Comprehensive Housing Market Analysis for Tuscaloosa, Alabama - HUD User
The analysis presented in this report was completed prior to the COVID-19 outbreak in the United States and therefore the forecast estimates do not take into account the economic and housing market impacts of the actions taken to limit contagion of the virus. At this time, the duration and depth of the economic disruption are unclear, as are the extent and effectiveness of countermeasures. HUD will continue to monitor market conditions in the HMA and provide an updated report/addendum in the future.
COMPREHENSIVE HOUSING MARKET ANALYSIS
Tuscaloosa, Alabama
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
As of January 1, 2020
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Tuscaloosa, Alabama Comprehensive Housing Market Analysis as of January 1, 2020
Executive Summary 2
Executive Summary
Housing Market Area Description
The Tuscaloosa housing market area (HMA) is coterminous with the Tuscaloosa, AL Metropolitan Statistical Area (MSA), which is defined as Tuscaloosa, Hale, and Pickens Counties in Alabama. The HMA is home to the University of Alabama (UA), the largest employer in the HMA. UA is partly known for its football team, the Alabama Crimson Tide, which has won 17 national championships since 1925. The HMA is also home to many German manufacturing and logistics companies, including Mercedes-Benz U.S. International, Inc. (hereafter, Mercedes-Benz), the second largest employer in the HMA.
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! Places of Interest Major Roads Urbanized Areas Tuscaloosa HMA Birmingham MSA
Tools and Resources
Find interim updates for this metropolitan area, and select geographies nationally, at PD&R's Market-at-a-Glance tool. Additional data for the HMA can be found in this report's supplemental tables. For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool.
Comprehensive Housing Market Analysis Tuscaloosa, Alabama
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Tuscaloosa, Alabama Comprehensive Housing Market Analysis as of January 1, 2020
Executive Summary 3
Market Qualifiers
Economy
Strong: Nonfarm payrolls increased 2.8 percent during 2019.
Sales Market
Balanced: Total home sales increased 1 percent during 2019, while home sales prices decreased by 1 percent after increasing 18 percent during 2018.
The professional and business services sector led nonfarm payroll growth during 2019, expanding 13.1 percent, while the manufacturing sector slowed to 0.6 percent. During the 3-year forecast period, nonfarm payrolls are expected to increase an average of 1.7 percent annually. Although down from the 2.8-percent growth in 2019, forecast growth is expected to be similar to the 1.6-percent average annual growth rate during the 2011-to-2018 period. Gains in the government; professional and business services; and mining, logging, and construction sectors are expected to be partially offset by a contraction in the manufacturing sector.
The sales market is currently balanced, with an estimated vacancy rate of 1.3 percent compared with 2.1 percent in 2010. There was a 2.7-month supply of available inventory during December 2019, compared with 1.6 months during December 2018. During the 3-year forecast period, demand is expected for 1,275 new homes in the HMA. The 140 homes currently under construction will satisfy a portion of the estimated demand during the first year of the forecast period.
Rental Market
Tight: The apartment market is currently tight, with a vacancy rate currently at 2.3 percent, while the overall rental market is slightly tight, with a vacancy rate estimated at 4.0 percent.
The overall rental market vacancy rate is down significantly from the rate of 10.4 percent in 2010, when the market was soft. The apartment market vacancy rate is also down significantly from a peak of 20 percent during 2009. Student apartments that were completed in 2018 achieved full occupancy on completion and remain fully occupied. During the 3-year forecast period, demand is expected for an additional 1,400 rental units. The 690 units under construction will satisfy some of the demand during the first and second years of the forecast.
TABLE OF CONTENTS
Economic Conditions 4 Population and Households 9 Home Sales Market 12 Rental Market 16 Terminology Definitions and Notes 19
Tuscaloosa HMA
3-Year Housing Demand Forecast
Sales Units
Total Demand
1,275
Under Construction
140
Rental Units 1,400 690
Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction as of January 1, 2020. The forecast period is from the current date (January 1, 2020), to January 1, 2023. Source: Estimates by the analyst
Comprehensive Housing Market Analysis Tuscaloosa, Alabama
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Tuscaloosa, Alabama Comprehensive Housing Market Analysis as of January 1, 2020
Economic Conditions
Largest Sector: Government
Nonfarm payrolls increased 2.8 percent, or by 3,100 jobs, during 2019. This growth was led by 1,400 jobs added in the professional and business services sector and 400 jobs added in both the information and the mining, logging, and construction sectors.
Primary Local Economic Factors
UA contributes significantly to the economy of the Tuscaloosa HMA, with an economic impact of $2.2 billion during the 2017-to-2018 academic year (CBER, University of Alabama). UA currently employs 7,150, making up roughly 24.6 percent of the government sector. The UA football program, which is among the highest ranked in the country, attracts many new students and visitors and has an estimated average economic impact of $20 million per home game. Since the early 2000s, university expansion has contributed to notable gains in the government and the leisure and hospitality sectors. Enrollment growth has led to steady increases in the leisure and hospitality sector. Sporting events have contributed to leisure and hospitality as well, but also have the added draw of retirees moving into the area, leading to increases in the education and health services sector. (Figure 1).
Mercedes-Benz employs 4,200 people in the HMA although the number of jobs has declined during the past 2 years due to an ongoing switch from combustion engine vehicle production to an all-electric vehicle line of production (Table 1). The production facility supports several logistics companies and original equipment manufacturer (OEM) suppliers in the area that surrounds it, such as ARD Logistics and the BFGoodrich Tires brand of Michelin North America, Inc., who also work with other vehicle manufacturers in the region. These companies draw some labor
Economic Conditions 4
Figure 1. Share of Nonfarm Payroll Jobs in the Tuscaloosa HMA, by Sector
Mining, Logging, & Construction 6%
State & Local 24%
Manufacturing 15%
Federal 2% Other Services 4%
Government 26%
Total 113.0
Trade 12%
Wholesale 2% Retail 10%
Leisure & Hospitality 10% Education & Health Services 8%
Transportation & Utilities 3% Information 2%
Financial Activities 4% Professional & Business Services 11%
Notes: Total nonfarm payroll is in thousands. Percentages may not add to 100 percent due to rounding. Based on 12-month averages through December 2019. Source: U.S. Bureau of Labor Statistics
Table 1. Major Employers in the Tuscaloosa HMA
Name of Employer
Nonfarm Payroll Sector
Number of Employees
The University of Alabama
Government
Mercedes-Benz U.S. International, Inc.
Manufacturing
DCH Regional Medical Center
Education & Health Services
Warrior Met Coal, Inc.
Mining, Logging, & Construction
SMP Automotive Systems Alabama, Inc.
Manufacturing
BFGoodrich Tires/Michelin North America, Inc. Manufacturing
City of Tuscaloosa
Government
Veterans Administration Hospital
Education & Health Services
Phifer Incorporated
Manufacturing
ARD Logistics
Professional & Business Services
Note: Excludes local school districts. Sources: Tuscaloosa County Industrial Development Authority, University of Alabama
7,150 4,200 3,325 1,375 1,375 1,350 1,300 1,275 1,200
770
Comprehensive Housing Market Analysis Tuscaloosa, Alabama
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Tuscaloosa, Alabama Comprehensive Housing Market Analysis as of January 1, 2020
Economic Conditions 5
from the adjacent Birmingham-Hoover, AL MSA as well. Approximately 32 percent of workers in the ZIP Code area where these companies are located commute from the neighboring Birmingham MSA (OnTheMap 2017, U.S. Census Bureau), located 15 miles from the Mercedes-Benz factory. Approximately 15 percent of total HMA workers commute from outside the HMA. This steady stream of labor in the form of commuters from the neighboring MSA has helped the manufacturing and the professional and business services sectors maintain steady growth since 2010.
Current Conditions--Nonfarm Payrolls
Job growth accelerated during 2019, led by gains in the government, the information, the mining, logging, and construction, and the professional and business services sectors. During 2019, total nonfarm payrolls increased by 3,100 jobs, or 2.8 percent, from the previous year to 113,000 jobs (Table 2). Growth was higher than the 2,100-job, or 1.9-percent, gain during the previous year. The largest increase in 2019 was in the professional and business services sector, which added 1,400 jobs, or 13.1 percent; UA and Mercedes-Benz contributed to gains in the sector due to increased demand for logistics and management. The mining, logging, and construction sector added 400 jobs, or 6.2 percent, during 2019 due in part to construction of two hotels and a replacement dorm for the university. Camgian Microsystems Corp, an advanced sensing and information processing company that receives grants from the U.S. Department of Defense, contributed to growth in the information sector, which was up by 400 jobs, or 25.0 percent, during 2019. Start-ups and companies looking to expand into the area, many of which are information and professional and business services related, are moving into the HMA. These companies and start-ups are moving to The Edge, a 26,000-square-foot facility near UA that leases office space to companies and assists with promotion of start-ups. In addition, the government sector increased by 300 jobs, or 1.0 percent.
Table 2. 12-Month Average Nonfarm Payroll Jobs in the Tuscaloosa HMA, by Sector
12 Months Ending
December 2018
12 Months Ending
December 2019
Absolute Percentage
Change
Change
Total Nonfarm Payroll Jobs
109.9
113.0
3.1
2.8
Goods-Producing Sectors
23.6
24.2
0.6
2.5
Mining, Logging, & Construction
6.5
6.9
0.4
6.2
Manufacturing
17.1
17.2
0.1
0.6
Service-Providing Sectors
86.2
88.8
2.6
3.0
Wholesale & Retail Trade
13.3
13.3
0.0
0.0
Transportation & Utilities
3.0
3.2
0.2
6.7
Information
1.6
2.0
0.4
25.0
Financial Activities
4.1
4.1
0.0
0.0
Professional & Business Services
10.7
12.1
1.4
13.1
Education & Health Services
9.3
9.3
0.0
0.0
Leisure & Hospitality
11.6
11.6
0.0
0.0
Other Services
4.1
4.2
0.1
2.4
Government
28.6
28.9
0.3
1.0
Notes: Based on 12-month averages through December 2018 and December 2019. Numbers may not add to totals due to rounding. Data are in thousands. Source: U.S. Bureau of Labor Statistics
The manufacturing sector slowed significantly, increasing slightly by 100 jobs, or 0.6 percent, during the past year. This slowdown was due in part to layoffs by Mercedes-Benz, which announced 10,000 job cuts worldwide between 2019 and 2022 (Forbes), and other OEMs in the area that cut jobs. The layoffs are largely due to a shift to production of electric vehicles, which require fewer hours to produce--at nearly 4 man-hours versus 6 man-hours for traditional combustion engines (NBC). The change in production has also affected local suppliers of parts specific to traditional Mercedes-Benz vehicles and suppliers that sell parts to other OEMs in the region.
Comprehensive Housing Market Analysis Tuscaloosa, Alabama
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
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