Department of Numbers

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Montgomery, Alabama Home Affordability

The data below measures home affordability for the Montgomery, Alabama metropolitan area using price-to-income and price-to-rent metrics.1 The maximum affordable loan amount for the median household income is also calculated. You can also compare Montgomery home affordability to other cities.

Montgomery, Alabama Home Price-to-Income Ratios

The current price-to-income ratio for Montgomery is 2.89 as determined by March 2014 Realtor median sales prices. The second chart shows a history of the ratio as an index calculated from the Federal Housing Finance Agency's Montgomery HPI series. Median household income data for Montgomery is from the Census American Community Survey.

Price-to-Income Dollar Ratio: Realtor

Price-to-Income Index Ratio: FHFA

Note: Index set to 100 in Q1 of 2000

Montgomery, Alabama Home Price-to-Income Ratio History

Date Realtor
(Dollar Ratio)		 FHFA
(Index Ratio)
March 2014 2.89 —
December 2013 2.90 103.3
September 2013 3.17 103.5
June 2013 3.10 102.6
March 2013 2.75 101.4
December 2012 2.87 103.4
September 2012 2.87 102.4
June 2012 2.87 102.1

Montgomery, Alabama Home Price-to-Rent Ratios

The current adjusted price-to-rent ratio for Montgomery is 16.96 as determined by March 2014 Realtor median sales prices. This ratio is calculated using household size adjusted median contract rent for Montgomery. The chart below shows an index of the rent ratio calculated from the metro FHFA HPI series and the Montgomery median contract rent data from the Census ACS.

Price-to-Rent Dollar Ratio: Realtor, Realtor Adjusted Rent

Price-to-Rent Index Ratio: FHFA

Note: Index set to 100 in Q1 of 2000

Montgomery, Alabama Home Price-to-Rent Ratio History

Date Realtor
(Dollar Ratio)		 Realtor Adjusted
(Dollar Ratio)		 FHFA
(Index Ratio)
March 2014 18.36 16.96 —
December 2013 18.42 17.02 85.2
September 2013 20.14 18.61 85.3
June 2013 19.70 18.20 84.7
March 2013 17.46 16.14 83.7
December 2012 18.25 16.86 85.3
September 2012 18.25 16.86 84.5
June 2012 18.25 16.86 84.2

Montgomery, Alabama Home Rent-to-Mortgage Payment Ratio

The rent-to-mortgage payment ratio uses the adjusted rent for Montgomery against a 100% loan-to-value mortgage (30-year fixed) for the median price home using Realtor home sales statistics. It's a lot like a cap rate, but I find it more appealing in ratio form. A ratio of 1.0 means that annual rent is equivalent annual mortgage payments. Values less than 1.0 indicate rents are cheaper and values greater than 1.0 mean mortgage payments are cheaper. Beware, taxes are not considered here. The rent-to-mortgage payment ratio for Montgomery was 0.99 in March 2014.

Rent-to-Mortgage Payment Dollar Ratio: Realtor

Montgomery, Alabama Home Rent-to-Mortgage Payment Ratio History

Date Realtor Adjusted Rent
(Dollar Ratio)
March 2014 0.99
December 2013 0.97
September 2013 0.89
June 2013 0.95
March 2013 1.14
December 2012 1.12
September 2012 1.10
June 2012 1.08

Montgomery, Alabama Inferred Affordable Mortgage

The inferred affordable mortgage value is determined by taking the median household income for Montgomery, 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 ACS median household income and average monthly mortgage rates.

Inferred Affordable Mortgage

Montgomery, Alabama Inferred Affordable Mortgage History

Date Inferred Mortgage
February 2014 $225,684
January 2014 $222,243
December 2013 $221,460
November 2013 $226,759
October 2013 $228,659
September 2013 $220,681
August 2013 $221,460
July 2013 $223,821
June 2013 $231,971
May 2013 $247,484
April 2013 $250,269
March 2013 $246,566
February 2013 $247,791

1. Specifically, home prices are from the non seasonally adjusted FHFA all-transactions quarterly series. Dollar ratios are calculated using NAR metro prices when available. Rent and income data are from the Census ACS and are carried forward into the following year prior to release of the new data. ↩

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