Current findings from an analysis of the Memphis housing market: End of May 2025 data.

End of May data reveals that, on an inflation adjusted basis, the average Memphis home is selling at a 16.9% premium relative to the metro’s long-term pricing trend.  A long-term pricing trend is a statistically estimated trend based on past housing price data. Prices above the trend will tend to revert to the trend in time. Currently, Memphis is ranked 20th among the nation’s largest metros in terms of overpricing. Source: Top 100 U.S. Housing Markets 

An expanding population helps solve problems with home prices. Unfortunately, the population in a 25-mile radius of Memphis has actually declined by 0.5% in the last 10 years. This decline in population is partially offset by sufficient annual income to support rent and home prices with an annualized income per job of $69,600. Source: Stats American -- Big Radius Tool and the Waller, Weeks and Johnson Rental Index.

The trade-off between buying and renting slightly favors renting with Memphis having a current price-to-rent ratio of 4.0% above its average price-to-rent ratio.  Price-to-rent ratios indicate how many dollars in price an investor would pay for one dollar in annualized rent. When this ratio is above an area’s average, renting is favored over buying. The opposite is true when this critical ratio is below the local average. Currently, Memphis is ranked 48th in terms of overpricing based on this measurement. Source: Top 100 U.S. Housing Markets.

Another measure is the degree to which rents are over or underpriced. Currently, metro rents are, on average, 0.01% below Memphis’ long-term rental trend and affordability for the area is defined at an annual household income of only $59,927 noticeably lower than the annualized job figure of $69,600. These two points and others indicate the rental crisis in the area is ebbing. Source: Waller, Weeks and Johnson Rental Index.

Taken as a whole renting and reinvesting monies that would have otherwise been invested in homeownership is the current preferable choice over owning and building equity. This is driven mostly by the fact that home prices are above their long-term pricing trend and the natural tendency for home prices to return to their long-term pricing trend. Affordable rental levels help with this decision as well.

Affordability is becoming less of an issue in the Memphis area as incomes are now at a level sufficient to cover local average rents and home prices.  

While incomes are sufficient to cover rents and home prices at this point, a bigger issue is the declining population.  Metro area leaders and governments will need to coordinate economic growth activities to return to an increasing population.

The goal of the Ole Miss Real Estate Initiative (OMREI) is to help all (buyers, sellers, landlords, tenants, real estate professionals, lenders and local political leaders) make more informed real estate decisions.

Contact: Ken Johnson, Ph.D.
Christie Kirkland Walker Chair of Real Estate
The University of Mississippi
School of Business Administration
Contact: khjohns3@olemiss.edu