Shortage Of Housing In Memphis Due To Abundance Of Investors

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http://www.localmemphis.com/news/local-news/local-...

MEMPHIS, Tenn. (localmemphis.com) - If you're house hunting in Memphis, you already know why experts say this is the hottest market we've seen in decades. You're competing with investors from all over the globe who see Memphis as one of the best cities in the country to buy a house.

It's all about supply and demand, and inventory is lower than it's been in years. In fact, 1500 fewer homes are on the market in Memphis now than just 2 years ago.

“We're seeing things in this market, we have never seen before,” said investor Michael Stansbury. Stansbury buys, renovates, and then sells homes in Memphis. He is also mentoring people on how to flip homes. The end result puts additional inventory of homes into the market.

“There are realtors out there with buyers and there's no houses to sell to them,” said Stansbury.

Alaina Vanaman is one of Stansbury's students. She's renovating a house in Bartlett. Vanaman wants to “fix and flip.” She stays busy being a mom and house flipper.

“Gotta get things done. When my kids are at school, try to knock out my big projects,” said Vanaman.

Realtors say a lot of investors in Memphis want to "buy and hold," which is only adding to the shortage.

Investors buy homes, then rent them out.

“There is more people coming into the market, that want to buy from other markets into Memphis because they want to buy and hold properties here,” said Stansbury.

Memphis is a ripe place for these “buy and hold” investors. The city has a lot of homes for the right price and a high percentage of people who are renters.

The Local I-Team has found out-of-town investors are coming from all over. County property records show California investors have bought the most properties here, but investors from the East Coast and down to Florida also are snatching up properties.

Even foreign investors are in on it: from Asia, Australia and Europe. One real estate investment firm from the Virgin Islands owns 700 single-family homes in Memphis and rents them.

“Investors are buying homes, paying cash, and closing in a couple of weeks," said realtor Lee McWaters. McWaters is the incoming president of the Memphis Area Association of Realtors.

“The houses that are fixed up and marketed right are selling in a matter of hours or days,” said McWaters.

Some say all the “buy and hold” investors are squeezing out the average home shopper.

One couple we interviewed put in one of 11 offers on a house in Cordova, but ultimately lost out to one of three investors who had full-cash bids. It was on the market just two days. It showed up on a popular website a short time later as available for rent.

Its no secret that Memphis is  a buy hold investor market has been for decades.

What I see personally in the past sellers TK companies and PM was not putting out the best product and or the renters could abuse the landlords.. creating burntout landlord syndrome and continual merrygo round of inventory.

since your not building 5 or 10 thousand new houses a year like other markets ( for instance my market in Portlandia will build over 5 thousand new SFR's to accomodate these home buyers) if inventory is tightening like this.

Its becasue.

1.  TK is better  better product  

2. PM is better better control of tenant.

3. Tenants dont have the ability to just pick up and move to the next house without impunity.. 

Liar loans and sub prime loans were people lost houses have cycled.. so it really comes down to these existing areas of 2 forms of supply chain.. burnt out landlord.. older family wants out of rental neighborhood.

Articles like this always disappoint me by not adequately addressing the problem of housing and by saying such faulty generalizations from anonymous sources as: "Some say all the “buy and hold” investors are squeezing out the average home shopper".  

First of all articles like this try to make out the "investor" as the bad guy.  Even though OOS investors are direct competitors to us local investors, we welcome them into the market.  They not only provide rentals to those who want them but they also inherently boost the economy by maintaining these homes and other associated expenses/taxes. While I'm sure there are some who don't take care of their properties, there are also many homeowners who don't take care of their properties.  

I say many thanks to any company or individual who chooses to invest in Memphis.  Thank you for sharing your money and time in our city.

If demand is this high, why are we seeing more building. Like @Jay Hinrichs  said we aren't seeing the building like other markets. Just read an interesting piece at mises.org about this:  https://mises.org/wire/housing-high-prices-few-new... We aren't developers or builders so I don't have a good local take on that.  

However basic supply and demand should be examined - not just a general slam against those choosing to invest in our community.

I just hope this "one couple" trying to buy a house in Cordova doesn't ever need to move to Seattle or SF or LA or almost anywhere else in the US because they will realize the Memphis housing market is still affordable and accessible to most people

Updated over 2 years ago

Correction: If demand is this high, why AREN'T we seeing more building

@Sam Wilson   would be interesting to pull your new construction building permit numbers for greater Memphis.

if there is no real production building going on.. that means existing stock is cheaper to buy than to build from ground up. And home price have not caught up to make new builds profitable.. 

land use red tape can keep new builds down.

I looked at some New builds in the area ( lots a few years back) and as a builder investor the Margins were quite thin if you have to sell new builds at 100 to 120 a foot.. there is very little margin.. you need 150 to 200 a foot to make sense of it. Of course the big production builders can make it work with volume.. 

But it sounds like the pendilum is swinging.. maybe its time to jump on dirt