Two days ago The Commercial Appeal released an article titled, "Memphis to Lead Nation for Rise in Home Prices." (Note that the article is only available to paid subscribers). It references a report by the Demand Institute. The most interesting part about their research, at least for us Memphians, is that they are predicting a 33% growth in the housing market between 2012 and 2018 (see page 18 of the report). We're actually tied with Tampa, FL for #1.
As a home owner and a real estate agent, this is pretty exciting. Here's what it means. If they're correct, a house purchased in 2012 for $118,000 (the average price for a in house in Memphis last year) could possibly be worth $157,000 in 2018. Or, using the same math, a house purchased in 2012 for $200,000 could possibly be worth $266,000! How's that for a return!
I've always felt great about Memphis real estate, and it's one of the reasons I'm both a real estate investor and agent. Eight years ago we moved from the San Francisco Bay Area to Midtown Memphis. In 2004/2005 we were trying to buy in the Bay Area. In hindsight I am so grateful that we didn't. The house we rented at the time was worth over $400,000. It was 1000 square feet and had two bedrooms and 1 bathroom. It was in San Leandro, a small community outside of Oakland.
In a good Memphis neighborhood such as Cooper-Young, I can rent a $100,000 home for around $1000/month. Using that math, the home we rented in San Leandro should have been $4000/month. It wasn't. It was $1450/month. When I did the math, I realized that it was an incredible deal to rent in the bay area, and it was just as much an incredible deal to buy in Memphis. So since we had been saving money towards a down payment and weren't going to be buying there, we decided to buy investment properties in Tipton County, where I grew up. And that began my real estate adventure!
I'll continue to buy here, and more important, I'll continue to help others buy. If you are looking to buy a home to live in or as an investment, I'd love to help. You can email me at robertgrisham@gmail.com.
As a side note, the other interesting aspect of their research is this: of the 2,200 cities they analyzed, they discovered that the wealthiest 10% own 52% of the total housing wealth ($4.4 trillion), while the bottom 40% own just 8% of the housing wealth ($700 billion). I don't guess this should surprise us, but seeing the numbers like this is pretty interesting.
