A Market with Lots of Potential, but Still Some Risk
by Carole VanSickle Ellis
Memphis, Tennessee, started 2025 out with a bang. According to the Memphis Chamber of Commerce, the city headed into 2025 with an outstanding economic record:
» $14.2 billion in capital investment in 2024;
» Nearly 4,000 jobs created in 2024;
» A $4.2 billion hospitality industry expected to gain ground in 2025; and
» The new location of the largest supercomputer in the world, Elon Musk-owned Colossus, which came to the area along with a 1 million-square-foot property, a slew of computer science, AI, and other tech-related jobs, and an $80 million water recycling plant.
The real estate outlook for the city was similarly strong, with Realtor.com predicting Memphis would see 10.5% price growth in 2025 on single-family properties and rents holding steady at just 0.1% less than in 2024.
Realtor.com analysts predicted Memphis would continue to benefit from the Southeast’s relatively lower housing costs and a 1.5% growth in rental stocks (the highest of any region in the country). All of this combined resulted in a record-setting year for the Memphis economy, which ranked second in the state only to Nashville with a valuation of $102.9 billion.
Not surprisingly, the Greater Memphis Chamber of Commerce heralded this news, calling it “impressive” and “a historic milestone” in the local Memphis Flyer.
“This achievement, along with our record employment numbers [4.3%, unadjusted vs. 4.1% national average], really highlights…Memphis is a place where business thrives… We are truly transforming our economy and opening up exciting new opportunities for our region,” said Ted Townsend, GMC president and CEO.
For comparison, Nashville’s economy had a 2024 GRP of $204 billion in 2024, and Knoxville (3rd place) tallied up $64.3 billion.
Despite all this growth and future growth potential, Memphis real estate remains relatively affordable, with March 2025 numbers indicating median sales prices around $185,000 (vs. $160,000 in February 2024) and average days on market hovering around 50 (vs 65 in 2024).
With a cost-of-living around 10% lower than the national average and an increasing demand for specialized tech jobs as well as other indirect employment opportunities associated with a growing population of affluent, young professionals, the Memphis housing market, currently considered “balanced” by Realtor.com analysts, could heat up in the next two years.
Although the population fell by just over 5,000 people in 2023 due, local policymakers say, in large part to outbound migration of young professionals to other southeastern cities like Atlanta, Georgia; Charlotte, North Carolina; and Nashville, in 2024 and, so far, in 2025, the population is once again rising. Memphis mayor Paul Young credits the Colossus supercomputer and other tech-industry growth along with an increased focus on bringing down crime rates for the expansion.
“All of these things are connected. We are working on all of these things,” Young said.
Memphis Prices Stabilize, but Overvaluation Rumors Persist
While the country as a whole has seen median listing prices soften slightly since their peak in 2022 at just over $442,600 (St. Louis Fed), Memphis-area home listing prices have risen slightly over the past year, from $188,950 in March 2024 to $200,000 in 2025 according to Realtor.com. Sales prices also remain up nearly 10% year-over-year in according to Realtor.com. Despite confidence from many industry analysts about the Memphis market, some experts still have expressed concern that it may be overvalued.
In fact, according to Fitch Ratings, the Memphis, Tennessee-Mississippi-Arkansas MSA is among the top five most-overvalued markets in the country. In that same report, Fitch noted 89% of all major metropolitan areas across the U.S. are overvalued and stated, “There are early signs of a correction in the U.S. housing market, as indicated by the uptick in both active and new property listings.”
Fitch analysts said nationally homes are overvalued by 11.5%, observing, “increases in home prices over the past three decades have far outpaced income growth” (S&P Global Ratings). Given that Memphis home prices actually declined slightly in January 2025 before ticking upward and leveling off in the early second quarter, this market could be considered more stable than other similar MSAs.
Cost-of-Living Keeps the Memphis Market Stable
The Memphis market has the additional advantage of having a much lower cost-of-living than most other comparable metro areas, including southeastern cities like Atlanta and Nashville. According to Payscale, the cost-of-living in Memphis is 7.3% lower than in Atlanta, with housing in Memphis costing 9.3% less than in Atlanta. Compared to Nashville, Memphis has a 9.3% lower overall cost-of-living and 20% less expensive housing.
“Memphis has one of the lowest costs-of-living in the country, with no state income tax and affordable housing costs,” noted self-titled “ambassador website” WeAreMemphis.com in January of this year. The group cited emerging neighborhoods like the Edge District, formerly known as “Auto Row” and the birthplace of rock ‘n’ roll according to most Memphis tourism sources, and One Beale, a four-phase mixed-use development that faced strong local headwinds when it was initially proposed but did eventually manage to complete three of four proposed construction phases, as places warranting investor and retail-buyer interest.
New tech businesses in the area could also combat overvaluation, bringing in a new, affluent population of professionals accustomed to higher costs of living elsewhere in the country. These new households are likely to be unfazed by Memphis home prices and rental rates, thus sustaining current values rather than contributing to overvaluation.
Although Ford’s BlueOval City project, originally intended to be the home base for assembling a “new generation, all-electric pickup truck codenamed ‘T-3,’” is currently on hold until at least 2026 along with the 6,000 direct jobs and roughly 24,000 indirect jobs analysts had predicted it would bring to the area, Elon Musk’s Colossus supercomputer and associated AI research center are already in operation.
For investors who are not already investing in the Memphis area, this complicated market requires careful analysis. Certainly, some of the unbridled optimism of mid-2024, before Ford’s BlueOval City behemoth had stalled, must be tempered in light of current developments. In late March 2025, however, local politicians and economists predicted the project might be pushed back on track as a result of looming 25% tariffs on the auto industry.
Careful monitoring remains key to successful investment in the region, but, overall, the Memphis market has long been a strong one for both fix-and-flip investors and buy-and-hold investors, and it appears poised to remain so over the coming year.
SIDEBAR 1
By the Numbers
$1.3 Billion — the value of the Memphis gross regional product (GRP) in 2024 (Federal Reserve Economic Data)
10.7% — Decline in Memphis home sales prices between 2023 and 2024
10.5% — Projected rise in Memphis sale prices between 2024 and 205 (Realtor.com)
8.3% — Rise in Memphis home sales volume between 2024 and 2025
$194,000 — The total salary needed for two working adults with two children to “live comfortably” in Memphis (vs. $318,406 for a single adult in New York, New York). (SmartAsset.com)
20% — The cost of housing in Memphis is, on average, 20% lower than the national cost of housing
14% — The cost of healthcare in Memphis is 14% lower than the national average
SIDEBAR 2
The Memphis Crime Question
Relatively high crime rates have plagued the Memphis area for years, and many locals, including current mayor Paul Young, have blamed crime rates for the city’s decline in population since 2010. At the end of 2024, the chances of becoming a crime victim (violent or nonviolent) in Memphis were roughly 1 in 10. Fortunately, those odds may be improving in citizens’ favor.
Property crime rates have been falling as the city increases focus on crime in general, with 2023 rates nearly 20% higher than those in 2024. At the beginning of 2024, Memphis rolled out a number of new safety initiatives aimed at bringing crime rates down, including 183 high-definition surveillance cameras in the downtown area (bringing the total to 429), AI-equipped technology able to identify “objects, license plates, and other key data points,” and an initiative to execute more than 480 outstanding warrants for violent offenders. The city also plans to use gun-detecting dogs as a deterrent against illegal firearms, although the City Council had not yet approved this at time of publication.
