Why Alabama’s Housing Market is Great for First-Time Homebuyers

Why Alabama’s Housing Market is Great for First-Time Homebuyers

Alabama’s housing market is among the most attractive in the nation. Offering a blend of affordability, charm, and opportunity, the state is an ideal spot for first-time homebuyers to put down roots and cultivate their dreams. SmartAsset, an online source for consumer-focused financial information and advice, ranked 185 best places for first-time homebuyers based on affordability, competition, growth potential and social factors.  Alabama metros making the list were Huntsville (7), Birmingham (86), Mobile (89), Montgomery (120), Tuscaloosa (147), and Dothan (149).  Here’s why first-time homebuyers should look to Alabama.  



The median sales price of a home in Alabama in 2023 was $215,951 according to the 2023 Annual Alabama Economic & Real Estate Report published by the Alabama Association of REALTORS®.  That’s a drop of 4.8 percent from 2022 and compares favorably to the median sales price of a home in the U.S. of $382,600 in 2023.  

According to finance guru Dave Ramsey’s website, Ramsey Solutions, “the average cost of living in Alabama is 12.2% lower than the average U.S. city, making it a relatively inexpensive place to live.”  Compared to neighboring states, Alabama’s cost of living was lower than all except Florida.



Finding that first home can be a daunting task in areas where the supply of available homes is low – especially those within the reach of first-time buyers’ budgets.  Alabama offers an abundance of homes for new homeowners.  In December 2023, there were 14,723 active real estate listings in Alabama which is an almost 19 percent increase over the same month in 2022.  New home construction in the fourth quarter of 2023 exceeded the total homes built for the same period in 2022.


Attractive Communities

A recent Realtor.com survey found that first-time homebuyers favor locations with people in their own age groups and life stages.  In 2022, the average age of a first-time homebuyer was 35, according to the National Association of REALTORS®. Research by analysts at Construction Coverage ranked Alabama 13th in the number of homebuyers under age 25.  

In Alabama, the average age of the state’s population is 39.  

Along with living near people in their own age group, first-time homebuyers look for communities with restaurants, shopping, and entertainment.  In Alabama, you don’t have to live in a large city to find exceptional cuisine, retail therapy, or leisure activities.  From the mountains in north Alabama to the Gulf Coast, Alabama offers affordable entertainment for adults and children of all ages.  The state is home to 21 state parks, a world-class public golf trail, as well as science, nature, and history centers.


Assistance Programs

First-time homebuyers often need a little help.  Many new buyers struggle with coming up with the required down payment or need help in determining how much they can afford to invest in a home.  In Alabama, there is a special First-Time Homebuyer Savings Account program that provides a state income tax deduction on money saved through a qualified savings account for a down payment and other specific costs associated with buying a home.  The Alabama Association of REALTORS® (AAR) worked with the Alabama Legislature to create the program that began in 2019.  Initially, buyers had five years to save and spend their funds but AAR was successful in extending the savings period to December 31, 2028.  The program also is available to homebuyers who have not owned a home in the past 10 years.  For more information about the First-Time Homebuyer Savings Account, click here.

The Alabama Housing Finance Authority (AHFA) has checklists, tips and links to homebuyer tools like mortgage calculators and homebuyer resources from federal agencies to help make purchasing a home more affordable.  

With a winning combination of affordability, availability, assistance and attractive communities, first-time homebuyers are not likely to find a more accommodating market than Sweet Home Alabama.