The Memphis residential real estate market has been strong in 2016 and looks to be continuing to build steam going into 2017. Memphis remains one of the most affordable cities in America. With cost of living below the national average and affordable housing prices, this Southern jewel is well positioned for another big year. Inventory keeps declining, people are rediscovering the south, and Memphis remains one of the most affordable cities in America.
Memphis Real Estate Attracts Millennials
The median list price for Memphis real estate is $80,000 (a decline during the off-season). That’s about 62 percent lower than the national median. Prices like these are attractive to Millennials, who are just starting their families and beginning to look for homes. While the median list price for condominiums and townhomes is higher, at $107,500, it is still below most cities across the US.
Sixty percent of the Memphis population lives in single-family homes (a combination of rentals and homeownership). Not only are houses affordable, the cost of living is also well below average. The overall cost of living in Memphis is 84, 16 points below the national average. The housing index is 35 points below the national average. The average housing cost index in the country is 100. Compare this to expensive cities like NYC and LA at 167 and 142, respectively.
This overall affordability, along with employment growth makes Memphis an attractive home market for those looking to get a head during these slow but steady economic growth times. Also, this affordability helps offset any negative effects the interest rate increases potentially have on buyers.
Affordable but Shrinking Inventory
Buyers will get a lot of home for their money in Memphis (houses average 1,866 square feet), but you’ll have to be earnest if you want to close the deal. This is especially true if you’re looking for a condo.
Total inventory in Memphis real estate has declined 6 percent since last year. The inventory of condos and townhomes declined just 3 percent, but there are far fewer on the market than single-family homes. The inventory for single-family homes declined 7 percent. If demand increases, the inventory will not be able to keep up, and future buyers will be locked into bidding wars. This could raise prices in the Memphis real estate market, leading to a boom for people jumping in to today’s market. This well may be the last chance at getting in early on a boom market.
Time has shown that Millennials have waited until later in life to start raising a family. But many of them are now in their 30s, getting married, and having children. For these people and others, Memphis is the opportunity to have a yard, a dog, a white picket fence, and a garage.
Investors Got In Earlier
As is typical, investors saw the potential of Memphis early in the recovery cycle. Memphis was hit hard by the housing crash, compared to other cities. In 2011, the homeowner vacancy rate for the metropolitan area was 4 percent. Recovery began when real estate investors saw an opportunity on the horizon and started snapping up foreclosures. They renovated the vacant homes, enhancing their value exponentially. Unfortunately, for interested buyers, most of these investors are taking advantage of the booming rental market, and these properties are not for sale.
Memphis remains a great place for first and second time buyers but that could easily change in 2017 as the inventory level of available homes continues decreasing.