Department of Numbers

Alabama Home Affordability

The data below quantifies Alabama home affordability by using home prices and home price indices to calculate price-to-income and price-to-rent ratios.1 The maximum affordable loan amount for the median household income is also calculated. You can also compare Alabama home affordability to other states.

Alabama Home Price-to-Income Ratios

The home price-to-income ratio for Alabama comes from the Federal Housing Finance Agency's relatively new state median price series and their purchase only index combined with Alabama annual median household income data. The FHFA home price series yields a dollar ratio (top chart) while the index results in an index ratio (bottom chart). Based on the latest FHFA state home prices in June 2010, the price-to-income ratio for Alabama was 3.15.

Home Price-to-Income Dollar Ratio: FHFA

Chart of Alabama home price-to-income ratio using FHFA median price

Home Price-to-Income Index Ratio: FHFA

Chart of Alabama home price-to-income ratio using FHFA HPI

Note: Index set to 100 in Q1 of 2000

Alabama Home Price-to-Income Ratio History

Date FHFA
(Dollar Ratio) 		FHFA
(Index Ratio)
September 2011 — 106.5
June 2011 — 106.0
March 2011 — 106.6
December 2010 — 108.9
September 2010 — 112.2
June 2010 3.15 114.1
March 2010 3.09 115.0
December 2009 3.26 124.0
September 2009 3.29 118.7
June 2009 3.30 122.6

Alabama Home Price-to-Rent Ratios

The price-to-rent ratio for Alabama is determined for both the FHFA median price and the purchase only index by calculating a ratio with the median contract rent. The price-to-adjusted rent value takes into account CPS reported household size to attempt to correct for quality differences in renter and owner occupied homes. More on that process here. Again, the median price ratio is a dollar ratio and the HPI ratio is an index ratio defined to be 100 in Q1 2000. The adjusted price-to-rent ratio for Alabama was 21.94 in June 2010.

Home Price-to-Rent Dollar Ratio: FHFA, FHFA Adjusted Rent

Chart of Alabama home price-to-rent ratio using FHFA median price

Home Price-to-Rent Index Ratio: FHFA

Chart of Alabama home price-to-rent ratio using FHFA HPI

Note: Index set to 100 in Q1 of 2000

Alabama Home Price-to-Rent Ratio History

Date FHFA
(Dollar Ratio) 		FHFA Adjusted
(Dollar Ratio) 		FHFA
(Index Ratio)
September 2011 — — 84.3
June 2011 — — 83.8
March 2011 — — 84.3
December 2010 — — 86.1
September 2010 — — 88.7
June 2010 22.82 21.94 90.3
March 2010 22.38 21.52 90.9
December 2009 23.18 21.18 96.3
September 2009 23.41 21.39 92.2

Alabama Inferred Affordable Mortgage

The inferred affordable mortgage is determined by taking the median household income for Alabama and calculating the mortgage 30% of that income could afford. Traditionally, 30% of income is the maximum amount a homeowner could use towards a home loan. Inferred affordable loan values are calculated from median household income and average monthly mortgage rates. The amounts are not adjusted for inflation.

Inferred Affordable Mortgage

Chart of Alabama maximum affordable home loan amount

Alabama Inferred Affordable Mortgage History

Date Inferred Mortgage
November 2011 $214,831
October 2011 $212,769
September 2011 $211,749
August 2011 $207,742
July 2011 $200,996
June 2011 $201,939
May 2011 $198,898
April 2011 $194,351
March 2011 $194,351
February 2011 $191,917
January 2011 $196,151
December 2010 $197,288
November 2010 $207,003

1. Specifically, Home prices are from the FHFA seasonally adjusted, purchase only quarterly series. Rent data is from the Census ACS and income is from the Census CPS. Rent and income data for the previous year is carried into the following year for calculations prior to release of new data. ↩

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