Market Spotlight: Montgomery
Topics: Research, Residential Real Estate
Markets: Montgomery Area
The greater Montgomery area is a region of economic diversity. In addition to the state capital and regional governments, the area is also home to Maxwell-Gunter Air Force Base, a major military installation. It is also home to Air University, a prestigious Air Force training program. A thriving industrial base, led in part by Hundai Motor Manufacturing Alabama, has driven the area’s reputation as a growing manufacturing center.
Montgomery is also an emerging technology hub. The River Region has strategically aligned public and private partners with the defense industry to create Alabama’s first Internet Exchange (one of only four in the Southeast). Leaders from city government, county government, the state of Alabama, Maxwell-Gunter Air Force Base, Air University, and the Cyber College of the Air Force, along with state universities and the RSA Data Center, envisioned the project. The Montgomery Defense Information Systems Agency is located in the Gunter Annex of the larger Maxwell Air Force Base. It is one of eight Department of Defense Core Data Centers.
A quick review of the economic development headlines coming out of the greater Montgomery area reveals an impressive array of growth and new investment. Hyundai, for example, recently celebrated the grand opening of a new cylinder head machining plant. The project represents a $388 million investment that will create approximately 50 new jobs in the area. Hyundai Motor Manufacturing Alabama (HMMA) started vehicle production in 2005 and is the River Region’s largest private manufacturer with 2,700 full time and 500 part time employees. Additionally, HMMA has been named the most efficient and highest productivity auto OEM in North America, and has an annual economic impact estimated at $4.82 billion for the state of Alabama.
“With our latest expansion, HMMA continues to show its strong commitment to the people of Montgomery and the people of Alabama,” Hyundai President and CEO Dong Ryeol Choi said when plans for the new engine plant were announced in 2018. “Hyundai is continuing its track record of investing in new manufacturing technologies to ensure the long-term success of our U.S. assembly plant.”
The manufacturer is also supporting public education in the River Region. Hyundai recently announced a $250,000 donation to Montgomery Public Schools for STEM (science, technology, engineering, mathematics) education. The initiative will benefit over 3,000 students from five elementary schools in the area.
Growing manufacturing and technology sectors have impacted residential markets in the Montgomery area. Total residential sales increased 7.7% year-over-year (y/y) in May, while year-to-date (YTD) sales are up 9.1% from 1,815 last year to 1,980 currently. Thanks in part to rising sales activity, inventory (residential listings) in the area contracted significantly in May, declining 29.4% y/y. May’s drop marks 12 consecutive months of y/y inventory declines, and this was a major factor contributing to rising home prices. Median sales price increased 21.9% y/y in May, and it is now up 7.5% on the year. It should be noted that May’s significant median sales price gain is an outlier, a sign of a really good month in a seller’s market (3.6 months of supply currently). Expect future price growth to moderate to its current YTD range of 7-8%.
With tightening inventory and increased sales, it was surprising to see the area’s days on market average increase by one day y/y from 92 to 93. Year-to-date, however, properties are selling 9 days faster than during 2018, which was a record year for real estate in Alabama, the River Region included. Stay tuned for more information about Montgomery’s growing economic base and its impact on residential markets in the area.