CENTER FOR BUSINESS AND ECONOMIC RESEARCH / THE UNIVERSITY OF ALABAMA
& ECONOMIC INDICATORS
Volume 68, Number 3
March 1999
Alabama Housing Affordability Index
Fourth Quarter, 1998 and Year-end Summary
Housing affordability surged during
the last quarter of 1998. The
Alabama Housing Affordability Index
(AHAI), which measures the affordability of existing housing for the
state and its ten metropolitan areas,
increased from 153.9 in the third
quarter to 160.7 during the last three
months of the year. A combination
of falling mortgage interest rates and
somewhat lower housing prices
worked to increase the state’s HAI
by almost seven percentage points.
The average composite mortgage
rate fell from 7.08 percent in the third
quarter to 6.88 percent in the fourth
quarter. During the same time
period, the statewide median home
price fell from $98,898 to $96,634, a
drop of $2,264. For the year, the
state’s housing affordability index
registered 156, the highest it has
been since 1994.
Similar gains in housing affordability
were registered for the rest of the
country. The housing affordability
index for the United States increased from 132.8 in the third
quarter to 138 during the last three
months of 1998. The housing
market for the nation mirrored the
situation in Alabama, with the U.S.
average median home price falling
$1,700 during the fourth quarter. In
general, housing prices tend to
soften during the winter months as
housing demand slackens. From a
pricing perspective, it would be hard
to find a better time to purchase a
home.
Housing affordability increased in six
of the state’s ten metropolitan areas
during the fourth quarter. The HAI
rose in Anniston, Decatur, Dothan,
Gadsden, Huntsville, and Tuscaloosa. Not surprisingly, these were
the same metro areas that reported
lower median home prices for the
period. Huntsville, once again, had
the highest affordability number,
breaking over 200 in the fourth
quarter. Basically, this means that
families earning the median income
in Huntsville of $52,100 dollars had
more than twice the income needed
to purchase the median price home
in this metro area.
Housing affordability remained
virtually unchanged in Florence and
Montgomery, and declined in the
Birmingham and Mobile Metropolitan Areas. Most of the decline in
affordability for the Mobile metro
area reflects rising prices in Baldwin
County, which has benefited from
the strong economy and the associated increased demand for vacation
and recreational properties. During
the last quarter of 1998, the median
home price in Baldwin County rose
by over $9,000. For the first time
this year, the Tuscaloosa metro area
did not have the lowest housing
affordability. Tuscaloosa’s index
number rose by 10 percentage
points during the last quarter,
reflecting a decline of almost $6,000
in the median priced home.
The Alabama Housing Affordability
Index is calculated as the ratio of the
actual median family income to the
income required to purchase the
median priced home in the state.
An index number of 100 indicates
that a family earning the median
income has just enough buying
power to qualify for a mortgage on
the median priced, existing single
family house, given standard
underwriting criteria. The higher the
index number, the more affordable
housing.
Leonard Zumpano
Alabama Income Tax Collections
Rising wages, investment income, and employment were reflected in Alabama’s 1998 income tax collections. Income
taxes paid by Alabamians to the state totaled $2.41 billion in 1998. This amounted to an 8.6 percent increase over
income tax collections in 1997, the largest increase of the last nine years. As positive economic growth continued in
early 1999, January 1999 income tax collections were 13.4 percent above January 1998.
1997
($ Millions)
November
194.931
December
172.368
1998
January
160.412
February
224.271
March
198.912
April
229.326
May
285.756
June
242.496
July
114.337
August
215.590
September
217.475
October
115.971
November
220.076
December
188.783
1999
January
181.858
Alabama Unemployment Rate
The state’s unemployment rate continues to remain below the national average. Both the state and national rates
have shown dramatic reductions since they reached cyclical peaks in 1992 for the United States and 1993 for
Alabama. The decline in unemployment rates reflects both increased employment opportunities in the state and
also slower labor force growth.
1997
Alabama
U.S.
November
4.7
4.6
December
4.6
4.7
January
4.2
4.7
February
4.2
4.6
March
3.6
4.7
April
3.4
4.3
May
3.6
4.3
June
4.8
4.5
July
4.2
4.5
August
4.1
4.5
September
4.2
4.6
October
4.5
4.6
November
4.0
4.4
December
3.3
4.3
1998
2
Alabama Business and Economic Indicators
Alabama Sales Tax Collections
Alabama collected $1.43 billion in sales taxes during 1998. Collections were up $79.87 million over 1997, for a 5.9
percent increase indicative of positive sentiment among the state’s consumers. Sales tax revenues during the 1998
Christmas season (November and December) totaled $249.37 million, 6.0 percent higher than 1997 Christmas sales
tax revenues.
1997
($ Millions)
November
113.811
December
121.367
1998
January
131.671
February
98.036
March
109.334
April
118.447
May
118.121
June
122.331
July
124.188
August
117.394
September
118.168
October
123.821
November
119.467
December
129.902
1999
January
135.688
Average Weekly Hours Worked in Manufacturing
The average number of hours a manufacturing employee has worked in a week reflects demand in the manufacturing
sector and the availability of labor. During times of high demand for manufactured products, workers put in more
overtime. Clearly, many firms are working their existing labor force longer rather than add new employees. U.S.
Average Weekly Hours Worked is one of the 10 items in the Index of Leading Economic Indicators.
Alabama
U.S.
November
1997
42.6
42.6
December
42.9
43.0
January
42.3
41.9
February
41.7
41.7
March
41.8
41.7
April
41.5
40.8
May
42.2
41.8
June
42.5
41.8
July
41.7
41.1
August
42.2
41.7
September
42.1
41.5
October
42.0
41.9
November
42.4
42.1
December
42.8
42.6
1998
For more information about these and other Alabama economic indicators, please visit the CBER Internet
site at http://www.cba.ua.edu/~cber
Center for Business and Economic Research
3
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Alabama Housing Affordability Index
4th Quarter, 1998 and 3rd Quarter, 1998
Metro Area/
County
Median
Income
Median Loan/Value
Monthly
Annual
Price
80%
Payment
Payment
Average Quarterly Interest Rate was 6.88%
Anniston
Birmingham
Decatur
Dothan
Florence
Gadsden
Huntsville
Mobile*
Montgomery
Tuscaloosa
$37,500
44,000
43,000
38,700
37,800
34,900
52,100
37,600
43,700
39,800
$80,967
124,667
95,600
87,750
78,600
74,117
100,400
112,779
104,233
110,300
$64,773
99,733
76,480
70,200
62,880
59,293
80,320
90,223
83,387
88,240
$426
656
503
461
413
390
528
593
548
580
Baldwin County
Cullman County
Lee County
Marshall County
Mobile County
Tallapoosa County
37,600
35,300
42,000
35,500
37,600
35,200
131,308
81,067
121,733
72,900
94,250
120,167
105,047
64,853
97,387
58,320
75,400
96,133
690
426
640
383
496
632
Statewide Average
U.S. Average
39,207
45,584
96,634
131,000
Required
Income
HA Index
4th Quarter
1998
HA Index
3rd Quarter
1998
$5,109
7,866
6,032
5,537
4,959
4,677
6,335
7,116
6,577
6,960
$20,435
31,464
24,128
22,147
19,838
18,706
25,340
28,464
26,307
27,839
183.5
139.8
178.2
174.7
190.5
186.6
205.6
132.1
166.1
143.0
179.3
140.2
172.2
152.2
190.8
169.0
194.8
138.1
166.3
132.7
8,285
5,115
7,681
4,600
5,947
7,582
33,141
20,460
30,724
18,399
23,788
30,329
113.5
172.5
136.7
192.9
158.1
116.1
119.7
152.8
141.6
175.6
163.3
121.9
160.7
137.8
153.9
132.1
Sources: Alabama Real Estate Research and Education Center, Culverhouse College of Commerce and Business Adminstration,
The University of Alabama and The Alabama Association of REALTORS. National data supplied by the Federal Housing Finance
Board and the Research Division of the National Association of REALTORS.
* The Mobile Metro Area, which is made up of Baldwin and Mobile counties, is atypical because of the higher concentration of vacation
properties located in Baldwin county. Because these vacation homes have much higher prices than owner-occupied residential
properties, the HAI understates housing affordability for the Mobile Metro Area.
Alabama Business is a monthly publication of the Center for Business and Economic Research, Culverhouse College of Commerce, The
University of Alabama. Articles reflect the opinions of the authors, but not necessarily those of the staff of the Center, the faculty of the
Culverhouse College of Commerce, or the administrative officials of The University of Alabama.
All correspondence should be addressed to: Editor, Alabama Business, Center for Business and Economic Research, The University of
Alabama, Box 870221, Tuscaloosa, Alabama 35487-0221.
The University of Alabama
Center for Business and Economic Research
Box 870221
Tuscaloosa, Alabama 35487-0221
Address service requested.
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Permit No. 16
Tuscaloosa, Alabama 35401