Birmingham Market by Class

76 Replies

Class A

Mountain Brook - https://www.neighborhoodscout.com/al/mountain-brook

Homewood - https://www.neighborhoodscout.com/al/homewood

Vestavia Hills - https://www.neighborhoodscout.com/al/vestavia-hills

Hoover - https://www.neighborhoodscout.com/al/hoover

Class B

Alabaster - https://www.neighborhoodscout.com/al/alabaster

Pelham - https://www.neighborhoodscout.com/al/pelham

Gardendale - https://www.neighborhoodscout.com/al/gardendale

Trussville - https://www.neighborhoodscout.com/al/trussville

Helena - https://www.neighborhoodscout.com/al/helena

Chelsea - https://www.neighborhoodscout.com/al/chelsea

Indian Springs - https://www.neighborhoodscout.com/al/indian-springs-village

Class C

Fultondale - https://www.neighborhoodscout.com/al/fultondale

Centerpoint - https://www.neighborhoodscout.com/al/center-point

Roebuck - https://www.neighborhoodscout.com/al/birmingham/roebuck-crest-estates

Forestdale - https://www.neighborhoodscout.com/al/birmingham (Unincorporated)

Adamsville - https://www.neighborhoodscout.com/al/adamsville

Graysville - https://www.neighborhoodscout.com/al/graysville

Hueytown - https://www.neighborhoodscout.com/al/hueytown

Pleasant Grove - https://www.neighborhoodscout.com/al/pleasant-grove

Mt. Olive - https://www.neighborhoodscout.com/al/gardendale

Irondale - https://www.neighborhoodscout.com/al/irondale

Moody - https://www.neighborhoodscout.com/al/moody

Leeds - https://www.neighborhoodscout.com/al/leeds

Grayson Valley - https://www.neighborhoodscout.com/al/birmingham (Unincorporated)

Pinson - https://www.neighborhoodscout.com/al/pinson

McCalla - https://www.neighborhoodscout.com/al/bessemer (Unincorporated)

Mulga - https://www.neighborhoodscout.com/al/mulga

Minor - https://www.neighborhoodscout.com/al/mulga (Unincorporated)

Morris - https://www.neighborhoodscout.com/al/kimberly (Unincorporated)

Kimberly - https://www.neighborhoodscout.com/al/kimberly

Class D

Midfield - https://www.neighborhoodscout.com/al/midfield

Tarrant - https://www.neighborhoodscout.com/al/tarrant

West End - https://www.neighborhoodscout.com/al/birmingham/zipcode/35211

Ensley - https://www.neighborhoodscout.com/al/birmingham/zipcode/35208

Inglenook - https://www.neighborhoodscout.com/al/birmingham/inglenook

Class F

Bessemer - https://www.neighborhoodscout.com/al/bessemer

Fairfield - https://www.neighborhoodscout.com/al/fairfield

Eastlake - https://www.neighborhoodscout.com/al/birmingham/zipcode/35206

Lipscomb - https://www.neighborhoodscout.com/al/lipscomb

Brighton - https://www.neighborhoodscout.com/al/brighton

North Birmingham - https://www.neighborhoodscout.com/al/birmingham/zipcode/35207

Comparison by Class

Homewood – Class A

Median Home Value - $379,563

Median Household Income - $66,573

Individuals Below the Poverty Level – 11.1%

Crime Index – 8 out of 100 (100 being Safest)

School System – Top 10 in the State

Average Market Rent - $1,420

Alabaster – Class B

Median Home Value - $179,984

Median Household Income - $73,325

Individuals Below the Poverty Level – 10.2%

Crime Index – 40 out of 100 (100 being Safest)

School System – Top 50 in the State

Average Market Rent - $1,362

Centerpoint – Class C

Median Home Value - $117,940

Median Household Income - $39,134

Individuals Below the Poverty Level – 26.7%

Crime Index – 12 out of 100 (100 being Safest)

School System – Lower 3rd of State

Average Market Rent - $1,162

Tarrant - Class D

Median Home Value - $73,542

Median Household Income - $26,800

Individuals Below the Poverty Level – 32.6%

Crime Index – 1 out of 100 (100 being Safest)

School System – Lower 3rd of State

Average Market Rent - $1,045

Alabama is similar to all other states regarding property class. They are driven mainly by school systems and crime statistics. Since Birmingham is a smaller MSA the per capita rates for crime are skewed and typically reflect more crime than actually happens.

Homewood is a Class A area however, due to recent annexations the crime stats reflect an area of higher than normal crime. Homewood is an affluent suburb of Birmingham. It was chosen as a comparison to show this fact. It has one of the highest median home values and income in the state. The school system is consistently rated in the top 5 of the state. This is a predominately owner-occupied market.

Tarrant City is a lower income area that is a predominately tenant-occupied market that receives assistance in one form or another. This area consistently rents above market. It is a higher crime area of Birmingham.

Birmingham is not the crime filled market data would typically suggest. It consists mainly of domestic abuse and/or petty vandalism.

If you are investing in Birmingham I ask you do your own research to verify the data provided. Class C & D areas are the best markets for renting properties. The Class D areas in Birmingham would likely be Class C areas in other markets however, the classes have been assigned based on local activity and knowledge of the markets as a whole for Birmingham and the MSA.

I used to Appraise Real Estate prior to Investing. I only invest in Class C or D areas since the return is higher and the pool of potential occupants never decreases. In Class A or B areas the return is lower since the entry prices are higher and the return is typically half of predominately rental areas. If you are investing for cash flow it is better to invest in areas that reflect your goals instead of investing in areas that do not offer the returns you are seeking.

If you have any questions about Birmingham I welcome you to reach out to discuss further.

So the difference between class A and class D is only $300/month in rent? If you need 3X rent as salary this is a difference of $900 per month or about 10K per year. But if you look at median home values the difference is almost $300K so you would need $100K additional income to purchase in A vs. D not to mention 5X the down payment. This makes no sense to me.

The market in Birmingham actually makes perfect sense in terms of Real Estate usage and supply/demand. Property usage/supply drives demand. If you are in a predominately owner-occupied areas (Class A & B) the median value is higher and appreciates at a different pace than non owner-occupied areas. If you are in predominately rental areas (Class C & D) the rent amount not value appreciates. Investors that attempt to rent in predominately owner-occupied areas attempt to fit a square peg in a round hole unknowingly. This is in every market in the country.

In it's most simple terms, no one ever won the Monopoly game by owning Boardwalk. They won by accumulating hotels in an area. In order to do that they controlled supply on that section of the board. The more you invest in an area you begin to have a say in market value and market rent.

If you analyze every market they will all reflect the same data when comparing owner-occupied areas vs rental areas. 

You only make the most money/return when a property is functioning under its highest and best use. If you're in the suburbs a housing authority voucher won't appraise for as much because there are less comps. You're not comping home value. You comping rent. If you go to rental areas you have less retail market sales because that not the highest and best use of the areas.

@Anish Tolia I hope this helps.

Originally posted by @Jason Cory :

I fully expect rent ratios to be different at D and A class properties. I do see that in other markets where I invest in. For example in Indy a class B 100-120K home rents at 1% while a class C 70-80K home rents at 1.2% and class D 50K home may rent at almost 2%. But there is a large drop in actual rents from 1200/month down to $500/month. What  I have a hard time with is your statement of a Class D property renting for over 1K per month in Birmingham while a class A $300K property only fetches 1400.

Because the demand is not tenant occupied in Class A areas. It's owner occupied in Class A areas. If you live in a $300k area you don't rent your house. You go to these areas bc you can afford to buy. 

If you are in a Class C area you have a mixture of owner occupied & tenant occupied. 

In Class D it is driven by assistance whether rent, food, etc. Investors set the rent amount (rent comps) that forces a housing authority to pay market rent. Investors set these markets not owners. The only way to get a house is to pay the market rent. The housing authority appraises their rent amounts by properties that are not using a voucher. I was the independent contract appraiser for the housing authority when I appraised. 

1% rule is a 10% return as you stated. 2% is a 20% return. 

I don't make the data. I've included screenshots from the Zillow app for available rents that are either for rent by owner or from the MLS feed. It's how every market is because it's driven by usage of the property & demand for said usage.

The $675 in Tarrant is a 2 bedroom. The screenshots support the data provided.

I am not attempting to argue but I would like investors to be more versed about investing in Birmingham and investing for cash flow in general instead of continuing to unknowingly put a square peg in a round hole because they are spending more money for a lessor return not only in Birmingham but other locales as well.

Nice @Alpesh Parmar . You made a wise decision going to Grayson Valley. No city taxes since it's unincorporated. Be gentle in Centerpoint going forward. It had a good run once Huffman High School was built. Many in the city moved there because the new school was the shiny new object but rents have started to decrease and there is an over supply of available properties for rent and sale currently. You can still make money in Centerpoint but if you decide to invest there start lowering your purchase price to absorb the decline in the market. I'm not sure if it's a temporary over supply or if it will last. Clay-Chalkville and Pinson are in the area of Grayson Valley/Centerpoint and unincorporated also but similar markets to Grayson Valley.

@Jason Cory I appreciate the effort that went into this article, however, I do disagree with your ratings.  Not to go into detail but please tell me how you can generalize so much of an area that is the 2nd or 3rd largest city in our metro as a Class F when houses in that city can be sold for over $100,000?  There are some good placement here but there are many that really need to be revised.

Originally posted by @J Benoit :

@Jason Cory I appreciate the effort that went into this article, however, I do disagree with your ratings.  Not to go into detail but please tell me how you can generalize so much of an area that is the 2nd or 3rd largest city in our metro as a Class F when houses in that city can be sold for over $100,000?  There are some good placement here but there are many that really need to be revised.

 That's the city of Bessemer not unincorporated that includes McCalla, Adger, parts of Hueytown, etc. that have a Bessemer zip code aren't included in the links to data. 

Bessemer was ranked last year as the #2 crime city in the country per capita. That deserves an F all day. 

Are you working the area? 😂

I only work the C, D, & F (Eastlake only) areas as you know so I'm throwing myself under the bus but I won't even work the other's in the F class. It's an analysis based on how an appraiser will value each market with the market condition report included in every appraisal. 

Remember, agents & appraisers always disagree on market analysis & values but appraisers are the ones that have the final signature when loans are needed.

Investors not familiar with the market have an idea of how their investment will be analyzed by an appraiser with the class segments with this thread now. 

@Jason Cory I think your article is a good reference for those who don't know Birmingham but I do still disagree with a lot of the order.  You are right that agents and appraisers and I would even add in there that investors all have their own opinions on market analysis.  I'm just voicing mine as I have worked in these areas for 15 years.  It's important that people don't read this and think that is the way it is without question.  

Yes, I work in almost all areas of Jefferson County so I'm very familiar with how an A compares to an F.  However as mentioned, my order of properties is much different than yours.

Originally posted by @J Benoit :

@Jason Cory I think your article is a good reference for those who don't know Birmingham but I do still disagree with a lot of the order.  You are right that agents and appraisers and I would even add in there that investors all have their own opinions on market analysis.  I'm just voicing mine as I have worked in these areas for 15 years.  It's important that people don't read this and think that is the way it is without question.  

Yes, I work in almost all areas of Jefferson County so I'm very familiar with how an A compares to an F.  However as mentioned, my order of properties is much different than yours.

 No worries but I think you may be confusing neighborhood boundaries within a specific market versus the overall market of a municipality. They are different but many times viewed as the same thing. 

It's like saying Lorna Road is an A just because it's in Hoover. Lorna is a C because of the population directly on the road while Hoover as a whole is an A. It's not Trace Crossing or Ross Bridge by any means however, it doesn't get rated a D or F like it would if it was located in Hueytown for example because it's in Hoover. It gets the school district & overall increase of neighborhood classification because it's in Hoover. 

That's a part appraisers are trained in versus agents. Agents see things as a whole instead of the segments within a given market.

Also why one house in Bessemer that's historic & renovated may sell for $100,000 but the house next door is still a $5,000 house. 99% of people with $100,000 Will live where the house next door looks like theirs & not run down like they are on most every block in Bessemer. 

Principle of Substitution applies within neighborhood boundaries as well as cities as a whole.

Both have their own individual analysis that determine value & in turn, market class. 

That is exactly my point.  I still stand firm that my grading of neighborhoods is different than yours due to that exact reasoning.  Some areas are multiple classes and some, in my opinion, are at a different level than your opinion.  I'm not trying to call you out or say you are wrong.  I just want people to know this is not 100% how these neighborhoods are defined.  The BP community relies pretty heavily on this site.

Originally posted by @J Benoit :

That is exactly my point.  I still stand firm that my grading of neighborhoods is different than yours due to that exact reasoning.  Some areas are multiple classes and some, in my opinion, are at a different level than your opinion.  I'm not trying to call you out or say you are wrong.  I just want people to know this is not 100% how these neighborhoods are defined.  The BP community relies pretty heavily on this site.

  the data is for the city as a whole. I don't think you're calling me out. I've had these discussions with Underwriters and agents for years. At worst investors will understand our Market from our discussion and see that investors in the market can actually have intelligent conversations about it.

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