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Home Values and Ownership in Five Points South: A Decade of Growth and Stability
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
DATA SOURCE
United States Census Bureau: American Community Survey Data (ACS)
Zillow: Zillow Home Value Index (ZHVI)
Five Points South, a neighborhood in Birmingham, Alabama, has experienced significant growth and changes in its real estate market over the past decade. The area has maintained a high percentage of renters, with homeownership rates ranging between 21% and 26% from 2013 to 2022. Despite the stability in homeownership rates, average home prices have shown a substantial increase.
The homeownership rate in Five Points South has remained relatively stable at around 25% for most of the observed period. Average home prices have risen steadily, from $133,888 in 2010 to $262,946 in 2022, representing a 96% growth over 12 years. This increase in home values did not significantly impact homeownership rates, suggesting other factors such as neighborhood desirability or local economic conditions may have played a role in maintaining the rental-dominated market.
Federal interest rates have fluctuated over the years, potentially influencing homeownership trends. When interest rates were historically low between 2010 and 2015 (ranging from 0.09% to 0.18%), the homeownership rate in Five Points South increased slightly from 21% in 2013 to 24% in 2015. However, the overall impact appears limited, as the homeownership rate remained relatively constant even as interest rates began to rise more significantly after 2016.
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The rental market in Five Points South has been dominant, with renter-occupied units consistently accounting for 74% to 78% of the housing stock. Average rent prices have shown an overall upward trend, with some fluctuations. From 2013 to 2022, average rent increased from $805 to $959, a 19% rise over nine years. This increase in rent prices coincided with a population growth from 8,985 in 2013 to 12,177 in 2022, suggesting that growing demand for housing in the area may have contributed to the upward pressure on rents.
Recent data shows that average home prices in Five Points South reached $266,948 in 2023 and remained stable at $266,936 in 2024. This plateau in home prices coincides with a significant increase in federal interest rates, which rose to 5.02% in 2023 and 5.33% in 2024. These higher interest rates may have contributed to cooling the rapid home price appreciation seen in previous years.
Predictive models forecast that average home prices in Five Points South may continue to experience moderate growth over the next five years, albeit at a slower pace than the sharp increases seen in recent years. The current higher interest rate environment could temper demand and price growth. For rent prices, the forecast suggests a continued upward trajectory, driven by the neighborhood's persistent popularity among renters and ongoing population growth.
In summary, Five Points South has demonstrated a resilient real estate market characterized by steadily increasing home values and a strong rental sector. The neighborhood's ability to maintain a high proportion of renters while simultaneously seeing appreciating property values points to its enduring appeal. As the area continues to evolve, it will be crucial to monitor how these trends in homeownership, property values, and rental rates shape the future of this dynamic Birmingham neighborhood.
