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MortgageRight Moment: Turning The Housing Market Into A Financial Advantage

In this MortgageRight Moment we take a deeper dive into understanding how the current market will benefit homeowners in the near future.

By now, most of us have seen the impact of our hometown’s recent metropolitan boom. Drastically
ahead of projections, Huntsville became the largest city in the state as reported by the Associated Press
in August of 2021. This population increase was not unexpected, it was willed into existence. Our city
and state leadership have put an enormous focus on attracting both businesses and government
agencies to the area, the result of which has been extremely positive on many fronts – more jobs, more
tax revenue, and more development.

The gravitation to Huntsville is not simply a matter of political maneuvering, however. While our area’s
natural beauty, proximity to other large metro areas, low crime rates, and Blue-Ribbon schools are
extremely attractive, the single biggest factor relating to Huntsville’s desirability has been Wages vs. the
Cost of Living Index (COLI).

The Cost of Living Index is an aggregate representation of multiple categories – 32% goods and services,
13% groceries, 4% health care, 29% housing, 12% transportation, and 10% utilities – expressed as a
percentage against the national average, benchmarked at 100%. For example, a score of 90 would
demonstrate that a city’s rating in a certain category would be such that it is 10% less than the national

The COLI data for Huntsville in 2010, as compiled by the Council for Community and Economic Research,
listed the city’s overall rating as 91.2. As depicted below, this favorable rating is not due to the low costs
of items across the board. In fact, many of Huntsville’s categories are very close to the national average.
Where the city pulls away from the national average is in the housing category.

Over the next decade, the overall COLI rating increased slightly to 96, with housing jumping from 78.7 to
88 in 2021. This upward tick in housing prices followed closely with the influx of new residents to the
area against the volume of existing homes for sale – simple supply and demand. At the same time, labor
shortages and material availability resulting from the government’s SARS-CoV-2 response, coupled with
unprecedented inflation, significantly increased the cost of new home construction. These conditions
created a market bubble that saw home prices increase in a significant and rapid manner.

The rise in home value, while creating a negative impact to Huntsville’s overall COLI rating, provides a
huge benefit to its residents. The newer residents moving to our city are shopping for homes that are
still well below what they are used to seeing in their previous hometowns, such as Northern Virginia.
They are still getting more value for their money. For existing homeowners, the rise in home values
translates directly to the immediate realization of increased equity, like the impact a surge in the stock
market would have in their investment portfolio.

According to data compiled by Zillow and analyzed by Stacker, the equity in homes for our area has risen
on average 30-35% between 2018 and 2021. When drilling into the raw data provided by Zillow, which
measures the typical home value and market changes across the region for homes in the 35th to 65th
percentile, the increase in home value soars exponentially from $175,345 in January 2018 to $267,895
in November 2021 – a jump of over 52%.

This situation presents a unique opportunity for the Huntsville homeowner. While the mechanism by
which one may capitalize on newly realized equity essentially lies in either selling or refinancing, the
decision to take either path has multiple considerations that must be evaluated first.

If you are looking to learn more about these opportunities our team has the extensive knowledge and expertise to help you decide which path is best for you. We have the resources and people to guide you through the home buying or selling process. Or to learn more about MortgageRight and their services please visit their website.

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