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Average Cost of Living in Alabama: An In-Depth Guide

Moving to a new state can be overwhelming. If you’re thinking about moving to Alabama, you’re probably wondering if the cost of living is as affordable as everyone says it is. We’ve compared the data and looked at how much it costs to live in the Yellowhammer state.
Moving to a new state can be overwhelming. If you’re thinking about moving to Alabama, you’re probably wondering if the cost of living is as affordable as everyone says it is. We’ve compared the data and looked at how much it costs to live in the Yellowhammer state.

Relocating to a new state can be an exciting and worrying time. One of the most important aspects to consider is whether your income will allow you to live in the new state comfortably. Although this may seem obvious, a dollar in California does not stretch as far as a dollar in Arkansas.

The deciding factor doesn't always come down to finances, however, and moving to a different state for a better quality of life will sometimes mean that your income drops. This doesn't have to be a negative — especially if the cost of living is lower in your new home.

Nicknamed after the Yellowhammer state bird, Alabama is also affectionately called the "Heart of Dixie" and is known for its affordable cost of living and pleasant weather.

If you're thinking about relocating to Alabama, we've looked at some of the most important considerations that you should make, so you can make an informed decision. It's important to remember that an experienced real estate agent, with knowledge of the local market and its living expenses, can give you an even better idea of what to expect in your new state.

Typical Home Prices in Alabama in 2019

According to Zillow data, the median price of homes currently listed in Alabama is $219,900; however, the median price of homes that have sold is $154,000. There is also good news for Alabama homeowners, as the median home value has increased by 4.8% in the past year alone. According to Zillow, the median home value in Alabama is predicted to increase by 2.2% over the next year.

Like most states, the average market value of properties can fluctuate drastically depending on where you plan to live. For example, the average home price in Hoover is $260,300, in comparison to Decatur, where the average home price is $105,700 — over $150,000 less.

If you’re considering when the best time of the year is to buy a house in Alabama, you won't be surprised to hear that the stormy that lasts between May and November impacts the real estate market.

It's important to note that although it may be easier to come across lower-priced homes in the winter, the housing inventory is also lower now, and therefore, there is less choice for buyers.

How Much Are Alabama Property Taxes?

The good news for buyers is that Alabama has the second-lowest property taxes in the U.S. According to the 2009 American Community Survey, Alabama has a median effective property tax rate of $3.33 per $1,000 of property value, which is much lower than the national average of $10.35.

In Alabama, the property transfer tax rate is calculated at $0.50 per $500 of the purchase price, and this amount is paid when your home sells. For example, on the median home sale price of $154,600 in Alabama, you would pay a real estate transfer tax of $155.00.

It is important to note that in Alabama, the real estate transfer tax is typically paid for by the buyer; however, your real estate agent can often negotiate to have this cost offset by the seller at closing as part of your sales agreement. If you are buying in a strong seller's market, it may make your offer more appealing if you do not ask for this type of concession, so it is important to discuss your options with your realtor.

If you’d like to learn more about calculating your potential property taxes — check out our in-depth property tax guide.

Average Homeowners Insurance in Alabama

Home insurance is one of the most important aspects of owning a home, and it is often necessary if you are financing your home through a lender. To find the most appropriate homeowners insurance for your needs, it is essential to consider your location, and the type of home that you have. Home insurance premiums vary depending on the size of the home, and the age of the house.

Alabama is known for its pleasant weather, but every now and again, it can turn stormy. Your home insurance ensures that you have a backup plan in case the weather takes a turn for the worst. According to TrustedChoice, in 2016, insurance companies spent over $670 million on home insurance claims in Alabama.

Because of Alabama’s climate and inclement weather, home insurance is more expensive. The U.S. average for home insurance is $1,173 per year; however, in Alabama, the average annual costs homeowners $1,358. Although this may seem costly, it is imperative to be covered in case of disaster.

Common Home Maintenance and Repair Costs in Alabama

Alabama has a humid, subtropical climate, which means a lot of damp, hot heat in the summer, and cool winters. This combination of heat and humidity can be disastrous for wood-framed homes.

You should expect to treat any wood elements yearly with sealant, to limit moisture damage, and also regularly check your roofing and flashing for water and wind damage during the stormy season.

Because Alabama summers can get extremely hot and uncomfortable, you must regularly service your HVAC units to ensure they are running in optimal condition. Keeping on top of simple tasks such as changing the air filters and checking the ductwork can help to avoid costly repairs further down the line — and keep your home cool and pleasant.

If you do not correctly maintain your HVAC unit, or it reaches the end of its lifespan, you can expect to pay anywhere from $3,744-$7,242 for a new one, according to HomeAdvisor.

Other Costs of Living in Alabama to Consider

If you're still considering a move to Alabama, there are a few other living costs that you should find out before you make the jump. For example, the Alabama state sales tax is currently 4%, however, depending on the local county, the tax rate can increase to as high as 11% — making it the highest in the U.S.

It is also important to note that the average health insurance premium is higher in Alabama than it is elsewhere in the U.S., as well as the cost of utilities such as water, electricity and natural gas — although not substantially.

With all of these costs in mind, it is evident that when relocating to a new state, many unexpected expenses can crop up. One way to ensure that you're fully informed is to ask any family or friends that live in Alabama what the average cost of their monthly bills is. This can give you a good idea of what you should expect to pay and also allows you to compare the costs to your expectations and budget.

If you don't have any family and friends already enjoying the Alabama lifestyle, consider reaching out to a local real estate professional, who will give you an idea of the average home price in your desired area, and the local amenities.

Find a Top Alabama Real Estate Agent

Purchasing a home in a new state can be overwhelming — and a lot to handle — but it doesn’t have to be stressful with the right help. By reaching out to a local Clever Partner Agent, you will have someone who can support you throughout the sales transaction, and guide you to the best possible outcome.

Plus, Alabama is a state where home buyer rebates are legal, so if you choose to work with one of our experienced Clever Partner Agents, you can receive a rebate of $1,000 for your new home if you buy it for over $150,000.

 

 

 

 

 

 

 

 

 

 

 

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Reuven Shechter

Reuven Shechter is the Outreach Coordinator at Clever Real Estate, the free online service that connects you with top real estate agents to help save on commission. He spreads the word about Clever, disseminating studies to journalists and developing relationships with media outlets. Reuven is passionate about investing in real estate and creating lasting success for families. His writing has been featured in Max Real Estate Exposure, Leverage Marketing, and more.

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