TUSCALOOSA — While rents continue to rise in north Alabama and across the state, Huntsville’s average rents are below what they should be, according to researchers at the University of Alabama and two other schools.
Eight out of 12 metro areas across the state recorded year-over-year increases higher than the national average of 3.4% in May according to the Waller, Weeks and Johnson Rental Index.
In north Alabama, Florence and Decatur doubled the national average, recording yearly increases of 8.0% and 7.26%, respectively.
“Rents continue to rise as a result of stubbornly high mortgage rates,” 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 said.
Meanwhile in Huntsville, rents have moderated, with just a 2.11% increase from May 2023 to last May, according to the study.
Also, the study showed, the average rent of $1,504.01 in the state’s largest city is below what it should be – $1,511.32.
Despite the yearly increases, the average rent in Alabama is $1,372, more than $600 cheaper than the national average. Waller noted while rents are cheaper across the Southeast compared to major metro areas such as New York and Los Angeles, renters are still feeling the financial strain.
According to the index, renters in Daphne need to make $68,095 to avoid being rent-burdened, the highest salary mark in the state.
In North Alabama, renters in Decatur need to make $46,571 to be considered not rent-burdened; in Florence, the annual salary needed is $41,317 and, in Huntsville, renters need to make $60,161.
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.”
Along with Daphne — Birmingham, Decatur and Huntsville — all recorded increases in the base salary households must make to avoid paying more than 30% of their income to rent.
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.
“The uncertainty of mortgage rates and the upcoming election are likely to influence mortgages rates staying elevated and as such rent prices,” Waller said.
The average rent in Decatur is $1,168.78, but should be $1,039.04, according to the study. The increase is 7.26% since May 2023. Florence’s average rent is $1,032.92, but should be $914.23; the increase is 8.06% since May 2023.
“Increases in rents continue to exceed incomes in most areas in Alabama,” Waller said.
Complete interactive data for the U.S. and Alabama can be found here.
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