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The 2018 Memphis Real Estate Market in Review
Rising Property Values
One of the most impressive numbers to come out of Memphis this year was the rise in property values. In May we saw sales prices rise to $192,883, a 14 percent increase over the $169,540 average home sales prices of the previous year.
The volume of homes sales is up, too, not just the prices. Again, in May, year over year, sales jumped 14 percent from $300 million to $343 million in the volume of home sales. Crye-Leike Real Estate Services, who operates in the Memphis area, reports a personal volume sales increase of over 16 percent, something that they report as being unseen in many years.
Not only did the average home sales price rise, but so did the median sale price. It rose by 12 percent to $153,700.
Declining Foreclosures
In Memphis’ continued upward streak, foreclosures saw a downturn as well. Between May of 2017 and May of 2018, Shelby County foreclosures dropped from 186 to 93…down 50 percent. This decline in foreclosures is indicative of, in large part, a growing and healthier Memphis economy. While in most cases the foreclosure rate was a sign of market recovery post-2009 economic crisis, Memphis was one of the markets that weathered the storm relatively well.
It did not have the bubble so large as to cause a significant bust, and as a result, did not have as far to fall or recover. That said, the decrease in foreclosures across the county is indicative of market health and, more specifically, the growing economic vitality and stability in Memphis.
Inventory Squeeze
One of the issues that we often see plaguing “hot” real estate markets is an inventory squeeze. This is often the result of housing demand outweighing homebuilding efforts, either because homeowners see the explosive growth in property values and decide to sit on their properties en mass (resulting in a low inventory in existing properties on the market) while buyers scramble to fight over new inventory that can’t satisfy all of the existing demand.
This is the case in many markets, such as Dallas and Houston, where even robust construction efforts can hardly account for the massive demands for housing and population growth.
The same isn’t exactly true of Memphis. While we have seen both population growth and growing demand, it has been much more evenly tempered than that of a Houston or Dallas. What we have seen is a decrease in building permits over the past year. While homebuilding all in all has picked up, this dip had contributed to the overall squeeze on inventory.
This has made it an especially good time to be a seller in Memphis, as well as contributing to the growth in home values.
What Real Estate Market Criteria Really Matter?
When we’re looking at a hot real estate market as real estate investors, we have to recognize that it is not enough to look at factors like sales prices, inventory, and housing sales volume. The factors that drive a healthy real estate market are ultimately what matter most. These numbers are symptoms, not causes.
When we look at Memphis, we have to ask whether or not we are seeing sustainable growth. This question can be answered when we look at the state of Memphis’ economic development. In short, we’re seeing encouraging growth on all fronts: enthused residents, growth in the small business sector, and ambitious city projects.
Read We ♥ Memphis: A Community Investing in the Future
Combined with an affordable cost of living, rich cultural heritage, and its reputation as a great place to start business ventures, Memphis is attracting more economic activity than ever.
Turnkey Opportunities for Real Estate Investors
How exactly does all of this connect to real estate investment opportunity? After all, what is good for a homebuyer or home seller does not necessarily translate for an investor. When we examine the health of the real estate market and growing demand, it is indicative of a growing population and activity that creates demand in the rental sector as well.
With a vibrant and promising investment market growing stronger each day, investors can’t afford to miss the opportunities in Memphis.