As we start to wrap up the year, we as real estate investors and professionals always benefit from taking a step back and examining where the market is and how it has grown and changed so we can adjust and plan accordingly for the upcoming year.
While it may be beneficial to look at the whole of the U.S. real estate market, what is valuable to us as real estate investors is a look at the markets in which we are actively invested in. So with that in mind, we are taking a look and recapping each of our six Memphis Invest investment markets over the last quarter, from real estate happenings to economic moves.
If you need a quick catch-up, you came to the right place.
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The Q3 Rundown of Our Turnkey Investment Markets
The moves we’ve been seeing in Memphis over the last several months are nothing short of encouraging. In the economic sector, we’ve seen a boom in revitalization downtown and particularly in the tourism department. With tourism driving several major real estate development projects, including the redevelopment of the Mud Island River Park and the Memphis Fairgrounds, which is undergoing an $80 million redevelopment into a multi-use multisports complex, as well as the renewal of the Pinch District near St. Jude’s Research Hospital, we’re seeing ongoing efforts to bring both residential and commercial life back to Memphis.
There’s a lot of pent-up demand for Memphis real estate and high consumer confidence. According to the numbers, with rental prices on the rise and the cost of living overall still one of the most of affordable in the nation, Memphis offers an ideal turnkey investing environment. Because it is a great homebuying environment with rising rent costs, there is a great opportunity for investors to capitalize.
Dallas real estate has seen a trend of leveling off over the last several months. That said, the DFW market has been named top-to-watch for 2019, as its relative affordability to other comparable markets and population growth projections make it the top contender among 78 other metro areas according to PricewaterhouseCoopers and the Urban Land Institute.
Indicators point to a strong economy and what experts call a “disciplined” real estate market. New supply is growing, but carefully and consistently, and that is keeping this hot market from overproducing or falling out of balance.
With that said, homebuyer interest seems to be tapering off a little in Dallas—with a record number of properties going on the market, however, it may be that supply has finally caught up. As such, that market feels more balanced and less competitive. That said, Dallas real estate feels promising and strong. With a powerful economic backbone and a savvy real estate market, things look promising as we move toward 2019.
Like Dallas, Houston is also on PwC’s list of real estate markets to watch in 2019—just not in the number one spot. Houston ranked 37th of the 78 cities on the list. This is actually an improvement over its spot last year, where Space City ranked 60th, when the consequences of the oil crisis and Hurricane Harvey where hitting Houston hardest.
Overall, Houston is looking good—above average in population growth and prospects, labor force participation, business startup activity, and other indicators of economic health. Even now, people are still coming to Houston for its low cost of living, quality of healthcare, economic opportunity, and yes...to retire. That said, like Dallas, Houston has seen a cooling of their real estate market. This is likely due to rising mortgage interest rates and too-tight inventory, as well as continued market disruptions from recovery after Hurricane Harvey. This resulted in a year-over-year decline in home sales.
St. Louis, Missouri
The pressure is on in St. Louis. Things are heating up and everyone involved in the real estate world is feeling the tensions of rising prices and low inventory. There is a reported 2.6-month supply of homes in St. Louis as of August of this year, which is down almost 32 percent from last year. Most of the competition and inventory squeeze will be found at the $250,000 and under price point, whereas there is more to offer in the higher price ranges.
What’s the cause? Economists point to the rising millennial demand as they finally move into homebuying in the St. Louis market, increasing demand and putting pressure on inventory. Median prices are up by 5 percent. There’s never been a better time to be turnkey and dodge the headache of a bidding war as the heat turns up for St. Louis real estate.
Oklahoma City, Oklahoma
Oklahoma City, like Houston, has seen some issues in the office sector and in other economic areas over the past few years—this year included—due to the recovering oil industry. Something of note that we see coming to fruition is how buy-and-hold investors have truly invested in and sustained the OKC real estate market. Evidence suggests that non-owner occupied mortgages have gone a long way towards sustaining healthy home prices in the market, versus artificially raising their value. OKC has a large share of such mortgages: 15.4 percent.
Median sales prices are up slightly year-over-year at $150,000 in October, compared to $147,000 last year. Rent is also up from $950 in October of last year to $975, representing a modest increase on all fronts.
Little Rock, Arkansas
Little Rock is seeing the stirrings of revitalization and energy this year as many of the other markets on our list have. The West Village neighborhood, long struggling with vacant storefronts, is seeing a turnaround as businesses return and plans are put into motion to bring life back into the area. This is but a small picture of some of the happenings in Little Rock—pride in the city and in its economic potential.
As far as real estate goes? Home prices are actually down year-over-year while rental prices are on the rise, as are the number of units. Median home costs in November of 2017 were $182,000, while at the end of October this year, they sat at $171,600.
Rent is headed the other way. Last year we saw rent at a median $997, and this year, $1050. The most dramatic number that has shifted is the number of rental properties—just 272 last year, and 556 reported this year.
There is rental demand evident in Little Rock, and the excitement around the economy is undeniable.
Staying in-the-know can be challenging for busy real estate investors, especially when it isn't your full-time job. That's why we dedicate ourselves to doing the heavy lifting—so investing is worry and hassle-free.
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