Housing bust? Not in Memphis

commercialappeal.com - Memphis, TN
By Amos Maki
April 18, 2006

Like Ol' Man River, the Memphis residential real estate market just keeps rolling along, with local home sales and prices jumping once again in March.

Home sales for March hit 1,632, up 8.2 percent compared to March 2005, according to the Memphis Association of Realtors.

The average sales price in Memphis was $165,100, up 2.6 percent over the same period last year.

Through the first quarter, 5,613 homes were sold, a 12 percent increase over the same period last year, according to Chandler Reports.

All that comes as good news to local Realtors.

"For the company overall, we are ahead of last year and last year was banner," said Jimmy Reed, co-owner of Marx & Bensdorf Real Estate & Investment Co., the oldest real estate brokerage firm in the city. "It is somewhat surprising in that interest rates have kicked up and there are national media stories about a decline, but Memphis, so far, is feeling immune to that.

"We are not a boom-bust market and never have been," Reed said.

Year to date sales volume is $269 million, up 10.7 percent from $243 million last year.

"(The) market in Memphis continues to be strong in the first three months of the year, with the busiest months ahead of us," said MAAR president William Mitchell.

The Cordova Zip Code of 38016 led the way with 380 sales in the first quarter, up 24 percent over the same period last year, according to Chandler Reports.

The Collierville Zip Code of 38017 came in second with 326 sales, up 24 percent from last year.

"The primary boost there is all the new home development," said Jennifer Burda, general manager of Chandler Reports.

Analysts said relatively low local housing costs is one reason the Memphis market has remained so steady.

"Things are still pretty affordable," Burda said. "I think affordability plays a big part in it."

Nationwide, the median sales price for an existing home -- the point where half the homes sold for more and half for less -- rose to $209,000 in February.

At the end of March, the median sale price in Memphis was $132,500.

Another factor is the stability and health of major employers like FedEx -- or employment sectors like health care -- and the city's diverse business base.

While markets in and around Detroit or Silicon Valley can fluctuate wildly due to bad economic news, it's generally steady as she goes in Memphis.

"We're just not tied to any one thing," Reed said. "We percolate at our own pace."

Condo sales for the quarter nearly doubled over the same period last year.

Through March of this year, 338 condo sales were recorded compared to 178 last year.

Downtown's 38103 Zip Code and Germantown's 38138 and 38139 Zip Codes account for more than one-third of the condo sales in the first quarter with 139 sales.

Downtown recorded 88 condo sales in the quarter while Germantown recorded 51, thanks in large part to the conversion of old apartment developments into condo communities.

According to preliminary numbers from the Northwest Mississippi Association of Realtors, 350 home sales were recorded in March.

"As of today, we're running over 10 percent above last year," said Michael Austin, president of NMAR and owner of Austin Realty Group of Southaven and Hernando. "We've got a market and a half down here."

In 2005, 3,908 homes were sold in DeSoto County, up from 3,088 in 2004, according to NMAR.

That type of activity is drawing more Memphis Realtors into the market.

"It's just busting at the seams," said Doug Collins owner of Prudential Collins-Maury Inc. Realtors, which opened an office in Olive Branch on Friday. "I had to get a presence down there."

Nationally, home sales should generally level out and remain at historically high levels, according to the National Association of Realtors.

Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005.

New-home sales will likely fall 10.9 percent to 1.14 million from the record 1.28 million last year.

However, both sectors would see the third best year ever following 2005 and 2004.

"Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau, meaning this will be the third strongest year on record," said David Lereah, NAR's chief economist.