Real estate markets across the country are very dynamic these days. Memphis is no exception. New housing starts are down in Memphis. Not from a lack of demand but rather from a lack of available building lots.
Still, the local nonprofit United Housing has recently completed construction of 34 houses that meet the eco-friendly requirements of the Memphis Light, Gas & Water green building program. These single-family houses are located at the Wolf River Bluffs development in Frayser.
These houses specifically targeted being affordable to an underserved population. While these houses have a higher up front cost for building materials, over the life span of the homes, the energy savings far exceed the additional material costs. The project’s goal was to achieve a 30 percent reduction in energy costs. To date, real data indicates a 33 percent reduction in electrical costs.
Slow Down In Memphis Area New Construction
However, not all is good when it comes to new home construction. New home construction slowed in Memphis and Shelby County in the second quarter of the year. The slow down is not due to a lack of buyers. It’s the result of a lack of buildable lots. New homebuilders filed 219 permits for the three months that ended June 30. That’s down 19 percent from the 271 permits filed during the same period last year.
New home sales were also down with 196 new homes being sold during the quarter compared to 210 the previous year. That’s a reduction of 6.6 percent. Builders squarely attribute the down turn to a lack of building lots. As the numbers strongly suggest, everything that is being built is being sold.
Another indication of the strong market for new housing is the sales price data. Shelby County average new home sales prices were $312,505, up 18.4 percent from $263,837 a year ago.
The Memphis Resale Market is Strong
Because of the wide range of housing types available in the Memphis area, one of the better metrics to look at is price per square foot. From mid-April to mid-July, the average price per square foot was $76, an annual increase of 2.7 percent.
However, the medium price of houses sold decreased 1.1 percent over the past year. The medium price is not the average. Rather, it is the point where half of the houses sold for more and the other half sold for less. The Memphis area medium price from mid-April and Mid-July was $123,500 based on 1,553 home sales. That’s a sold sales price decrease of $1,400 while the number of sales increased 4.1%. All of the numbers indicate that residential sales in the Memphis area remain robust and still slightly favor the buyer.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.