Memphis home prices take off
Lower inventory, interest rates raise competition
The Memphis area saw slightly more home sales in 2020, but prices surged from the year before amid dwindling supply.
The number of active listings has steadily declined since March, helping raise the 2020 median Memphis-area sales price 14.2% from 2019, according to the most recent data from the Memphis Area Association of Realtors. Home prices in areas ranging from South Memphis to Lakeland leaped.
“There’s just not enough inventory out there for all the buyers that are looking to get into the market,” said Kevin Mills, broker agent at Lawrence Johnson Realtors in Whitehaven. “We’ve had situations where we’ve listed a home that went on the market one day and had 14 showings and 10 offers.”
In December, total active listings in the Memphis-area marketplace numbered 2,403. That’s down from 3,682 the year before. Compared to 2019, total home sales in 2020 increased 0.4% from the year before.
Cassandra Bell-warren, president of the Memphis Area Association of Realtors, said several factors could be playing into the sales price increases and limited supply. The COVID-19 pandemic kept more people at home and could be making potential sellers hold off on listing their home amid the uncertainty.
“You’ve got a lot of reasons to think about why people aren’t putting their houses on the market,” she said. “As we try to get back to some normalcy, maybe we’re able to see more inventory.”
Sales volume increased 12.8% from the year before to $4.22 billion, per the association. The median sales price was $177,000, compared to $155,000 in 2019.
The jump in home prices and lack of inventory is being seen throughout the country. According to the National Association of Realtors, the median existinghome price in November was 14.6% more than the year before.
“Unfortunately, home prices have also soared in the last year, a consequence of high demand, relatively low supply and low interest rates,” Robert Frick, corporate economist for the Navy Federal Credit Union, said in a statement, according to USA TODAY. “This puts homeownership further out of reach for lower-income Americans and even middle-income Americans in some markets. That lower-income Americans have been hurt more by the pandemic just makes that situation worse.”
Bell-warren said low interest rates have allowed buyers to pursue homes that would typically be out of their price range.
“I don’t know that people will be priced out of the market — it’s the issue of whether there will be inventory available at the right price point,” she said.
Home price increase by neighborhood
According to the Memphis Area Association of Realtors, these were the neighborhoods that saw the largest jumps in median home prices. The data compares January to December 2020 prices to the same period in 2019:
● The Frayser neighborhood had a 24% median home price jump, with the price rising to $48,360 versus $39,000 in 2019.
● South Memphis saw a 22.2% median home price increase. The median sales price was $33,000 in 2020, versus $27,000 in 2019.
● The median home price in Millington, north of Memphis, increased by 19.7%. The price was $155,000 in 2020, while 2019 had a median price of $129,500.
● Lakeland, a Memphis suburb, saw the median home price rise 19.7% from the year-before period. The price was $365,000 compared to $305,000.
● East Memphis posted a 19.4% home price increase. The median sales price was $180,000, compared to $150,712 in 2019.
● Midtown’s median home price went from $145,000 to $162,750, a 12.2% increase.
Home prices have increased in a variety of different neighborhoods, said Mills, who pointed out Whitehaven and Hickory Hill as two Memphis neighborhoods that have also seen steady growth in home value this year.
“We never anticipated Frayser would blossom the way it did,” Mills said. “… Frayser became high demand within the last eight to 10 months, and that may be attributed to the new job growth out in the Frayser area.”
In 2020, Amazon held a groundbreaking ceremony for a massive fulfillment center in the Raleigh neighborhood near Frayser expected to create 1,000 full-time jobs. Frayser is also home to Nike’s North American Logistics Campus.
Mills, who cited both Amazon and Nike as area job creators, anticipates home prices will continue increasing into 2021.
“Unless if the inventory increases, you’ll continue to see supply and demand as an issue,” he said.
Complete market statistics are available on the Memphis Area Association of Realtors’ website, covering Shelby, Fayette and Tipton counties.