Pressed for Space: A look at the Rocket City’s real estate market for houses

HUNTSVILLE, Ala. (WHNT) — It’s no surprise that Huntsville has been growing and expanding rapidly.

Three years ago, it became the largest city in the state of Alabama. Now it is within the top 100 largest American cities and is still one of the fastest growing cities in the nation.

In the past four years alone, the city has grown by more than 10%. That’s the equivalent of 17 people moving to Huntsville every day. With this meteoric rise in the number of people, opportunities abound – but that growth also presents challenges.

Do we have enough housing for both new and longtime residents? Do we have enough apartment space? Is what’s available affordable?

Over the next two weeks in ‘Pressed for Space in the Rocket City,’ News 19 will dig into these questions .

In this story, we take a look at the current real estate market for houses.

Even a casual look around tells you the Huntsville housing market has changed, and the changes keep coming. The experts, like Anthony Jones with 5 Star Real Estate Agency and Huntsville Association of Realtors President Lore Hislop, see it.

“When I was growing up here, your major roadways you’d see a lot of cotton fields, a lot of you know, vacant land. And that has changed drastically in the past five years,” Anthony Jones with 5 Star Real Estate Agency said.

“The growth is incredible, right? We’ve seen it from every angle, every part of the county has been touched,” Hislop said.

The median home price today in Huntsville is $340,000  – up 53% from five years ago. Madison County property tax assessments in 2022 were $343 million, this year expected assessments are $455 million. That is big money for schools and more.

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But there’s been another major change, and this one hurts.

“It’s interest rates, we haven’t seen rates at this level in the market in quite some time,” Bank Independent Senior Vice President of Mortgage Lending Amy Henry said.

Mortgage interest rates are nearly 7% on average nationally. Henry says those rates have affected how much power buyers have.

“Interest rates have reduced buying power,” Henry added. “When we were in 2020 and 2022, the majority of that time, a consumer’s power buying had increased. Because of interest rates being so low, I can buy more house when the rate’s lower, now that interest rates have increased, they can’t buy as much.”

That can be discouraging for people like Huntsville resident Stephanie Johnson.

“Back in May or so, I got pre-approved. And we searched for almost the whole month of June. About the end of June I said, ‘OK, let’s pause it.’ and maybe by end of the year, middle of next year, I might, I know I can get approved. So that’s not the most challenging part, it’s making sure I’m comfortable with what I want,”

There’s been one big change in buyers’ favor – the crazy COVID-19 housing market is over.

“It was definitely a seller’s market. We had under a month of inventory at some points on the market in 2021, which isn’t healthy,” Hilsop says.

In July 2020, the median home sale price in Huntsville jumped 12% from the year before, then prices rose 18% in July 2021 and shot up 17% in 2022.

Now, there are three to four months of housing inventory.

“And we came out with a balanced market, which now buyers have options,” Hislop said.

But as for sellers, 5 Star Real Estate Agency Broker & Owner Lindsay Pruitt says they are in a situation where they have to negotiate more than they’ve had to in the previous two or three years.

“Buyers are in a situation where the seller wants to sell the house, so they’re willing to negotiate, and at the end of the day, I think everybody kind of wins, that’s the point of negotiation,” Pruitt explained.

You may be wondering, who is a buyer in the current market? High rates and prices staying near historic levels leave plenty of people out of the market. But again, Huntsville is growing with a significant median income in the area.

Huntsville Manager of Urban and Long-Range Planning Dennis Masden says the area median income (AMI) is roughly $80,000 because Huntsville is a fairly educated community and its AMI tends to be higher than a lot of peer cities.

Masden said he thinks there is a lot of “existing and new stock coming in” at a price point where if you’re making roughly that amount – there is a fair amount of stock out there for you.

The Huntsville area Association of Realtors reports nearly 2,000 houses were sold from March to June, a bit higher than the same stretch last year.

Higher interest rates usually mean home prices go down, but Henry says the market hasn’t loosened up. Because sellers, currently paying 3-4% interest, face their own dilemma – something a realtor like Jones sees daily.

“The reality is, where are you going to go?” Jones said. “And so that next house, is currently priced at the current market value, you’re also dealing with current interest rates. And so a lot of current homeowners, when they go look for new homes, they run the risk of potentially paying more for a home or just as much for a home that may, in essence, be smaller than what they were looking to sell.”

Tim Blair and his wife Karen are looking to sell and to buy in this new landscape.

“Well, it’s changed a lot since I was young, houses were a lot more affordable than they are today. What we’ve seen is a lot of high interest and the prices of homes has accelerated so much, through the years. We’re in our seventh home, and now we’re looking to scale down, instead in all the past years we kept trying to get a little bigger, a little more land,” Tim Blair said.

They’re thinking south Huntsville to be closer to the grandkids. Seven homes in, they’ve accumulated some wisdom.

“In the past everything we have purchased to where when we got ready to sell it we made a nice profit that we could put down on the next place. So, you have to start small and just keep, keep moving up,” Karen Blair added.

Pruitt has been here 14 years and told News 19 she’s seen a lot of change.

“As far as the real estate market, I think it’s just holding steady, stabilizing a little bit. But I think overall, it’s an awesome place to be,” Pruitt said.

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