Many of the recent articles you read on the housing market seem to convey almost polar opposite messages. Markets are up, other markets are down and no two pollsters, spinsters or prognosticators seem to agree on exactly what is happening. Real Estate Investors have to get past all the white noise of the national housing market and get down to the fundamentals of particular markets that provide quality, stable investment opportunities.
Real Estate is a 'Hyper-Local' investment opportunity that often cannot be categorized as a city, but has to be broken down into neighborhoods and sometimes even street levels to find the best deals. But on the surface, you absolutely must look at markets individually to get consensus on which markets are good for investing and which are not.
Recently, CNN Money released a report compiled from data provided by Local Market Monitor which rated the most over-valued and most under-valued markets in the country. I, along with the writers of the article, found it fascinating that Las Vegas was rated as both over- AND under-valued. Because segments of the city show characteristics of both values it was rated that way - now that is hyper-local!
Now, I focus on Memphis real estate and in this particular report, Memphis was ranked as one of the most under-valued cities in America along with a dozen other cities. Muddled right in the middle of the pack, the median home price in Memphis ($161,000)* is currently 16% under true value for 2011 and expected to be 17% under true value for 2012.
That translates well for real estate investors looking to buy properties that are not only producing monthly positive cash flow, but that are also being purchased below true market values. The calculations show that as the economy improves and the housing market stabilizes, markets like Memphis should see an early, quick bump in values as demand increases. Rather that the traditional appreciation tracking with inflation, Memphis should see that spike and then level off again. Appreciation is never a reason to invest in today's real estate market, in my opinion, but it sure doesn't hurt to have a little!
*we are doubling checking this number to see if it is Memphis proper, Shelby County or the entire MSA which includes parts of Arkansas and Mississippi.