Top 5 Residential Real Estate Investment Markets in Alabama

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By Trent Seigfried Updated June 3, 2024
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Edited by Michael Yessis

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Chickasaw is home to the best residential real estate investment market in Alabama.

The 36611 zip code in Chickasaw presents the greatest opportunity for investors among the 1,084 individual real estate markets in Alabama we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.

Top 5 Alabama residential real estate markets

RankCity InvestScore Affordability Property value appreciation
1Chickasaw1002.769.21%
2Midfield95.81.758.43%
3Sheffield92.43.059.38%
4Elkmont92.33.267.81%
5Russellville91.62.958.99%
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1. Chickasaw

We've identified the 36611 zip code in Chickasaw as Alabama's best real estate investment market. Here's why.

πŸ”Ž Key data about Chickasaw

Data pointValueRank in state (of 1,084 markets)
Zip code36611N/A
InvestScore 100Highest
Typical property value $104,559[1]25th lowest
Five-year appreciation 69.21%[2]9th highest
Household income $38,985[3]242nd highest
Affordability ratio 2.748th most affordable
Five-year population growth 8.6%[4]78th highest
Unemployment rate 4.7%[5]133rd lowest
Property taxes $370[6]34th lowest
Educational attainment 12.2%[7]239th highest
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Chickasaw (zip code 36611) is the best residential real estate investment market in Alabama. It has the 9th highest property value appreciation among markets we evaluated, with a 69.21% appreciation of the typical property over the last five years.

Chickasaw is the 48th most affordable market among the 1,084 Alabama markets we evaluated, with an affordability ratio of 2.7.

2. Midfield

The 35228 zip code in Midfield is Alabama's second-best residential real estate investment market.

πŸ”Ž Key data about Midfield

Data pointValueRank in state (of 1,084 markets)
Zip code35228N/A
InvestScore 95.82nd highest
Typical property value $77,664[8]18th lowest
Five-year appreciation 58.43%[9]33rd highest
Household income $46,114[10]209th highest
Affordability ratio 1.76th most affordable
Five-year population growth -0.2%[11]174th highest
Unemployment rate 3.9%[12]107th lowest
Property taxes $641[13]155th lowest
Educational attainment 19.2%[14]147th highest
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The 35228 zip code in Midfield features a typical property value of $77,664, the 18th lowest in the state.

Property values have appreciated 58.43% over the past five years, the 33rd highest increase among evaluated markets in the state. Midfield homes have an affordability ratio of 1.7, the 6th most affordable in the state.

3. Sheffield

The 35660 zip code in Sheffield comes in at No. 3 in our ranking of residential real estate investment markets in Alabama.

πŸ”Ž Key data about Sheffield

Data pointValueRank in state (of 1,084 markets)
Zip code35660N/A
InvestScore 92.43rd highest
Typical property value $121,509[15]37th lowest
Five-year appreciation 59.38%[16]29th highest
Household income $40,357[17]237th highest
Affordability ratio 3.080th most affordable
Five-year population growth 4.7%[18]119th highest
Unemployment rate 3.8%[19]104th lowest
Property taxes $512[20]95th lowest
Educational attainment 16.8%[21]178th highest
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With a typical property value of $121,509, Sheffield's 35660 zip code features the 37th lowest property values in the state.

Sheffield homes have an affordability ratio of 3.0, the 80th most affordable among the markets we evaluated.

4. Elkmont

The 35620 zip code in Elkmont ranks No. 4 among Alabama's residential real estate investment markets.

πŸ”Ž Key data about Elkmont

Data pointValueRank in state (of 1,084 markets)
Zip code35620N/A
InvestScore 92.34th highest
Typical property value $256,070[22]194th lowest
Five-year appreciation 67.81%[23]11th highest
Household income $80,145[24]11th highest
Affordability ratio 3.299th most affordable
Five-year population growth 41.6%[25]4th highest
Unemployment rate 2.8%[26]58th lowest
Property taxes $553[27]123rd lowest
Educational attainment 13.3%[28]222nd highest
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Property values in Elkmont's 35620 zip code have seen the 11th highest increase among evaluated markets in the state, with an appreciation of 67.81% over the past five years.

Elkmont's affordability ratio of 3.2 makes it the 99th most affordable among the 1,084 markets we evaluated.

5. Russellville

The 35653 zip code in Russellville rounds out our top five residential real estate investment markets in Alabama.

πŸ”Ž Key data about Russellville

Data pointValueRank in state (of 1,084 markets)
Zip code35653N/A
InvestScore 91.65th highest
Typical property value $154,292[29]76th lowest
Five-year appreciation 58.99%[30]30th highest
Household income $52,648[31]30th highest
Affordability ratio 2.975th most affordable
Five-year population growth -5.2%[32]220th highest
Unemployment rate 2.7%[33]51st lowest
Property taxes $399[34]45th lowest
Educational attainment 14.1%[35]215th highest
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Property values in Russellville's 35653 zip code rose 58.99% over the last five years, ranking the city 30th highest among evaluated markets in Alabama.

Russellville homes have an affordability ratio of 2.9, the 75th most affordable among the markets we evaluated.

How we rank residential real estate markets in Alabama

We evaluated 1,084 markets on eight metrics, and then assigned an InvestScore based on their weighted and combined rankings. Each market corresponds to a specific zip code in Alabama.

What is InvestScore?

InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.

  • Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase. We assign a weight of 20% to typical property values.
  • Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results. We assign a weight of 20% to property value appreciation.
  • Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing. We assign a weight of 10% to median household income.
  • Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand. We assign a weight of 15% to the affordability ratio.
  • Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip. We assign a weight of 10% to population growth.
  • Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes. We assign a weight of 15% to unemployment rate.
  • Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates. We assign a weight of 10% to property tax.
  • Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates  local residents who have higher earning potential and thus should be able to afford homes. We assign a weight of 15% to educational attainment.

Disclaimer: The information contained in this article isn't intended as, and shall not be understood or constituted as, financial advice. The information in this article isn't a substitute for financial advice from an investment professional or real estate agent who is aware of the facts and circumstances of your financial situation or the specifics of any individual property.

Article Sources

[1] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[2] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[7] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[8] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[9] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[14] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[15] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[16] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[21] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[22] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[23] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[28] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[29] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[30] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[35] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.

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Our experts continually research, evaluate, and monitor real estate companies and industry trends. We update our articles when new information becomes available.

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