If you want to understand country music history, Memphis, Tennessee, is the place to go. It's home to many celebrities, but the real estate market thrives here, as well. It's crucial to learn about the Memphis real estate market, and that means exploring trends and data in 2023.
You'll learn about the sales figures, average sales prices, median sales price, and total home sales. This will help you determine if you should consider buying a rental property in the Memphis area.
Memphis Housing Market Trends
The Memphis Area Association of Realtors (MAAR) tracks home prices and sales in the Memphis area every month. It claims there's been a decrease in total sales compared to the national average and the same month last year.
Total sales include existing and new home sales, which were down by a whopping 36.6 percent. In fact, only a little over 1,000 units were sold compared to last year's 1,605.
Likewise, total sales for the year to date were down by 28.6 percent; only 4,368 units got sold compared to over 6,000 at the same time last year.
Factors Affecting the Memphis Housing Market
Let's take a look at the factors that might affect the Memphis Real Estate Market:
Median Sales Price
Though the total sales declined, median sales prices for houses in Memphis were increased by 0.2 percent, which adds up to $216,000 in April of this year. However, last year, it was only $215,500.
Median Home Sales Prices
You learned that the median home sale price for Memphis real estate decreased, though certain neighborhoods saw jumps in prices. Likewise, there were more active listings in February 2023 than there were in January and February of 2022. Real estate investors might find that this is the best time to invest in the rental property business.
Excellent Cash Flow
Home prices seem to be dropping slightly, which is great for investors. Many times, homeowners rehab the properties themselves, so you're looking at less work before you can showcase it to prospective tenants and start earning money.
High Rental Rates
Buyers often worry that they'll scoop up properties for low prices only to see the neighborhoods falter. However, Memphis seems to have higher rental rates compared to the prices.
This data is subject to change, but the markets in TN are flooded with properties people can't get rid of. Likewise, an investor can easily keep rents the same or raise them slightly with no issues. People want to live here, so buyers have the upper hand.
Lower Cost of Living Compared to the Rest of the Nation
The music business has made it to where many people flock to Memphis, TN, to make it big. However, the cost of living hasn't soared as much as it has in other parts of the nation. Therefore, you can expect the average price of rent to be high because people can still afford other necessities on their salaries.
Memphis has only had a few times in the last 20 years where property values dropped. When the US real estate market crashed from 2007 to 2009, Memphis property values only declined about three to four percent. Other markets saw decreases of 50 percent or more!
Whether you're focused on properties close to interstate highways or in the suburbs, you'll find options. Though it's wise to work with a Memphis Realtor, you can easily get a low price and make the sale while pushing for tenants effortlessly.
Will the Housing Market Crash in Memphis?
Memphis is focusing on affordable housing, which means the average rent is $900 per month for a one-bedroom apartment. That's a one percent increase compared to last year. However, average rents for studio apartments are down three percent.
If you own Memphis rentals, you should expect them to continue earning you the same or a little more compared to the same month last year.
Memphis Housing Market Statistics
- The home value index from Zillow indicates that Memphis is at $151,770 (May 2022).
- House values have increased by about 22.1 percent from 2022.
- Home values have actually increased by roughly 93.2 percent in the past five years.
- Median sales prices for a Memphis house is about $221,000, which is based on reports from MAAR (Memphis Area Association of Realtors).
- Riverside is the most affordable neighborhood, with median listing prices sitting at $59,000.
- There are 164 neighborhoods within Memphis, Tennessee. River Oaks happens to be the most expensive. Realtor.com indicates the listing prices are around $532,000.
- Median home sales prices have jumped by about 4.5 percent year-over-year.
Housing Market Predictions
Though it's only May, there hasn't been a spring homebuying session yet, and it could be a dud altogether. April saw mortgage rates increase by 15 base points, and existing/pending home sales slumped in previous months. It's slightly promising for real estate shoppers because the median home sales price went lower for another consecutive month, but price declines aren't likely to be extensive.
Overall, high home prices and mortgage rates put off most homebuyers because they worry about the recession, a weakened economy, volatility in the banking sector, and inflation. Early in May, the Federal Reserve raised the key interest rate by 1/4 of a percentage point. Most housing experts predicted this.
Plus, the Federal Reserve indicated that it would pause rate hikes for the rest of the year if inflation fell. This could indirectly impact long-term home loans. Overall, there's a significant strain on the real estate market, so it's a mixed bag.
Memphis Housing Market Predictions
Memphis real estate is highly affordable, and we're going to look at the market predictions for the rest of this year.
Overall, it seems that it's a seller's market right now. Home values are up, there are more active listings now than before, and there's a steady increase in the houses available in the best neighborhoods.
Zillow shows an average house value as being $148,368, which is a 4.3 percent increase from last year. Likewise, homes sell in about 24 median days.
If you focus on the key takeaways, Memphis is seeing a huge sales over the list price of 23.4 percent, so it indicates a competitive market. However, over half the home prices are under average, so buyers and investors have excellent opportunities to buy properties for far less than the asking price.
There should be positive growth for the coming year. In fact, experts believe there will be a 0.1 percent increase at the end of May. In March of 2024, you should expect an increase of roughly 3.1 percent.
Purchasing an investment property can be a great option for you right now, but it's not the same as buying owner-occupied housing. Your goal is to make money from people renting your real estate, so you have to look at it from a business standpoint.
Understanding the trends and forecasts of any given market will help you determine what you should do. Overall, Memphis seems to be in a seller's market, but that doesn't mean you can't find great deals if you look hard enough.
Is It Wise to Purchase an Investment Property in Memphis?
Memphis could be an excellent option for rental property investors because of its strong job market, diversified economy, and quality of life. However, it's best to focus on your needs and capital spending habits first.
Is Memphis Highly Populated?
The population in Memphis is excessive, and it's the most populated city in all of Tennessee. However, this can be good for property investors!