Is Huntsville more affordable than where you live now?

Today we're going to ask the question, is Huntsville more affordable than where you live now? And then the second question we're going to ask is by how much? So Megan, today that's a huge topic for us. It's something that draws a lot of people to the Huntsville area, and we want to go into what those details are and some of the nuances so that people truly understand whether it's more affordable in their situation compared to where they are now.

Yeah. And it so depends on what you're coming from, right? Like if you're coming from a market where things are very expensive, it's going to seem very affordable. And if you're coming from a market where things are not, it's going to seem expensive. And that is obviously true, but it's also, you know, in terms of our housing costs link, it's really apparent because they're not cheap anymore. But for what you get, it can be a real value.

Absolutely. And I balance the words cheap and affordable. They don't mean the same, but it used to be that you would come here and be like, "Wow, I can get that." And it was mind-blowing. You know, I think that it was very easy to get something for like under 200 here. When I first started in real estate, it wasn't super fancy, but you could get a house and it would be okay. And now that would be quite the hat trick.

Absolutely. And I look at like anecdotal evidence from my clients and what they've told me about, and then also kind of some more empirical evidence, right? Looking at statistical norms. So like Seattle's one I love to beat up on because it's such a delta, but we have so many people that move here from there, right? And it's insanely expensive. I was on Zillow yesterday kind of getting prepped for this, and I was looking at, okay, our average price point fluctuates between the mid-3s to 4, right? And I was like, okay, what can you get for $400,000 there? You could get what I'm going to call a raft. And I literally mean it. It was sitting on a dock in the water and it was a wood box on top of it, 480 square feet and a one-bedroom, one-bath, and that was the cheapest thing and it was like $399. Yeah.

And I'm like, that's insane, right? And then you start looking at an average house in that area, you know, a three-bedroom, two-bath, a four-bedroom, three-bath, and you're already over a million. And then when you look at anecdotal evidence, I had clients that moved here two years ago and I love them. Dave and Deb, I know you still watch. So, they like to send me information, which is super helpful after you move here. By the way, if anybody else is watching that's already moved here, definitely continue to keep us in the loop. But they had budgeted $60,000 to live here on an annual basis. And they're frugal. They make every penny count, but they wound up only spending $32,000 their first year here. And he messaged me that and I was actually in a meeting with another client looking to retire here, and so it was apropos that text came through in that moment. But they also sold a very, what I'm going to call, standard house up there for considerably more than what they spent here on a much nicer home. And that arbitrage play is still there. And if you don't know what arbitrage means, it just means buy low, sell high, and then buy low again somewhere else.

Yeah. So if you're coming from an urban area or a heavily populated area of any type, you're going to find that you can generally afford more here, a larger house for the same price. It's not a crazy deal anymore, but the average price of a home in say San Francisco or Seattle is going to be a very expensive, very nice house here. So you can get a lot more for your money.

Yeah. And a lot of people, they're like, "Okay, but I'm moving to Alabama. Like, I'm not going to get paid enough to afford the house." And so, that's a big misnomer. And there parts of Alabama that are very economically depressed. They have been for centuries because they're rural farming communities and farmers are not getting paid more today than they did yesterday. But in our area, our incomes are above the national average to begin with. But you know, if you're comparing say like a computer programmer or software engineer in San Diego versus here, there is going to be a pay discrepancy. You are more than likely going to make less here on the same rung of the ladder. But the average pay difference, depending on where you are in Southern California, is anywhere from 12% to 20% difference. But the average cost of living difference is 68% less here. That's property taxes, home cost, gas, groceries, and your state income taxes are all different here than they are there.

I know we've talked about it before, but the gas is a huge one. Yes. It's a lot less here.

Absolutely. I've literally had people from California, and I do know this is literally, that have asked me if we price it by the half gallon because it's so much lower than what they see where they are.

Yeah. But it's a mixed bag and not everything, it's not like you're going to like the land of everything being super inexpensive. It's not like you're going to have 50-cent tacos like that. There's a lot of nice high-end food. The food, I think that going out to eat here is not an inexpensive endeavor, really. It's probably less than if you were in Manhattan, but you know, a cup of coffee is like what, $3.50, $4 here?

Yeah.

So no, and you're right, groceries have gone up, gas has gone up, you know, like everywhere, right? What I do tell people though is our increases rise with the national, right? But we start off at such a lower point. So if something costs $100 and has a 4% appreciation or increase in inflation, right now it costs 104. But if you're in another market where that costs 200, it now costs 208. So like inflation is based on your original starting point, too. So because we're less expensive than so many other areas, our increases are in absolute terms lower even though the percentage may be the same.

And I think that you'll save money in terms of there's a lot of free activities here. Yes. There's volleyball courts in South Huntsville and soccer fields and hiking trails and all kinds of stuff, parks, a lot of things that you can go do that don't cost you any money.

Absolutely.

And a lot of places you can't leave the house without spending $100.

Yeah. No, exactly.

I have felt that way. I felt like I was hemorrhaging money in other places. You're absolutely right. It is so much less expensive to live here and go do things. And you actually have the time to do it on top of that because you're not stuck in the car for two hours a day.

That's a great point. Now, when we look at like areas people would move here from too, it is relative to where you come from. So areas where people move here frequently and where we have a lot of clients from: Northern Virginia, DC, Southern Maryland, right? That kind of metroplex there. Chicago is one. I have some people coming in from New York right now, several, Southern California, Seattle, and Colorado Springs, particularly now with Space Command coming here. And I would even say the Space Coast of Florida. If you're moving here from Southern California or Seattle, you're going to see the biggest difference in the economic difference. Yes, you will make less money if you're on the same rung of the ladder, but your cost of living will be significantly lower. New York and DC are also places where you see a lot of that. Chicago as well, but for different reasons than those other areas. Property taxes have a huge play. So, I have people moving down right now. We're going to closing in a couple of weeks on a house and they're coming from New York, not New York City, outside of the city. They're kind of rural and our, their property taxes here are going to be a quarter of what they paid there.

Yeah.

And they keep checking with me because they don't believe it.

Right. Yeah.

Now, if you come here from Colorado, Colorado Springs particularly, it's going to be very similar. It is less expensive here on average, but not by a wide enough margin that you might not, you might be above the average, right? You could be more expensive for you. And then if you're coming here from the Space Coast of Florida, it's about dead even, but that has to do with state property or state income taxes.

Yeah. Property taxes are one where people are either blown away because some markets in the country, they're very, very expensive.

Absolutely. And where that impacts people not only if you have a mortgage, but if you have paid off your home or you paid it off when you buy here. So let's say, and this is something we run into pretty frequently, you're coming from one of those higher cost of living markets. You bought there 20 years ago. You have a ton of equity built up because of the rapid appreciation those areas saw. You move here and you buy all cash. You buy that $600,000-$700,000 cash. Your property taxes are maybe three grand, depending on maybe $4,500 if you buy in Madison. And then your homeowner's insurance is two grand. You are paying annually to own your home less than you were paying in property taxes somewhere else. And it's like it's ridiculous. And you're saving all that money off the mortgage. You're saving it off taxes. If you're coming from Florida, like our insurance, like you're just wondering if your house is really insured based on the difference.

Yeah. And then so it's just really surprising to people those housing costs and related costs are so much lower than what they experience elsewhere.

But I mean, even so, insurance has gone up in the last few years here. Like if you're someone who's lived here, you're like, "What keeps happening?" Because it has gone up.

Absolutely. Yeah. So there'll be local yals that tell us that, and that's true of everywhere, right? If they had lived anywhere else, it would have gone up, too. They just, you know that, but it's gone up because your property values have gone up. They haven't gone up because people have changed the system.

Absolutely. And I saw a lot of people complaining about their property values going up. And I'm like, I get it until you go to sell. Negatively, you want your property values to go up.

Yeah. It happens incrementally, guys. It doesn't all happen the day you decide to sell or get the equity line. You know, it's going to happen year over year. It's good for the market, healthy. We would much rather that than your property value be going down. So, but it does surprise people the delta.

Now, another surprise that gets people is sometimes we're pricier than they expect. So, when we were talking about earlier the cheap, but I'm talking more on the higher end of things here locally. So, and I see feature creep, but not budget creep. And I'll give you an example. Somebody will call me and say, "Hey, we need a 3,000-square-foot home, four bedrooms, three baths, three-car garage. Can we get that for $600,000?" Now, I have to ask some additional questions. Are you looking new? What kind of lot are you looking for? Do you want to be on a mountain? Back to trees? Be in a cookie-cutter neighborhood? What school district? What tax zone?" And we start off with, yes, we can make that work. But then it's like, well, we really need a bonus room, too, or a fifth bedroom or a fourth bathroom, or we need a half-acre lot, or we need to back to trees or be on a mountain or be in this school zone. And it's like, okay, well, we've now increased the budget, too, because we were at the cap. And if you don't see it on Zillow, odds are it doesn't exist. Now, there are new construction exceptions, and I'll say that, but if you can't find a home that sold in the last 60 days that matches your criteria and the price range you're looking for, then the market doesn't provide it. And there's nothing you or I are going to do about that. The market is what it is. And so, if you start having feature creep on what you're looking for, fine. Absolutely. I want you to buy what you want. Understand that's going to come with an additional cost.

Yeah. And this is about expectations. People read that Huntsville has made it to the top of these lists of affordability and they think, "Wow, I'm going to be able to go there and get everything I want." And they're thinking, "I have $500,000 to spend, that's going to be a mansion there." And while it is affordable, like you can afford to live here, everything you want isn't extra inexpensive here.

Yeah. So, if you decide that you want to live in a super nice house with a lot of features in a highly coveted area, it can get pricey. And it's usually those people who are in that 600 plus category who are like, "This is way more expensive than I thought it would be."

And I'll say for sure for that. And then I think that $450,000 to $600,000 price range, they're not necessarily always getting what they want if they're looking at used homes. Resales particularly in like southeast Huntsville where you may see more of like aged infrastructure like cast iron pipes, galvanized pipes, you may see foundation repairs whether or not they were done by an engineer, and you run into this situation where these houses need to be renovated or updated and it's like, "Oh, I thought at 450 I was getting move-in ready." Well, you can move into the house. There's nothing wrong with it, but it's not updated. You're going to spend money refinishing the floors, you're going to replace the carpets, you're going to have to do some exterior maintenance, replace the roof, things like that. And that catches people by surprise, too. So, $450,000, you know, five years ago was a perfect home. Absolutely. That has changed quite a bit.

Now, there is still the $300,000 and less brand-new construction, three-bedroom, two-bath, four-bedroom, two-bath homes out there, too. So, it depends on what you want. If you want something grand, it's going to cost more. If you want something brand new, bigger lot, bigger house, it's going to cost more. But there are still those opportunities to move here and pay cash or get a small mortgage and live here very affordably. And don't let this discussion dissuade you from that either. Just understand what you're getting into. You're going to get a small lot, small house. It will be all brick and a very basic interior, white cabinets, white countertops, light-colored LVP floors, carpet in the bedrooms kind of thing. But it'll be a nice house. It's just nice as in the condition of it, not necessarily a bunch of extra features.

Yeah. I mean, and that's just how markets work. The bottom of our market has shifted; it's no longer a $150,000 house. The bottom of the market is around 300. You can still find things in the mid twos, but it's tricky and you don't have a lot of selection, and you just need to have manageable expectations. While this is one of the more affordable markets, especially for somewhere this affluent and with this many options, this great of a lifestyle, it is not, it's not like the '90s where you would go from an urban environment to a less urban environment and just have money to burn.

No, absolutely. I agree with you, and it depends on what stage of life you're in. We've done numerous videos on this and we'll do more in the future because you guys love them on retirement in Huntsville and how affordable it is. Alabama in general is very kind to people 65 and older and people that are taking retirement-based income drafts. So things like not taxing most pensions, you get a certain amount from your 401(k) or IRA, like six grand or more per individual before it's taxed. If you make under a certain amount and you're 65 and older, you don't pay the state portion of your property taxes. So there's all these little caveats for people that are approaching or in retirement that draw them here, too.

Yeah. When we look at Florida, if you move to Florida, yes, you don't pay income tax, but you've got higher property tax and your insurance is effectively a tax. Versus you move here, depending on your income situation, you may pay no income tax again, and you've got lower property taxes and you have lower insurance. So the financial scales may be tipped in your favor here depending on your personal situation.

I do think moving here for a lot of people in a lot of places is going to be a financial advantage. But there are people who, I mean, this isn't the most inexpensive market in the country.

Sure.

And depending on where you're coming from, you're either going to be like "wow" or way. Absolutely right. And I feel like we are trending from low cost to middle cost. We did a podcast a little bit ago where we talked about the economic advantages of being here and whether or not we're in a bubble and are we at the peak? Are we at the mid, the beginning? And I still feel this way, we're in the mid. So we are in an upward trajectory. So buying here today versus buying here two or three years from now is a different financial commitment and you're in a different equity position and appreciation position. So in general, and I know I'm a realtor and it's always "buy a house today", but it's not always the best day to buy a house, I think if you look at a long-term scale, a 10-year, 15-, 20-year horizon, you're much better off buying here today than you are three years, four years from now.

You know, that's how it is with any appreciating investment. It takes time.

Absolutely. So coming in now, you take advantage a lot of what the differential between what you sell that house for elsewhere and what you pay for it here.

Yeah. I think that the big thing is that people need to have managed expectations.

Sure.

Especially at the higher price points with homes here. The thing that you often get that is much better here is square footage. You might be selling a, I have people all the time be like, "Oh, 2,000 square feet." And then they end up with 3,500 square feet because they just didn't think that that was possible. So you do get a lot more in terms of square footage here at those mid to higher price points for sure. I would say the more research you do on the front end, the better off you are. So if you come in with an expectation of 2,000 and you get 3,500, great. If you come in with the expectation of paying for a 3,500-foot home, paying what you would for 2,000, that's a problem. So it is doing that research in advance and seeing where prices are for what you want, not just general. There's the average, but there's what you want, where you want it, and that could be up or down from what you expect.

So it's a mixed bag. I think that's the bottom line, that it really is a mixed bag. And this is just the way that everything is these days. Things are more expensive than they used to be.

And so process for us, right? Like if somebody reaches out, they register on our website, they email us, they schedule a call, whatever, we're going to find out what you want. We call it a relocation consultation. And really, we want to find out who you are, what's bringing you to the area, what your timeline is, what your expectations are around budget and what you can get for it, what part of town you're going to live in. And these initial calls go anywhere from 30, 45 minutes, maybe an hour depending on people's personal situations. And that's really what we dig into initially. Sometimes that initial call is the last call. We realize, hey, our market doesn't offer what you want and you don't have the ability to compromise on it, so we're not the right fit. More times than not, obviously, we are able to, otherwise people wouldn't be calling us. But we have those conversations so that we understand, okay, we can eliminate these three areas because they don't offer what you want in the price range you want it, or they don't have new construction and that's what you want, or they don't have trees and that's what you want. But we have to understand the whole package, not just the square footage.

And if you're looking for that deal, if you're coming here because you have seen that this is an affordable place and you want that deal, they exist, but you might have to be open to a larger area or be able to make a few different compromises. You might not be able to get that deal in the middle center of Madison City Schools. You might not get the 4,000-square-foot home with all the customized things that you want in those areas at the price you want. You might have to move to a different area or choose a smaller home. Compromises might have to be made.

I would say the number one compromise I see in that right now, and it's been trending this way over the last year or two, is in condition of the home actually.

Yeah.

Because while land is inexpensive here compared to other areas, the premium has certainly increased over the last couple of years. And I heard somebody phrase it this way and they said acreage is the new luxury. And that's 100% accurate. Where we used to price for luxury, we now price for privacy, acreage, distance from someone else. And so I see people moving here and they're like, "Oh, but if I move out to XYZ place, I can get more house for the money." You may, absolutely, but that house is 50 years old and hasn't been updated in 40. And so you need to be prepared for that when you come here, and photographers all photoshop everything. They don't take photos very obviously of areas that are problematic. You walk across the floor and it's like walking across the ocean, it gives so much. These are things that catch people by surprise, and you've paid for plane tickets and a hotel room to come down here and you've kind of convinced yourself, despite what we may tell you, that you're going to be able to find this thing that's a steal.

Yeah.

So you absolutely have to adjust expectations: age of home, location, size, and condition.

That's, I mean, I like to, if I know someone's coming and I have time, we'll go preview stuff before they get here. Absolutely. So it gives them a much better idea of what's really out there.

And if you know you're moving here, I'll go out and do video tours for you. I have probably four or 500 home tours on the back end of the YouTube channel that are just private tours for people where I send them a link and I'm going to tear that house apart. I'm going to be absolutely like a jerk about it because I don't know what's important to somebody when they move here. And what I think is okay, they may not. Everyone is different, and what I've learned over the years is just be on the extreme end and be upfront about it. Tell them, "Hey, I'm going to be more critical of this home than I really personally feel in most cases, but because I don't know your temperature level on this stuff, I can't assume that you're okay with everything that I personally would be okay with." And so I'm going to point it all out. Everything I see, everything I smell, everything I hear. And like I have people right now, we are looking at a lot for them to build on. They're selling their house in Texas. They're going to be here in a couple of weeks. And we were looking at a place for them to stay temporarily while they build. And they're like, "Is this a good area?" I'm like, "It's a good area, but you're pretty close to the highway." And then it dawned on me, "Wait, you're coming here from Dallas, though? Our highway is ridiculously non-traffic compared to what you're coming from there." Yeah, we like road noise. Great. Like the ocean.

So I'm not telling them not to live there. I'm just telling them this is what you're going to experience while you are there.

Okay.

Yep.

I think that we've covered this pretty effectively.

Absolutely. So hopefully we set the expectations right. If we haven't, it's always a one-on-one call to begin with anyway. So we'd love to hear from you and what you're looking for so we can help you with your relocation. So thanks for watching.

Thank you everybody.