Are you looking to buy or sell a new home in Memphis? If so, you may wonder what type of real estate market currently exists in Memphis, Tennessee. Is there a Memphis housing market bubble in the current environment?
In the guide below, you can find out more about the Memphis housing market, typical home prices, and sellers’ market trends. You will learn about new interest rates and the standard listing price you should choose when putting your home on the Memphis housing market.
This guide covers the possible housing bubble in Memphis and the potential for a housing market crash. Ready to find out all about it? Let’s get started!
Early Signs That the Housing Market Is Cooling Off
The real estate market might be cooling off for homeowners in Memphis. Realtors are still seeing offers coming, but more buyers are putting up offers below actual home values or the listing sales price. Some buyers are haggling and offering around $30,000 below the asking price. As such, it’s becoming more of a seller’s market in Memphis.
For instance, in July 2022, housing prices decreased by 17.5 percent compared to home sales in July 2021. The number of sales has also fallen by 4 percent over the last year.
As such, the future for the housing market shows home sales won’t remain as promising for sellers. Yet, as the housing market cools off, homebuyers may be better positioned to purchase new properties. Therefore, you won’t see as many bidding wars in the Memphis real estate market.
Furthermore, housing inventory has increased in recent months, which has given buyers more time to look at single-family homes, condos, townhouses, and other residential properties. Earlier in 2022 and 2021, the demand was much higher, with dozens of potential buyers looking at a particular property.
Nonetheless, the year-over-year costs of the average home increased by 6.2 percent from 2021 to 2022. For example, in July 2021, the average realty price was $252,595, but that price grew to $268,133 by July 2022.
Furthermore, real estate investing in Memphis is causing problems for home buyers in that region. The real estate investors may even lead to a housing crisis, as outside investors quickly buy properties with cash. At times, investors don’t even look at the homes before purchasing them.
Essentially, investors are keeping homeownership out of the reach of many in the Memphis area. Often, investors renovate, join the rental market, and become landlords to Memphis renters.
Earlier in 2022, bidding wars were more common, and many buyers kept losing out to real estate investors and cash buyers. Cash buyers also often waive home inspections and appraisals, which benefits the sellers.
At the time, the housing inventory remained low, which made it harder for buyers to find the right property. Since then, however, inventory has grown. Now, buyers have more opportunities to purchase a home. Nonetheless, supply chain issues have led lumber costs to increase. As such, the costs of new homes remain relatively high.
Generally, the housing market in Memphis has started cooling off. The primary signs showing this cooling-off period include slower home price growth, fewer buyers seeking to purchase new houses, and greater housing inventory. Home-selling dynamics have started to change and favor buyers, which further shows how the market has begun to cool down.
The reason for these outcomes relates to the rising mortgage rates or interest rates from mortgage loan companies. Furthermore, the Board of Governors of the Federal Reserve System has raised the interest rate paid for reserve balances to 3.9 percent. That increase has been effective since November 3, 2022.
The Cost Of Living in Tennessee has been increasing with rising inflation, and the monthly mortgage payments have also risen. Currently, the costs of groceries and gas have grown tremendously. That has all led to a cooling down of the real estate market in Memphis and elsewhere.
What To Do?
Essentially, the Memphis housing market bubble and potential cooling down of the real estate market have led home buyers to benefit. Yet, many home buyers may not prefer the rising mortgage rates, especially when housing costs are still relatively high.
Buyers may need to wait for housing costs to start dropping over the next year. Once that happens, buyers can look into the Memphis metro area to see what type of property is perfect for them. In the meantime, they can look into new rental properties until affordability improves for the housing market.
Sellers who are having trouble finding a home buyer or selling their place at a high price should attempt to market their property on Zillow, realtor.com, and social media sites. While the Memphis housing market was expected to grow in 2022, sellers are finding that home sale offers are lower than their asking price.
You can determine home value as the seller by considering current housing market trends and the typical asking prices in your neighborhood. Furthermore, as the seller, you may benefit from putting your house on the market at the right time of the year.
For example, homes get sold the fastest and at the highest prices in the late spring and early summer. Since most families look for a new home before a new school year begins for their kids, the best time for sellers to put their homes on the market occurs in late spring and summer.
Therefore, you should make sure to put your home on the market anywhere from May to August. With homes spending more time on the housing market, sellers should put their properties up for sale at the opportune time.
For instance, while homes sold 11 days faster in March 2022 than in March 2021, residential properties sold only six days faster in April 2022 as compared to April 2021. Essentially, home sales have started to slow down. If they keep slowing down in the same manner, sellers are likely to see their houses staying on the market longer before getting an offer.
Along with putting your house on the market in the spring or summer, you can add certain advantages to entice buyers. For instance, you may want to cover more of the closing costs for buyers to ensure they put in an offer.
You may also benefit from seeking out a real estate investor or cash buyer if standard home buyers are harder to come by. Cash buyers can complete a home sale very quickly, which will ensure your property won’t stay on the market too long.
Real Estate Market and Housing Trends in Memphis
In Memphis and the rest of Tennessee, the real estate market has been cooling down, and the housing trends further show a Memphis housing market bubble fizzling. The typical trends in the Memphis housing market include:
- The slowdown in home price growth
- A rise in housing inventory
- The length of time houses remain on the market has slowed down
- Fewer people are showing interest in buying new properties
- Changes in home sale dynamics
Home price growth has slowed down, with April 2022 seeing a 14 percent increase in sale prices as compared to April 2021. The slower growth rate is clear, as home prices increased by 17 percent from April 2020 to April 2021.
Total housing inventory was also down only 3 percent by the last week of April 2022. If the housing inventory continues to rise, buyers are likely to have less competition and more properties to pick from.
Sellers may also see their homes remain on the market for longer in the coming months. That may be due to fewer sellers looking to purchase new residences. For example, in recent months, online searches for “real estate” and “homes for sale” phrases declined by 10 percent.
Furthermore, housing trends in Memphis show that buyers currently bid closer to the asking prices or even lower than the asking. Sellers can no longer expect to sell their homes for higher than the asking price.
So, why is the housing market cooling off in Memphis? The main reasons are the rising mortgage interest rates and growing monthly payments. For example, the average interest rate for a 15-year fixed-rate loan rose to 4.22 percent in April 2022. That is almost a full percentage increase from March 2022.
The Memphis housing market bubble may pop before you know it and cause significant housing problems for Tennessee sellers. Essentially, housing costs may decrease over time, with fewer buyers showing interest. Home sellers in Tennessee may also see their houses remaining on the market for too long due to the cooling down of the real estate market.
If you’re a Memphis homeowner having trouble finding a home buyer for your property, you may want to seek out cash home buyers in Memphis. You can sell a house fast in Tennessee if you work with a cash buyer.
Luckily, we buy houses Cordova residents love, so make sure to contact us as soon as possible.