IS IT A GOOD IDEA TO INVEST IN ALABAMA?

 IS IT A GOOD IDEA TO INVEST IN ALABAMA?

Is it a good idea to invest in Alabama?

Located in the southern United States, Alabama's capital is Montgomery. Also nicknamed the Cotton State, its GDP of $221 million ranks this state 27th in terms of economic wealth. Two of its largest cities, Montgomery and Birmingham, may be of interest to investors. But is it really a good idea to invest in Alabama?

Investing in Alabama

Investing in Montgomery, Alabama

Montgomery, the capital of Alabama, had a population of approximately 201,000 in 2017. This figure is down slightly by 0.5%. According to experts, this decline continues, as this year is the first in 18 years that the population rate has fallen below 200,000 inhabitants. This is the lowest level since 1999. Economically, the city employs 88,100 people, a figure down by 0.6%. The economy is essentially based on three pillars: public administration, the military, and manufacturing. However, the poverty rate is estimated at 22.1%, a figure higher than the national average of 13.1%.

From a real estate perspective, the median home price in 2018 was $79,600, an increase of 1.5%. However, according to Zillow, this price will decrease by 5.8% this year. Rents are stable, averaging $859 per month.

Read also: Is this the right time to buy a house in the United States?

Investing in Birmingham, Alabama

Birmingham is the largest city in Alabama with a population of approximately 212,000. However, the city has not experienced any population growth since 2010, according to the U.S. Census Bureau. In fact, from 2000 to 2010, Birmingham lost more than 30,000 residents. This is due to the job market. Indeed, Birmingham is falling behind economically. This is the gist of a report by a Boston-based consulting and analytics firm commissioned by the Bold Goals Coalition of Central Alabama. The study indicates that Birmingham lags considerably behind booming Southern cities and has not yet fully recovered from the Great Recession of the previous decade. The region's industries rely too heavily on workers without college or advanced degrees, and these workers are likely to lose their jobs due to automation, the report says. Meanwhile, there is a shortage of high-tech industries, particularly life sciences, and local workers who are trained for such jobs often leave the region to find work.

From a real estate perspective, even though the median price of homes and rents increased by 1% to $99,900 and $885, respectively, caution is advised. If there are fewer residents in the city, it will be difficult to find tenants.

Should you invest in Alabama?

Alabama's two largest cities appear to be losing growth, which isn't a good sign for investors. They can turn to other nearby cities like Chelsea, which are growing quite well but are still in their infancy. Otherwise, there are other, more buoyant markets offering good returns, such as Ohio, with cities like Cleveland. For those looking for a safe and affordable market, there's still the west coast of Florida.