will allow the lender to begin the foreclosure proceedings.
  3. The foreclosure proceedings start by having the lender record a "lis pendens" document at the county clerk's office. This document declares to the public that the property is being foreclosed upon.
  4. Once this document is recorded, the borrower could receive a written notice within 10-30 days that his property is about to be foreclosed upon. Since this is not required by state law, some lenders skip this step.
  5. Once the lis pendens document has been officially certified in the county clerk's office, the sale may be conducted in much the same manner as if were foreclosed in a non-judicial procedure.
  6. However, if the borrower contests the sale, the court may give the borrower up until the day of the sale to redeem the property unless the original terms of the mortgage clearly state that no such period be granted to the borrower.
  7. In order to redeem the property, the borrower must pay the full amount of the loan plus any interest and costs that were associated with putting the home up for sale.
  8. Once the redemption period ends, the property is then sold in much the same manner as if it were being sold during a non-judicial foreclosure.
  9. Furthermore, the lender may opt out of the judicial foreclosure process at any time after obtaining final permission from the court by simply selling the home as if the lender were going through the non-judicial foreclosure procedure.
  10. Here is how that process works:
    • The lender must first publish a formal notice of the sale in a newspaper that is published in the county where the home is located.
    • The notice must be published at least once for at least 4 consecutive weeks.
    • The notice must provide:
      1. The time and place of the sale.
      2. A valid description of the property.
      3. And the reason why the home is up for sale.
    • Once this condition has been met, the sale takes place at the county courthouse with the county sheriff leading the proceedings.
    • The sale usually takes place from 11 AM to 4 PM.
    • A bidder may bid as low as $1.00 on the property.
    • There is no reserve price. As a result, the highest bidder wins the right to purchase the home for whatever amount of the final bid.
    • Furthermore, Alabama state law does not restrict who can bid at these sales. As a result, the borrower and the lender could technically bid at the sale.
    • The winner of the auction receives the property upon receipt of cash or a cash equivalent.
    • If the borrower is not the winner of the auction, he has one year to redeem the property.
    • During this time, the lender may sue the borrower for a deficiency judgment if the final auction price is less than what is owed on the note.

Here is how the non-judicial foreclosure procedure works in Alabama:

  1. First, the lender must go to the county court to see if there is valid Power of Sale clause in the loan's original language.
  2. If there is such language, the lender may go ahead and sale the house using one of two procedures:
    • If the loan's provisions include a procedure for selling the home, those provisions will govern how the sale of the home is conducted.
    • If there is no such language in the original loan's provisions, the procedure that was outlined above for a judicial sale is used with a few minor modifications.

Here are those few modifications:

  1. The lender must publish a notice of foreclosure sale date for only three weeks in a newspaper that is published in the same county where the home resides.
  2. The sheriff who conducts the sale may move the date of the sale as he sees fit. Otherwise, the procedure that was outlined above is used throughout the sale of the home.

Learn More

Check out the following resources to learn more about local real estate markets across Alabama.