Relatively low household incomes, skyrocketing construction costs and a shortage of subcontractors all contribute to a troubling statistic in the Tuscaloosa area -- almost no one can afford a new home here, according to data shared by the Chamber of Commerce of West Alabama this month.

Every year, the Chamber releases a huge amount of information compiled into their Prosperity Index, an overview of "vital metrics that impact our community," gathered from sources all over the country.

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For instance, the Index shows that home prices in the Tuscaloosa metropolitan area have increased by 41 percent in the last decade, and the median price of a newly constructed home in February 2022 was a staggering $408,418.

Couple that with a median household income of less than $51,000, and the data shows that nearly 73 percent of the people who live in the area are unable to afford a new home here.

Barkley Garrett, the Chamber's Vice President of Economic Development and the man behind the Prosperity Index, said a number of factors contributed to the report's bleak findings.

HIGH DEMAND, LOW SUPPLY FOR MATERIALS AND LABOR

"Especially over the summer, you were seeing lumber prices and all material prices go up, although lumber was certainly the one that caught everyone's attention," Garrett said. "There's also the fact that we don't have nearly enough subcontractors. It's simple supply and demand, and we had much more demand than supply of qualified subcontractors to do concrete, to do the electrical, to do the plumbing and the construction itself."

"So those prices were at a premium and add to that, the demand that we were seeing in 2022 was for higher-priced homes," Garrett continued. "I'm over-simplifying, but there's not a substantial amount of difference in the amount of materials and labor that go into a $200,000 home versus a $500,000 home. Obviously, the quality of the materials is different, but if you have a limited supply of labor and materials and you have the opportunity to build a $500,000 home versus a $200,000 home and there's a profit motive, then absolutely you would build the $500,000 home, every day."

IMPERFECT DATA

The economist also noted that the average household income reported in the Prosperity Index came from US Census Bureau data for Tuscaloosa County, but also includes Hale, Greene and Pickens County.

"When you're bringing in those three rural counties into our metro area that definitely has a negative effect on our median household income compared to just in Tuscaloosa County or just in the city of Tuscaloosa," Garrett said. "But we're at 72 percent of people can't afford a newly built home. Compare that to Huntsville, where only 52 percent cannot afford a new home -- well their new home prices are at $313,000, so you would have to kind of peek behind the curtain and see, OK, what is driving those numbers? Is Huntsville doing something that we're not doing to make home prices more affordable? Is land cheaper there? Are they building a different type of product? Certainly the average median household income is higher in the Huntsville area than it is here."

A NATIONWIDE ISSUE

Garrett also pointed to other areas of the country where the same statistic is as bad or worse than it is here in West Alabama. In Nashville, only 27 percent of the local population can afford a new home. In Norman, Oklahoma, and in Auburn, Alabama around 21 percent. In Gainesville, Florida, just 19.4 percent.

"Just the fact that nationwide, over 70 percent of people can't afford a new home -- that's certainly a stat that bears some reflection," Garrett said.

A KEY WORKFORCE BARRIER

Garrett said the Chamber and business leaders across West Alabama are sharply focused on dismantling barriers that keep otherwise employable people from working. Those barriers are primarily reliable transportation, reliable childcare and affordable housing. Measures must be taken to ensure the workforce required to support the Tuscaloosa area is able to afford living here, he said.

"How do we address the challenges that exist in creating housing that is affordable?" Garrett said. "We've got literally thousands of open positions in Tuscaloosa County alone. Our large employers are needing help and our smaller employers are needing help, and they need people at every price point."

Restaurants and hotels need workers, schools need teachers, police departments need officers, hospitals need nurses, factories need workers, and all those employees need to be able to afford to rent or own living space locally, he said.

"We need to have housing that is affordable for those types of people," Garrett said. "We don't have the magic bullet, we don't have a crystal ball as to what we can do to bring the price of housing down, but it is an area that needs to be addressed."

GET INVOLVED

Interested in contributing to that conversation? Garrett said the Chamber has assembled a task force to address the housing component of workforce barriers affecting the area.

"We welcome any business or community leader who would like to be involved in those discussions to hit me up and we'd be happy to include you in the conversation," Garett said.

For more exclusive news from the Chamber and around the business world, stay connected to the Tuscaloosa Thread.

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