What we’re looking at in the current Memphis housing market is higher prices, whether we’re talking about homes for sale or homes for rent. They’re not actively rising, as they have been steadily over the last couple of years. The prices have peaked, it seems, but they’re still historically higher than we have ever seen.
What does that mean for you, as a property owner?
It depends on what you’re planning to do with your investment.
This remains a strong and competitive market, and there’s less of a fear that some kind of recession is imminent. Memphis is still attracting buyers and renters who are willing to pay more for the right home.
Let’s talk about what this means for you and your property.
Home Prices and Real Estate Values in Memphis
If you have decided to sell your investment property, you’re still likely to get pretty close to your asking price. You can expect a reliable pool of buyers, even with rising interest rates making mortgages more expensive.
According to the Zillow Home Values Index, property values in Memphis have gone up about 22 percent over the last year. That’s good news if you have a property that you’re thinking about selling or planning to hold onto for further appreciation.
Rental Market in Memphis
If you’re renting out a home, you’re bringing in high rents and holding onto reliable tenants.
The rental market is possibly even stronger and more competitive than the sales market. In Memphis, we’re seeing a median rent that’s over $1,000 a month, even for an apartment. There’s a high demand for well-maintained rental homes in desirable locations. Single-family rental homes are in especially high demand. If you have a three-bedroom, two-bathroom home with a yard to rent out, you can count on a lot of competition from tenants to rent that property.
Several factors will contribute to the continued strength of our rental market:
- Inflation is driving up rental prices, and so is the demand for rental housing.
- The population of Memphis is growing
- Higher home prices are keeping a lot of renters in the market because they don’t feel like they can afford to buy.
We expect rents to stay high throughout 2023. If you’re thinking about selling your home, you might want to seriously consider the benefits of holding onto that asset and renting it out instead.
Vacancy and Turnover Trends
Generally, the vacancy rate throughout the Memphis rental market is manageable. With more properties available than a year or two ago, things are feeling more competitive for owners. However, there’s still a large pool of tenants, and most of those tenants are likely to renew their lease agreement rather than look for a new rental home.
As we said, rents have increased over the last couple of years, and so has the cost of just about everything. This has left tenants feeling cash-strapped. They’re deciding what they’re willing to spend on rent, and many of them are feeling like rents are too high. In Memphis, it won’t likely be necessary to decrease anyone’s rent. You may have to be strategic with rental increases at renewal time, however, especially if you want to hold onto your tenant.
Remote Work and the Memphis Real Estate Market
Memphis is an attractive city for remote workers. People who are employed by large companies in expensive cities can choose to live in an area like ours. They’ll pay less for housing and enjoy a happier quality of life.
This is a trend that rental property owners can absolutely leverage.
- Attracting Remote Workers to Memphis
Memphis is exactly the type of city that remote workers would gravitate towards. It’s not nearly as expensive as other cities, especially those across California or on the eastern seaboard. The cost of living here is attractive to workers who now have the flexibility to live wherever they want, even as they collect competitive salaries from their employers.
So, the remote work trend has had market-specific impacts. It’s increased rent. It’s reduced supply. There are more tenants in the Memphis rental market. The population is growing in our area, and there’s no reason to think that growth will stall.
With remote workers living wherever they please, housing prices in the sales market have soared. That’s keeping more and more people in their rental homes. Add those numbers to the population growth in Memphis and surrounding areas, and you’ll see why the shift to remote working has benefited our market.
- Making Your Memphis Rental Home Attractive to Remote Workers
With remote work having a positive impact on the Memphis housing market and driving demand for well-maintained homes, you can leverage your own rental home to attract well-qualified, remote-working tenants.
Here are some ideas based on what we know about the high-quality tenants who are looking for homes in and around our area:
- Offer dedicated workspaces in your rental property
Homes will be more attractive to work-from-home tenants when they have a dedicated workspace. That might be an office, a den, an additional bedroom, a loft space, or even a large and open floor plan that can accommodate a desk or two. That will attract your remote tenants.
- Provide good technology
Remote work demands a strong internet connection. Internet is perhaps even more important to remote workers than their utilities. You might leave it up to your tenants to choose their own internet providers, but be prepared to make some recommendations on which local providers offer the best packages and the strongest speeds.
- Competitive rents
People move to Memphis for affordability, among other things. Make sure you’re renting your home at an amount that earns you money and keeps up with the market but also attracts good tenants who are seeking value.
These are some of the most important market trends that we’re seeing in Memphis right now, and how they can help or hurt your own investment portfolio. If you’re thinking about making some moves with your property, let’s talk about it. We can help you position yourself for success and profitability in a constantly shifting Memphis real estate market. Contact us at RiverTown Realty.