Sunday, October 23, 2005

Memphis..2nd Most Undervalued Housing in the U.S.

Like many areas of the South, the Memphis housing market is a steal compared to sizzling housing markets in other regions of the country. The metropolitan area's median home price of $150,100 in the second quarter was about 28% lower than the national median of $208,500 and the average monthly apartment rental rate of $538.24 was the lowest of 54 major markets surveyed by Property & Portfolio Research Inc., a Boston-based real estate consulting firm.
This three-bedroom, two-bath home in a gated neighborhood of Memphis is on the market for $139,900.
Memphis also had the dubious distinction of being the seventh most undervalued housing market in the country in the second quarter, according to a study of 299 housing markets, conducted by Richard DeKaser, chief economist for National City Corp. The study found that Memphis homes were about 13% below fair market value. College Station, Texas, was the most undervalued market at 20% below fair value while Naples, Fla., ranked as the most overvalued market at about 79% above fair value.
Bargain prices are something of a double-edged sword for homeowners in Memphis. Housing may be affordable and the market at less risk of a correction, but local homeowners also aren't amassing equity at a rapid pace. "It's unfortunate that [Memphis residents] are not realizing the full value of their asset," Mr. DeKaser said. But he added, "anyone living in what we deem to be an undervalued market should take this talk of a housing bubble with a huge grain of salt."

______________Memphis Market Snapshot ______________

_________________2nd qtr 2005 _________2nd qtr 2004
Median Home price....................$150,100........................$138,300
Total Homes sold.........................4844...............................4402
Active listings.............8880...............................7998
Foreclosure rate..........................0.63% ............................0.73%
Avg rent per month...................$538.24...........................$542.58
Apartment vac rate........................9.9% ...............................10.5%

*Active listings were for June of the year specified.

Sources: Memphis Area Association of Realtors, National Association of Realtors, Property & Portfolio Research Inc., LoanPerformance.com