Biringham vs. Huntsville, AL

17 Replies

Hello BP.  I'm currently analyzing the Birmingham and Huntsville markets and would like some feedback from investors or professionals who have done business there within the last few years.  My research indicates that both markets have been rather flat with regard to appreciation and monthly rental cost.  Huntsville is actually on the downward trend with monthly rents, however the city seems to be attracting a good number of millennials especially in the tech sector.  I'm thinking that within the next few years, the rental cost curve will start to swing up in Huntsville, at least more so than Birmingham. Is this what you suspect also, or am I wrong?  What are other details I should take into consideration when comparing these two markets? How do you think this information would affect appreciation and/or monthly rents?  I would appreciate your honest feedback. 

Huntsville's rental prices have been relatively flat for the last 2-3 years owing to the fact that they were relatively high for the last 5-6 years. I would say that they are now reaching equilibrium. I would agree with your analysis that rental prices will be on the upswing again soon as over the last several months we have seen major announcements on jobs growth for the Huntsville metro. (Toyota-Mazda plant, Facebook, BAE Systems, etc). Additionally many would be first-time home buyers are being forced to rent because of tight inventory on resales and new home builders not being able to keep up with demand.

Account Closed

I don't know Huntsville all that well but can speak to Birmingham - it's been a pretty hot market the last few years but is big and diverse enough that there are still plenty of opportunities for a great ROI while staying out of the rough parts of town. But you do need to either physically drive through any neighborhood you are considering or find a good local partner, because one block can be very different from the next.

Hi Chris,

Piggybacking on what @Tal Simpson said... Find you someone with boots on the ground that works in these communities, it is different from block to block. With regards to the upward swing in rent, I'm believe so with some of the economic growth we're seeing entering into the market within the next few years and the current market stats. Birmingham and Huntsville both have acquired some pretty interesting contracts for companies moving / expanding into the region. 

As far as value appreciation,  it's going to be very "hyper-local," speaking from Birmingham. While our city isn't massive, it is spread out and appreciation is going to depend on the township you're in. A Broker report just released for our market as a whole from our Association of Realtors shows sales down 2%, median and average price range up 7% and inventory decreased by 14%. This was comparing June 2017 vs June 2018. Our sales are suffering, mostly due to lack of inventory. However, our prices are going to continue to rise.

With those stats and our current market, depending on the class of property you're interested in, I do expect rental rates to continue to rise. I know far too many people that are selling their primary residences and pushed into rentals just for the fact they can't find anything.

Hope some of this helped some... Good luck!

I’m a buy and hold investor in Huntsville, and I’ve thought about branching into Birmingham, but I’m just not familiar enough with the neighborhoods. Huntsville’s home prices are starting to increase (much like the rest of the country) to the point that investors would have a hard time cash flowing enough to make it worth their while. With that being said, there are still occasionally good deals to be had. The neighborhoods are also pretty easy to assess because they are almost all separated by landmarks and don’t typically change from block to block. Another important factor is with all the government industries in Huntsville, the area is almost recession proof because government spending continues when private insdustry is struggling. At least in my experience in this area.  

my wife and I are real estate agents in Huntsville and have watched them throw some serious money and attention downtown and you are CORRECT, definitely drawing in millennials... Looking forward to steady growth in the next few years. Also right next door to Madison AL and it we have seen a lot of new business there as well.... best of luck!

I've got 5 SFH in birmingham and a apartment in huntsville. Bham is more stable and huntsville is more of an emerging market.

Originally posted by @Adam Mykel Cox :

Hi Chris,

Piggybacking on what @Tal Simpson said... Find you someone with boots on the ground that works in these communities, it is different from block to block. With regards to the upward swing in rent, I'm believe so with some of the economic growth we're seeing entering into the market within the next few years and the current market stats. Birmingham and Huntsville both have acquired some pretty interesting contracts for companies moving / expanding into the region. 

As far as value appreciation,  it's going to be very "hyper-local," speaking from Birmingham. While our city isn't massive, it is spread out and appreciation is going to depend on the township you're in. A Broker report just released for our market as a whole from our Association of Realtors shows sales down 2%, median and average price range up 7% and inventory decreased by 14%. This was comparing June 2017 vs June 2018. Our sales are suffering, mostly due to lack of inventory. However, our prices are going to continue to rise.

With those stats and our current market, depending on the class of property you're interested in, I do expect rental rates to continue to rise. I know far too many people that are selling their primary residences and pushed into rentals just for the fact they can't find anything.

Hope some of this helped some... Good luck!

 Hi Adam,

What townships in/around Birmingham and/or Huntsville have better appreciation vs. cash flow?

I'm interested in these markets. 

Thank you, 

Erin

Originally posted by @Account Closed :

my wife and I are real estate agents in Huntsville and have watched them throw some serious money and attention downtown and you are CORRECT, definitely drawing in millennials... Looking forward to steady growth in the next few years. Also right next door to Madison AL and it we have seen a lot of new business there as well.... best of luck!

 Hi Al,

How long have you and your wife been agents in this area? In which areas do you invest?

Thank you in advance, 

Erin

Hi Erin! We have been working "together" for appx 15 years.  That's how long I've been in and my wife has been licensed for 23 years or so... We are both associate brokers, full time, all the time. 

We have flipped 3 in the past and honestly  not in a position at the moment to dive in very aggressively for now due to other obligation financially.

I'm an education addict though and LOVE everything BP. These guys all seem super nice and have put together an awesome think in my opinion. :)

Originally posted by @Helen Chen :

@James Lowery I'm still learning the area. You  mentioned "almost all separated by landmarks and don’t typically change from block to block.' Would like to know more details about that. Thank you!

North of Hwy 72 from downtown east to Research Park is better to be avoided unless its a killer deal. West of Memorial Parkway (excluding the 5 points neighborhood just outside of downtown) is overpriced and likely wouldn't cash flow. These major streets do most of the work in marking off the best places to look for properties. 

Originally posted by @Lane Kawaoka :

I've got 5 SFH in birmingham and a apartment in huntsville. Bham is more stable and huntsville is more of an emerging market.

 Hi Lane,

When you say "stable" are you saying home prices/rents are flat? Do you still see Birmingham as a decent area for investing? I was drawn there by the low prices, but some Census numbers (such as negative population growth) are making me nervous, especially when compared with Huntsville.

Stable means that a tenant is in there and things are going smooth.

If you buy in not the garbage area or blocks I think it transcends a negative population. This is for small stuff like SFH.

Its not like you are buying an apartment.That's when big data comes into play.