TUSCALOOSA, Ala. — Rents remain on the rise in Alabama according to researchers at The University of Alabama, Florida Gulf Coast University and University of Mississippi.
Nine out of 12 major metro areas across the state recorded year-over-year increases higher than the national average of 3.44% in July according to the Waller, Weeks and Johnson Rental Index. Rental increases in Auburn, Decatur and Dothan were more than twice the national average, recording yearly increases of 7.6%, 9.2%, and 7.0% respectively.
“Although rents continue to rise, the rate of increase is slowing in many metro markets” said Dr. Bennie Waller, the William Cary Hulsey Faculty Fellow in the UA Culverhouse College of Business and a research associate in the Alabama Center for Real Estate. This slowdown is more pronounced in the South and Midwest while the Northeast and Western US markets continue to see above average rental increases. The slowdown in rent growth can be attributable to several factors including increasing vacancy rates as the result of increased rental supply, changing demographics in the type of housing demand and falling interest rates which may be driving increased home ownership.
Despite the yearly increases the average rent in Alabama is significantly less than the national average of almost $2,100. Waller noted that while rents are cheaper across the state of Alabama, year-over-year increases in Auburn and Tuscaloosa were significant at least partly attributable to both being University towns.
According to the index, the income required to avoid being rent-burdened in Alabama metro markets is in excess of $60,000 in Auburn, Daphne, Dothan and Tuscaloosa. These amounts are substantially less than the US average of almost $83,000. Renters in Daphne need to make $68,095, the highest salary mark in the state. The Department of Housing and Urban Development, considers residents to be rent-burdened if they “pay more than 30% of their income for housing including utilities.”
Waller and fellow researchers Dr. Ken H. Johnson, an economist in FAU’s College of Business, and Dr. Shelton Weeks, the Lucas Professor of Real Estate at Florida Gulf Coast, added the rent-burdened metric to their monthly analysis of the most overvalued U.S. rental markets.
“While the expectation is that mortgage rates are likely to fall later this year, housing affordability coupled with the uncertainty of the upcoming election are likely to continue to drive elevated rent prices,” Waller said.
Residents in eleven (6 in California) of the top 100 markets need to earn more than $100,000 to avoid being considered rent-burdened, according to the index.
Complete interactive data for both the U.S. and Alabama can be found on the ACRE Website.
The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.
