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Pelham, Alabama: Rising Home Values and Stable Ownership in a Dynamic Market
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Pelham, Alabama, a vibrant city located in Shelby County, has experienced significant growth and development over the past decade. Known for its excellent school system and thriving business community, Pelham has become an attractive destination for both homeowners and renters. The city has seen a general trend of increasing homeownership rates, rising average home prices, and fluctuating average rent prices.
Homeownership in Pelham has shown a steady increase over the years, with the percentage of owner-occupied homes rising from 74% in 2014 to 76% in 2022. This upward trend coincides with a substantial increase in average home prices. In 2014, the average home price in Pelham was $177,345, which grew consistently year over year, reaching $302,259 by 2022. This represents a remarkable 70.4% increase in average home values over eight years, indicating a strong and growing real estate market in the city.
The relationship between federal interest rates and homeownership rates in Pelham shows an interesting pattern. Despite historically low interest rates from 2014 to 2021, ranging from 0.08% to 1.83%, homeownership rates remained relatively stable, hovering between 74% and 78%. This suggests that while low interest rates may have contributed to the city's ability to maintain high homeownership levels, other factors such as local economic conditions and housing supply also played significant roles in shaping the housing market.
Renter percentages in Pelham have shown a slight decline, decreasing from 26% in 2014 to 24% in 2022. This trend aligns with the increase in homeownership rates. Average rent prices, however, have experienced some fluctuations. In 2014, the average rent was $1,194, which decreased slightly to $1,137 in 2019 before rising again to $1,145 in 2022. These changes in rent prices, coupled with the city's population growth from 25,687 in 2014 to 27,645 in 2022, suggest a dynamic rental market that has remained relatively stable despite the increasing homeownership trend.
Looking at the most recent data, the average home price in Pelham reached $308,273 in 2023, showing continued growth in the real estate market. However, in 2024, there was a slight decrease to $307,249, indicating a potential stabilization in home values. This change coincides with higher federal interest rates, which rose to 5.02% in 2023 and 5.33% in 2024, potentially impacting home affordability and buyer demand.
Applying predictive models to forecast 5-year trends, it's anticipated that average home prices in Pelham will continue to rise, albeit at a more moderate pace. The recent stabilization observed in 2024 may indicate a shift towards a more balanced market. Average rent prices are expected to follow a similar trajectory, with modest increases likely to occur as the city's population continues to grow and housing demand remains strong.
In summary, Pelham has demonstrated a robust housing market characterized by increasing homeownership rates and rising average home prices. The rental market has remained relatively stable, with slight fluctuations in both renter percentages and average rent prices. The city's ability to maintain high homeownership levels despite varying interest rates suggests a strong local economy and desirable living conditions. As Pelham continues to grow, the housing market is expected to evolve, potentially seeing more moderate price increases and a continued balance between homeownership and rental options.
