Who is buying 700K houses in Huntsville? (Madison, Gurley: school districts, contractor)

[Three Wolves In Snow]

BlackRock has been going around buying up all kinds of homes. Not sure if in your state, as well, but it’s not always “transplants”.

Look into it, and if they are buying in your state, the next question should be “why “.

[steveklein]

Originally Posted by HB2HSV

Actually that's not a bad investment for the Huntsville market. It's roughly averages out to be a 10% appreciation per year which is doubled what I calculated to be before I moved here in 2008. That analysis drove my decision to get a 15 year loan instead of 30, since housing prices were so affordable back in 2008 I could afford a 15 year mortgage. The decision proved to be a correct one when we sold in 2017. We did not get a whole lot out of appreciation but we've paid down a whole lot of principle. So the majority of our gain came from our paid down equity.

The housing price increase in the last 3 years is "abnormal" for the Huntsville market. It's good for those who've already own homes but not so good for the young people just starting out looking to buy their first home. The rising prices is becoming an housing affordability issue for the first-time home buyers.

10% per year? It's actually less than 4% per year. 10% per year over 30 years is incredible for real estate.... think Florida beachfront or prime southern California real estate from the 70s to 2000s

[HB2HSV]

Originally Posted by steveklein

10% per year? It's actually less than 4% per year. 10% per year over 30 years is incredible for real estate.... think Florida beachfront or prime southern California real estate from the 70s to 2000s

How'd you figure? 300% increase in 31 years?

[rnc76]

It is compounding interest, you can’t just divide the growth by the number of years. Play with this calculator to see the huge difference.

https://www.investor.gov/financial-t...est-calculator

It is about 3.5% interest for property to increase 3X in 31 years. 10% interest would result in a 22X increase. Big difference!

Going back to the original post, Huntsville has seen modest real estate growth until recently. Essentially, home prices have slightly outpaced inflation other than a few spurts. People here accepted that it is normal for a 24 year old couple just out of college to be able to buy a nice 1800sqft tract home. The reality is that is unusual when you look nationwide at metros with high paying jobs. It is a new dynamic. Nashville is probably a good place to look for where we are headed. Nashville started booming a few years prior and it hasn’t stopped young people from moving there. In fact, they are flocking to it.

[RocketDawg]

Originally Posted by rnc76

It is compounding interest, you can’t just divide the growth by the number of years. Play with this calculator to see the huge difference.

https://www.investor.gov/financial-t...est-calculator

It is about 3.5% interest for property to increase 3X in 31 years. 10% interest would result in a 22X increase. Big difference!

Going back to the original post, Huntsville has seen modest real estate growth until recently. Essentially, home prices have slightly outpaced inflation other than a few spurts. People here accepted that it is normal for a 24 year old couple just out of college to be able to buy a nice 1800sqft tract home. The reality is that is unusual when you look nationwide at metros with high paying jobs. It is a new dynamic. Nashville is probably a good place to look for where we are headed. Nashville started booming a few years prior and it hasn’t stopped young people from moving there. In fact, they are flocking to it.

Nashville has one thing Huntsville doesn't have - a very nice Interstate highway and freeway system. And unless one materializes it will soon negatively impact growth. We have a nice airport than can handle many times the present passenger and air cargo cargo though, so that is a huge plus.

Single family building permits were actually higher in 2006 and 2007 than they are now, then fell off during the recession and are back to the peak at that time. https://www.acre.culverhouse.ua.edu/...adison?graph=6

Hopefully the housing costs will stabalize soon so younger people can afford what they once could (the ZEstimate from Zillow on my house actually decreased lately). Looks like developers are counting on a huge demand for apartments given the current boom in construction (I believe the article said something like 8000 units either under construction or approved, in over 30 separate complexes).

It'll be interesting to see what the 2020 census actual counts are, and compare those to the July 1, 2021 estimates that will be released next spring. Those estimates will take into account the actual census counts as well as modified estimation methodology. A lot of the current growth spurt happened after the April 2020 census data cutoff date.

[HB2HSV]

Originally Posted by rnc76

It is compounding interest, you can’t just divide the growth by the number of years. Play with this calculator to see the huge difference.

https://www.investor.gov/financial-t...est-calculator

It is about 3.5% interest for property to increase 3X in 31 years. 10% interest would result in a 22X increase. Big difference!

OK I see. Thanks!

[lpc123]

One of the biggest determinants of future home-buying demand is changes to the bankrate.com mortgage survey, which today is:

"On Sunday, July 04, 2021, the national average 30-year fixed mortgage APR is 3.290%. The average 15-year fixed mortgage APR is 2.680%, according to Bankrate’s latest survey of the nation’s largest mortgage lenders."

Here is a chart of the 30-year trend.

[RocketDawg]

Originally Posted by HB2HSV

OK I see. Thanks!

The compound interest equation is fairly simple to use: https://www.google.com/search?client...UTF-8&oe=UTF-8

[FatTails]

My crystal ball says the housing market is already starting to cool off a little. Buyers aren't quite as willing to waive the appraisal and inspection contingencies like they were a few months ago. Of course, cash is still king so good luck trying to buy a house with a VA, FHA, or USDA mortgage.

[ArmyWife86]

Some people didn't have the opportunity to buy houses when they were more affordable. Military families move frequently without having the option for a long-term plan for 5-10 years so there are always newcomers to Huntsville. Outstanding school districts drive prices up too (Madison schools). Huntsville is known for higher education as well. I've noticed property prices are up near the university districts because there's a lot of demand and not a lot of houses for rent/sale in the area.

Huntsville is a very attractive area because a lot of medium-sized cities have become so large in the past decade that people don't want to deal with that traffic any longer, and a lot of people move out of cities like NY or DC, too.

What you could buy for 150-250k a few years back is about $300-400k now but that's the same almost everywhere. I have friends in the process of purchasing property and the price is like that in every decent area. Huntsville is a wonderful option for so many people whether they are professionals, retirees, young families, college students or blue collar workers. It's a lot easier to get around Huntsville than most other places of the same size because you don't have to drive to other cities for certain amenities.

There aren't a lot of cons besides the weather but every place has something. I have never heard any negative opinions about Huntsville. It's a decent place in my opinion. Nobody thinks it's a good thing to pay double or even triple for a home. The price is determined by supply and demand. There's not enough supply and a lot of demand. It's the same in other states too.