The Gulf Opportunity Zone Act, known as the GO Zone, has been in effect for two years. I thought that I would take a look at its affect on the Mobile County housing and real estate market.
There has been a tremendous response locally in Mobile County to the available accelerated depreciation benifits for investors buying property in the GO Zone and putting them into the rental program. I can not speak for my neighbors to the west in Mississippi and Louisiana or to my north in the other counties in Alabama that are located in other areas affected the GO Zone. In Mobile, there were a number of investment homes purchased in the last two years. The result of these purchases has resulted in a stable rental market. In speaking to local property managers, it seems there are a number of rental inventory units available currently, but the inventory level of rental homes is down compared to the inventory levels at this time last year. Autumn is traditionally the slowest season for placing tenants and the property managers expect their activity to pick up after the first of the year.
On the sales side, the Mobile's real estate inventory level was at record lows as a result of the migration of people after Hurricane Katrina and the number of investment purchases. Those inventory levels have been rising on a monthly basis. Today Mobile County has roughly double the amount of homes available for sale as it did in did in December 2005. Compare to other areas of the country, Mobile's real estate market statistics show very good comparables. For example, the Mobile County absorption rate is around 6-7 months which is low compared to other areas of the country. The days on market for sold homes is around 62 days which is also low. The median sales price of a home in Mobile is $133500 which is low. As far as appreciation, Mobile metropolitan area is ranked 9th in OFHEO Highest Rates of Appreciation. The report was released at the end of August and it shows Mobile's 1 year appreciation rate at 11.26%.
There are signs that Mobile should experience a great demand for housing in the near future. Construction of a large new steel mill north of town is expected to bring 27,000 to 30,000 workers to the Mobile area to build the plant. Consruction time is estimated to be 3 years. Once the plant is operational, then there will be 2700 jobs added to the work force. It is estimated that an additional 2700 spin off jobs will be created as well. The Alabama State Docks is expanding its container operations, which will make Mobile one of the major ports along the Gulf Coast. A number of ship yards have plans to expand their manufacturing capability and with it will bring additional jobs. EADS has built a facility at the retired Brookley Air Force Base. This facility will employ 150 engineers that will design AIRBUS long range jets. EADS along with Northrup Grouman is bidding on military contracts to build Air Force Refueling airplanes. If successful, there are plans to manufacture those planes in Mobile and with it comes another estimated 3000 jobs. One of the larger employers (MAE) in Mobile has plans to expand operations and hire an additional 1000 workers. There are reasons that people think Mobile is the next boom town in the South.
If you are an investor and looking to invest in the GO Zone area, Mobile is an area to look at. The Gulf Region Properties Team would be happy to assist you in getting the answers you need to make a purchasing decision or other questions you may have regarding the Mobile real estate market. Please visit our website at http://www.GulfRegionProperties.com/. Once there look for the GO Zone page that has information and documents trelated to the GO Zone.
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