The Investigators: Memphis real estate market is hot; what will redevelopment look like in long-neglected areas?

MEMPHIS, Tenn. (WMC) - Low inventory and low interest rates have created a historically hot housing market in the Mid-South.

Sellers are commanding more money for their homes and are receiving offers from as many as 70 prospective buyers.

A WMC Action News 5 Investigation takes a closer look at where those buyers are coming from, and why some homeowners wonder if all growth is good growth.

One of those homeowners is Carlotta Hill, who has lived in the Riverside neighborhood of South Memphis for 20 years.

The Action News 5 Investigators visited her more than a year-and-a-half ago when she showed us property after property in her neighborhood that was vacant, abandoned or neglected.

Hill now sees change. She showed us property as it’s being renovated.

“How has the neighborhood changed in the last year-and-a-half?” asked The Investigators.

“It has not,” said Hill. “It’s just starting this past six months.”

The Mid-South housing market was hot before the COVID-19 pandemic.

Now, a lack of homes for sale, few new builds, and historically low interest rates have accelerated demand, which has spilled into Hill’s neighborhood, motivating previously neglectful homeowners to renovate or sell their properties.

“When you see all this renovation, does that make you feel hopeful or hesitant?” asked The Investigators.

“Both. I’m hopeful for new growth, but I’m hesitant about smart growth,” said Hill. “What the community in this area wants is to be a part of the process. This area is basically single dwellings. Does that change in the process? We just want a voice at the table.”

“Many boarded up houses are being bought, rehabbed, and being sold to owner occupants, which is wonderful,” said Memphis realtor Tyler Tapley.

According to Tapley, he sold 380 houses last year, more than one a day, and is on track to sell even more this year.

We met Tapley at a home in the Westwood area of South Memphis. He says the owner lives in Israel and bought the house last year for just over $50,000.

The owner paid for renovations and Tapley recently listed it for $120,000.

On the day we met Tapley, 19 showings were scheduled for the house, which hit the market the night before.

“If you were to describe the market right now, how would you describe it?” asked The Investigators.

“Crazy,” said Tapley. “Multiple showings, multiple offers, desperate people writing love letters trying to get the house if they can. It’s clearly a seller’s market.”

“People who want to buy right now, where are they from?” asked The Investigators.

“Obviously, there’s a lot of local buyers, but there’s buyers throughout the world who call us,” he said.

Tapley showed us calls and messages he’s received from interested investors living in Greece, Australia, California and Colorado.

“Out of town investors and hedge funds are buying properties here, and honestly, taking properties away from owner-occupant buyers that would love to buy it,” Tapley said.

“We know they’re coming into our neighborhood and just purchasing properties,” said Rebecca Hutchinson, executive director of the SCORE CDC and the board of directors president for the Soulsville Neighborhoods Development District (SNDD).

Hutchinson is currently working on a tax-incentive program that she says would give longtime homeowners a say in how their neighborhoods are redeveloped.

As part of the program, Hutchinson successfully fought for a year-long moratorium, or ban, on the sale of county-owned properties located in certain South Memphis neighborhoods.

These are properties owned by the county because their previous owners didn’t pay their taxes.

Hutchinson hopes the moratorium will keep out nonlocal buyers.

“People who come into our neighborhood and don’t live here, they don’t know the neighborhood, they don’t have any care for the neighborhood, they don’t understand it - the character and the history. That’s not their concern, they’re just trying to make money,” she said.

We checked all properties sold by the Shelby County Land Bank from April 2019 to April 2020. There were 1,649 total.

Public records show more than a quarter of those properties were sold to out-of-state residents.

“It concerns me because you have these absentee landlords,” said Hutchinson. “You have these developers that live in other parts of the country that are coming into underserved neighborhoods and just buying it up left and right. And sitting on the properties, right?”

Cities like Detroit have laws that prevent this from happening. It’s a practice known as speculation.

Speculation can occur when a person buys a blighted property, doesn’t fix it up, and sells it only when values have subjectively increased enough.

Back in Hill’s neighborhood, she has lived near an abandoned home for years while the owner has lived in Mississippi.

County sales records show the Mississippi owner sold the house in March to a company based in Brooklyn, New York.

It is currently being renovated.

“I don’t have a problem with it. I just want to know that they do the property right,” said Hill. “Are they mandated to bring it up to code with electrical and plumbing or do they just make it pretty on the outside?”

“Any kind of improvement, I think that’s going be great for our city,” said Cassandra Bell-Warren, president of the Memphis-Area Association of Realtors (MAAR).

She says most investors she’s working with, whether they’re local or not, are rehabbing unlivable homes.

“In some areas, they may not be the most desirable areas, but you get somebody to come in and to invest money to provide affordable housing or rentals for people who can’t buy right now. It’s a great thing,” she said.

According to Warren, the current real estate market also means homeowners in all parts of Memphis are seeing their home values appreciate.

“I’m seeing it everywhere! The Fraysers, the South Memphis, the Hickory Hills,” said Warren. “All across the city I’m not seeing anybody who’s not getting value.”

Data from MAAR shows the average home sales price in Shelby County has increased every year from March 2017 to March 2021.

In March 2017, the average home sales price in the Memphis-area was $155,124. In March 2021, it was $219,487.

“What do you think this housing market will mean for the future of Memphis?” asked The Investigators.

“A lot of times when you turn on the news, it’s all bad stuff. That’s the stuff that’s at the top. We want the good stuff to say that Memphis is growing and our market is great and it’s a great place to bring your family. So, I want it to be a great thing,” said Warren.

Hill wants that too but wants the city’s growth to keep longtime homeowners at the forefront.

“We can’t stop progress. We can slow it up and we can be a part of it,” Hill told The Investigators. “We’re ready to be a part of the process, just let us be a part of the process. That’s all.”

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