Newcomers Flock to Affordable Markets

Price, new construction key to attracting new residents

LANCE ALLAN

The Daily News

Mortgage interest rates are low, the economy is coming back around and a number of Metro Memphis market areas are experiencing rapid residential growth.

Between October and February, Memphis welcomed 12,405 new residents, according to The Daily News Public Records Database.

These newcomers, represented through first-time utility connections with the Memphis Light, Gas & Water Division, include new residents in both single-family and multifamily homes. Numbers for the period reflect strength in several market areas, particularly Southeast Memphis and Northeast Shelby County.

Affordability rules. According to The Daily News database, the 38115 and 38116 ZIP codes, both in the Hickory Hill area, were tops for the five-month period with 1,206 and 803 connections, respectively. Bartletts 38134 was third with 779 connections, followed by Cordovas 38016 with 713 connections.

The southeastern segment of the city, which includes Hickory Hill, continues to thrive due to affordable home prices and an abundance of multifamily units.

Southeast Memphis is not having new construction, meaning its existing homes that are under $100,000, and that is going to be first-time buyers, said Bob Turner, president of the Memphis Area Association of Realtors. That price point is very attractive. A note in that price range is going to be $700, so they can buy cheaper than they can rent. The new homes in Cordova and existing homes in Cordova are the same way.

Dominated by price. Turner said price is the No. 1 factor for first-time buyers and Metro Memphis newcomers in choosing where to live.

They can qualify for X number of dollars on a loan, he said. Cordova, Bartlett, Southeast Memphis all have that price point where most of the first-time homebuyers are buying.

Grace Uhlhorn, affiliate broker with ERA Chamberwood, has noticed a trend in new home sales that seems to be driven by newcomers from outside Memphis.

A lot of what Ive seen recently that surprises me is the zero-lot homes Ive always thought those are pretty much for empty-nesters, she said. I didnt see young couples moving into zero-lot homes. But we just sold one to a first-time homebuyer, and hes only 23.

I think that might be a trend in other parts of the country, so when people are coming into this area, theyre also looking for zero-lot homes.

Moving in. According to nationwide moving company Allied Van Lines, more people are moving into Tennessee than moving out. The firms annual Magnet States Report recently revealed more inbound movers for the state than outbound, making Tennessee the 19th most popular state for people moving with Allied in 2003.

And where those people are moving to in Shelby County depends on income level.

A lot of newcomers coming to town with two people, if theyre making $40,000 or $50,000 each they can qualify for virtually any house they want, Turner said.

That includes homes in areas such as Collierville and Germantown, where the influx of newcomers is weaker than in Southeast Memphis, Bartlett and Cordova, mainly due to affordability.

So much of that is dictated by price range, said John Linthicum, managing broker with Crye-Leikes Bartlett office. If theyre coming in from out of town and theyre in the $170,000 price range, theyre not going to be looking in Collierville or Germantown. They can look at a few homes, but it would be sparse. Ive worked personally with a lot of newcomers (in the Bartlett area).

Market comparison. According to the Memphis Area Association of Realtors, the median asking price in Cordovas 38016 ZIP code is $179,900. In Bartletts 38134, its $118,900, and in Hickory Hills 38115, its $89,900.

The median asking price in Germantowns 38138 is $255,000, and in Colliervilles 38017, its $329,900.

In Germantown and Collierville, you cant get anything for under $300,000 brand new, Linthicum said. In Bartlett, you can still get into the mid- to upper $100s. In new construction, youve got some of the amenities some of the other suburbs have, but maybe even more affordable. You can still buy a house in Bartlett three bedrooms, two baths in the very low $100s.

New homes. Uhlhorn said the current trend among potential homebuyers is to look for newly constructed homes.

Newcomers are looking for new homes, and we still see a ton of homes in the Cordova area, she said. If somebody coming into this area goes and compares existing homes in one part of the Memphis area and then goes out to Cordova, they can get a lot more for their money out there with a new home.

Of course, for people seeking new homes in the mid- to upper $100s, locations within Shelby County are becoming limited.

With new homes, you have to go where theyre being built to get that price point, Turner said. Bartlett is about to price itself out of the market like Collierville and Germantown have. Southeast Memphis and Cordova still offer that, and there is a pretty good supply in those markets of that price range of home.

Buyers are increasingly following the wave of new construction to areas such as Arlington, Bartlett, Cordova and Lakeland.

In the city. Still, although East Shelby County is seeing much of the areas newcomer activity, it doesnt mean specific areas within Memphis are hurting.

Between October and February, there were 151 newcomers in Downtown/Midtowns 38105 ZIP, 405 newcomers in Downtowns 38103 and 563 newcomers in Downtowns 38104, ninth among all Shelby County areas for the period.

Inside the loop, traffic is less, schools are good and its just a good location, Turner said.