Memphis Home Sales Still on the Rise

LANCE ALLAN

The Daily News

If May is any indication of things to come, Memphis-area real estate agents will be in particularly high gear during the already-busy summer months.

Still rising. May home sales reported to the Memphis Area Association of Realtors Multiple Listing Service came in at 1,422, an increase of 7.2 percent from 1,326 reported in May 2003. Year-to-date sales are up 13 percent over last years record pace. Through May 03, there were 5,729 sales, compared with 6,473 through May 04.

New home sales are really good, and it has just spilled over into existing sales, said MAAR president Bob Turner. And the economy is getting better all the time, jobs are being created all the time and the market is just really strong.

Heating up. If the recent trend holds true, the next six weeks will be hectic for the real estate market.

The slowest time (in the summer) is when everybody is getting out of school, then it picks up, Turner said. It slows back down when everyone goes back to school.

There were 3,965 home sales during June, July and August 2003, an increase from 3,751 during the same three-month period in 2002.

Our first quarter at Crye-Leike was the best quarter weve ever had, said Crye-Leike sales associate Tommie Criswell-Jones. May was another record-breaking month and we anticipate it continuing. Were still very positive that the market is going to remain strong. The interest rates are looking like theyre going to stay right around that 6.25, 6.5 mark, which is still extraordinarily good.

More listings. The number of homes being sold continues to rise. But so does the number listed. Active listings for May 2004 were 8,310, up 2.4 percent from 8,113 in May 2003.

I dont see anything negative with more listings on the market, Turner said.

The median sales price also has increased, up from $125,000 in May 2003 to $137,500 in May 2004, a 10 percent jump. Monthly sales volume increased 17.1 percent from $204.2 million in May 2003 to $239.2 million last month.

The most popular price range in the Memphis market is in the $125,000 area, $10,000 of either side, Criswell-Jones said. Theyre building the greatest number of homes in that price range in the Cordova/Northeast Shelby County area.

Economic factor. The improving economy is having an effect on interest rates.

Unemployment is good, so that means rates bumped up a little bit, said Fran Warner, president of the Memphis Mortgage Bankers Association. If unemployment happened to get bad, then rates could bump down.

Whether the rates stay around 6 percent or push close to 8 percent, educated buyers should know homes are still a good buy, said Grace Uhlhorn, associate broker with ERA Chamberwood.

Even if they reach 8 percent, thats not bad, Uhlhorn said. Its not what weve been used to the past couple of years, but theyre still fantastic interest rates. Just look back five years to see how they were.

I dont know if it will really slow people down or not.

However, buyers wont be able to afford as much house at 8 percent as they could at 6 percent.

One of these days, the rates will go back up and youll not be able to afford a house as big as you can now, said Bebe McWaters, principal with McWaters & Associates. I think that people planning to buy need to go ahead and buy while they are this low.

Hot spots. As the months go by and sales continue at a record pace, the hottest areas for new home sales seem to remain constant in Memphis.

Arlington is picking up with the new school out there, Turner said, referring to Arlington High School, which opens in the fall. Lakeland and Arlington are the two that continue to grow.

As homes in the suburbs continue to move, it has McWaters concerned.

People are going to the smaller towns because of city taxes, and I dont know what we can do about it, she said. Bartlett, Collierville and Germantown taxes are not as high, and Lakeland doesnt even have them. People are running from the taxes and theyre still benefiting from the city. You just step over the line and dont even know when you leave one town and enter Memphis.

So if homebuyers are moving away from the city, what will happen to the annexed areas of Cordova?

People who want to live in East Memphis dont mind paying Memphis taxes, and it will be the same way in Cordova, McWaters said. They have some of the most gorgeous homes in this whole area. It happens at first when the city takes things in it just kills that market for a while. But then people get used to it, and theyre going to find out that you find the most magnificent buys in Cordova.

Cordova is going to be an extension of East Memphis.

Whos buying? During the summer, Realtors inevitably see business from people relocating from other cities. There is also an increase in newlyweds in the summer looking for their first homes.

This years mix of buyers includes all of the above and more.

The housing sector is so strong in all areas that all buyers whether theyre first-time homebuyers or move-up buyers or buyers wanting to spend a million dollars on a house theyre out there buying, Turner said.

Solid market. With MAAR reporting an increase in sales dating back to October 2002, it seems that the trend will eventually reverse. But Turner doesnt foresee it as a sudden occurrence.

There is no bubble that is going to pop, he said. Its a real solid market, and our economist thinks its going to be a solid market for the next couple of years.