Memphis. It is a large city on the southwestern edge of Tennessee that could potentially be an underrated real estate market.
The city often gets overshadowed by Nashville in the same state, but this could be one of the best areas in the country to buy real estate.
In the second quarter of 2022, Memphis’ average home price was over $256,000.
So, what should you know about the Memphis real estate market before buying property there? What are the biggest benefits to the Memphis market? What are the hidden gems of this area?
This is your guide to the Memphis real estate market.
Market Is Heating Up
Something that you need to know about Memphis is that the real estate market is heating up. It has arguably risen faster in the last few years than any other time in the last few decades.
To give you an idea of this, take a look at the chart in the link from the introduction. More specifically, look at the average home price when the pandemic started.
In the first quarter of 2020, the average home was worth just over $186,000 in Memphis. In the first quarter of 2021, a home was worth just over $202,000.
That means that homes in the city have gone up by about $70,000 in the last two and a half years, with homes going up by about $54,000 in just the past year and a half alone!
In other words, the average price of a home in Memphis has increased by about 38% just since the time that the pandemic started. That is an unbelievable return and the market has not shown any signs of slowing down yet.
If you want more proof that the market keeps rising, let’s go back even further. Ten years ago, a house in the Memphis area was worth just over $135,000. Five years later, that house value went up to $156,000.
Now, a house is worth $100,000 more than that, or about a 64% increase in value in just five years.
Renter Market Is Strong
Along with the housing market, the renters market has also gained a lot of momentum in Memphis. For a property investor, this is great news, considering that Memphis rent has increased by as much as 73% recently.
A lot of buildings in the area have been increasing their rent by at least 50% over that stretch. This means that if you end up owning an apartment building, you could immediately charge a lot more money for rent than you used to be able to.
However, you do not have to limit yourself to long-term tenants in Memphis. You have the option of turning your apartments into Airbnbs as well.
With this option, you open yourself up to booking your apartment for people who are just looking to stay for a short trip.
For example, someone is looking to visit Memphis for a few days and go to places like Graceland and Elvis Presley’s home. They want to stay in a central location that feels more like a local experience than a hotel.
This could be another time where it benefits to own investment property because that market now opens up for you.
One thing that could benefit you as an investor is that right now, there is more inventory available than there has been in any month over the last year.
As of July 2022, there were 2,839 houses available in the Memphis real estate market. Meanwhile, the lowest point in the last year was the first month of 2022, when January only had 1,882 houses available.
Overall, 2022 has been a rocky year when it comes to inventory. During the first five months, we saw five of the seven lowest inventory months over the last two years. However, June and July have really picked up the year in this category, so you could see some potential movement in inventory.
The Decline in July Home Sales
July of 2022 put up an interesting sales number compared to that time last year. From year-over-year, July 2022 had 17.5% fewer home sales than July 2021 for Memphis. The total home sales fell under 2,000 in July 2022.
Despite the decline in sales, homeowners have been getting more money for their homes in this stretch. Both the median sales price and the average sales price have gone up by five figures in Memphis from July 2021 to July 2022.
The total year sales have also seen a slight decline comparing the first seven months of 2021 to the first seven months of 2022. In both years, there were over 12,000 homes sold. However, 2022 saw a 4.1% decline so far in homes sold.
Frayser Is Hot
Finally, if you are looking for a specific neighborhood in Memphis to buy in, you may want to take a closer look at Frayser. Comparing year-over-year statistics, it has seen the most gains in total sales numbers.
There are 14 more units available this year, resulting in more than a 15% increase. Along with this, the median sales price and the average sales price of homes in this neighborhood have gone up by over 20%.
Invest in the Memphis Real Estate Market
These are some of the notable things that you should be aware of in the Memphis real estate market. Keep an eye on neighborhoods like Frayser if you are considering investing and remember that the overall market is continuing to increase.
You should note that there is more inventory becoming available in Memphis, so that could mean a better opportunity for you to get your foot in the door.
Do you want more investment property tips? Message us today to see how we can help.