1031 Exchange in Huntsville MSA
The Huntsville MSA offers premium 1031 exchange opportunities with moderate cap rates, strong rental demand driven by aerospace and defense sectors, and competitive property taxes in Alabama's 'Rocket City' technology hub.
Population
491,723
Key Industries
Aerospace (NASA), Defense Contracting, Technology
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
0.56% - 0.65%
Assessment Method
Assessed Value (Alabama Property Tax Code)
MSA rate (0.56%) vs State average (0.41%)
+37% above state average
Transfer Taxes & Fees
Transfer Tax Rate
No state transfer tax
Local recording fees and title insurance costs apply
Local Tax Incentives
Alabama Economic Development Incentives
Various state incentives for business development and job creation
Eligibility: Qualifying commercial and industrial developments
Research Park Tax Incentives
Special incentives for technology and research companies
Eligibility: Companies locating in Cummings Research Park and related tech zones
Opportunity Zones
Number of Zones
4
Key Locations
- Downtown Huntsville
- West Huntsville
- North Huntsville
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
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Market Profile Dashboard
Economic indicators and market trends
Population
491,723
Growth: +2.3% annually
Median Income
$83,529
Unemployment
2.1%
Job Growth
+3.2% annually
Economic Drivers
Market Trends
Median Home Price
$284,059 - $340,000
Average Rent
$1,285/mo
Cap Rates
6.2% - 8.0%
Demographics
Median Age
38.5 years
Bachelor's Degree+
45.2%
Owner Occupied
71.8%
Property Type Analysis
Investment opportunities by asset class
Multifamily
Strong demand driven by aerospace engineers, defense contractors, and technology workers with high-income tenant base.
Market Metrics
- Cap Rates: 6.8%
- Vacancy Trends: Very low vacancy at 3.2% due to strong job market and population growth
- Demand Forecast: Continued strong demand from aerospace and defense sector growth
Risk Factors
- Dependence on federal defense spending
- Higher property values affecting affordability
Opportunities
- High-income tenant base with stable employment
- Continued aerospace and defense expansion
Single-Family Rental
Popular with relocating aerospace professionals and defense contractors seeking quality housing.
Market Metrics
- Cap Rates: 7.5%
- Vacancy Trends: Extremely low vacancy at 2.8% with excellent tenant retention
- Demand Forecast: Strong fundamentals with continued aerospace industry growth
Risk Factors
- Higher acquisition costs affecting returns
- Competition from new construction
Opportunities
- Premium rental rates from high-income tenants
- Strong appreciation potential in tech corridors
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
Research Park Area
High-tech corridor with Cummings Research Park and major aerospace employers
Investment Thesis
Premium rental market serving engineers and defense contractors, strong appreciation potential, and proximity to major employers.
Median Price
$385,000
Price Growth
+7.8% YoY
Rental Yield
5.8%
Days on Market
28 days
Key Highlights
Development Pipeline
Continued research park expansion and high-tech development
Downtown Huntsville
Historic downtown core with ongoing revitalization and mixed-use development
Investment Thesis
Opportunity zone benefits, urban lifestyle appeal to young professionals, and potential for appreciation as downtown continues to develop.
Median Price
$285,000
Price Growth
+8.2% YoY
Rental Yield
6.8%
Days on Market
35 days
Key Highlights
Development Pipeline
Major downtown revitalization and mixed-use projects
Madison
Affluent suburban city with excellent schools and family amenities
Investment Thesis
Premium family rental market, excellent schools attracting relocating families, and strong property value stability.
Median Price
$425,000
Price Growth
+6.5% YoY
Rental Yield
5.2%
Days on Market
25 days
Key Highlights
Development Pipeline
Continued upscale residential and commercial development
South Huntsville
Established residential area with mix of housing types and good accessibility
Investment Thesis
Balanced rental market serving diverse employment base, affordable entry points, and steady appreciation potential.
Median Price
$265,000
Price Growth
+5.8% YoY
Rental Yield
7.2%
Days on Market
38 days
Key Highlights
Development Pipeline
Infill development and neighborhood improvements
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Compare Markets
See how this MSA stacks up against others
Compare Markets
| Metric | Huntsville (Current) | Birmingham | Nashville | Atlanta |
|---|---|---|---|---|
| Population | 4.0M | 4.0M | 4.0M | 4.0M |
| Median Property Price | $750K | $750K | $750K | $750K |
| Average Cap Rate | 5.2% | 5.2% | 5.2% | 5.2% |
| Job Growth Rate | 2.1% | 2.1% | 2.1% | 2.1% |
| Rental Yield | 4.8% | 4.8% | 4.8% | 4.8% |
| Days on Market | 25 | 25 | 25 | 25 |
Frequently Asked Questions
Common questions about Huntsville 1031 exchanges
Huntsville offers balanced cap rates (6.2-8%), strong job growth (3.2%) in aerospace and defense, high median household income ($83,529), low unemployment (2.1%), and competitive property taxes (0.56%) in Alabama's premier technology hub.
NASA Marshall Space Flight Center and related aerospace contractors employ thousands of high-income engineers and scientists, creating strong demand for quality rental housing and supporting premium rental rates throughout the market.
Yes, Huntsville has four designated Opportunity Zones including downtown and several neighborhoods, offering potential tax benefits for qualifying investments including deferral and possible exclusion of capital gains.
The economy is anchored by NASA Marshall Space Flight Center, major defense contractors (Boeing, Lockheed Martin, Northrop Grumman), Cummings Research Park (second-largest in US), and growing technology sector.
Alabama offers competitive property taxes (0.56% vs. 1.02% national), no state transfer tax, and business-friendly policies. The state's aerospace and defense incentives support continued economic growth and job creation.