It’s almost cliché to talk about hot real estate right now. But the reality is that the local housing market of Huntsville, Alabama, the largest city in the state of Alabama, is hot, hotter than it’s ever been.
Huntsville had a housing shortage in 2018. In fact, a housing shortage was even considered by economists to be one of the major topics of conversation for the year. Unfortunately, for black community, that scarcity, coupled with the additional race of those living in the community, created an economic disparity for residents of that city.
Over the past 10 years, the population of Huntsville has almost tripled. And as housing inventory increased in those years, Huntsville has had to issue skyrocketing supply shortages for many subdivisions, and low inventory in others. This shortage has played a major role in the main Huntsville housing issue of “white flight.”
That shortage of inventory has forced residents of the city to look outside the city limits. Huntsville, unlike other major cities like Atlanta, Raleigh, and Tallahassee, only offered affordable homes for buyers who had good credit. Because of this, buyers from neighboring cities and counties were able to buy homes in Huntsville.
“Inventory is what really drives sales,” Jeffrey Tobolski, Executive Vice President and Managing Broker at Compass Group, said. “When homes are scarce, and buyers want to make an offer, even on homes in high demand, they cannot offer enough to beat the asking price and move the home into contract.”
Due to these high inventory shortages for Huntsville, people from nearby towns and counties moved to Huntsville to afford homes. In addition, people from outside Huntsville, like Jefferson County, either took the opportunity to find more affordable homes there, or relocated to a city or county in the area because of the housing shortage.
It’s a formula that leaves black communities from “white flight” feeling victimized. And it’s also one that’s quite prevalent within the country. After high foreclosure rates of African Americans in 2010, when the real estate crash occurred, many houses were held for high price just to have money to buy new ones. As a result, many black neighborhood homes were discounted and left in the prime real estate supply void.
Those “white flight” cities from Huntsville (like Madison, Collinsville, south Huntsville, and east Huntsville) never had opportunities for black buyers or sale activity. Instead, they’re still under housing inventory, causing effects like overcrowding, crime, poverty, and reduced home values.
“Years of foreign investment has been a continuing issue in the low bidder areas of Huntsville,” the inventory shortage was the case with the local area around south Huntsville. “Unfortunately, this has caused much overbuilding in the real estate market and housing industry in general.”
As for the main Huntsville area, in the Wards, North Bluffton, and southern parts of the city, homes often sold below the asking price because there was so little inventory. Some houses would be listed with an asking price of $20,000, and only sell for $15,000 due to lack of buyers in that area.
It’s a sore point for the black community that they’ve been making historic investment in this area, and that the quality housing needed in the area is sometimes lacking. In fact, according to Jed Smith, Vice President at Genesis Commercial Properties, “it is well documented in both the Madison County and Madison City Home Care review reports that in the Huntsville community, a black person could sell their home to a white person for half or less of what the home’s market value was, yet purchased the home from the federal Department of Housing and Urban Development (HUD) for the fair market value.”
“While this may change through past public policy, it is also now evident in the truth that residents of the Madison County Real Estate market are still treated differently due to race and are permitted less access to the real estate market than white people because of the lack of supply in their area,” Smith continued.
What can be done? One area to start in Huntsville is to bring more real estate training and real estate agents to the area, not just only because it will benefit residents of that area, but also because it could help attract buyers from outside the area. A number of trade schools, like Antioch School of Real Estate, offer training in the region as well as network for experts to sell and serve local communities.
There’s also a need for more competition. As the prices have skyrocketed in the Huntsville area, some homeowners have turned to sites like Airbnb and Homeaway to bring in some extra revenue.
“As the community grows in Huntsville,” Smith said, “it will become increasingly difficult for