Each year, the National Association of Realtors Research division conducts studies of market fundamentals and pricing trends in the nation’s largest metropolitan region, including Memphis. Reflecting data available through October 2007, the report gives insight into what the future may hold for our local real estate market. Overall the outlook for Memphis is strong, and the following are highlights from the report:

Home prices in the Memphis area have not really encountered the boom that much of the country experienced, making home prices highly affordable compared with other area. With job gains continuing at respectable pace, price increases are likely in the Memphis market, though at a more measured rate.

Despite some media reports of the worse housing market conditions since the early 1990s, the recent home price declines have been negligible at the local level.

Although inventory is higher compared to historic levels, homebuilder’s production cuts should help minimize prolonged oversupply conditions and help support home prices.

Unlike the past local housing downturns, which were accompanied by severe job cuts; the local economy continues to add jobs. The one-year job growth rate of 1 percent almost matches the national job growth rate.

Since the peak of the housing market two years ago, the local market added 15,000 new jobs (August 2007 vs. August 2005). Historical relationships imply roughly one additional homeowner for every two additional jobs.

Apartment rents have been rising at the highest pace In five years, which will begin to encourage some renters to seriously consider ownership.

Mortgage rates, already near historic lows, have been falling recently and could get even more favorable in coming months if the Federal Reserve continues to cut interest rates.

The ratio of mortgage servicing costs to income has been trending well below the historic average, implying that the local market can support future price increases. That also indicates that the local market will be less sensitive to increases in mortgage interest rates or related fees.

The local market has interestingly bucked the national trend of sharp rises in delinquencies and foreclosures. However, the prevalence of subprime loans (loans with rates at least 3 percentage points higher than market rates) soared in recent years, which could result in higher delinquencies and foreclosures among subprime borrowers as loan terms reset or if economic conditions deteriorate significantly.

NAR’s report reflects some of the fundamental strengths of our local market, including more measured home price increases, strong local job gains, and overall affordability as compared to other markets. With the prospect of continued home price appreciation in the coming years, Memphis real estate will continue to be a sound long- term investment.

In the most recent national home sales report issued in late June, the National Association of REALTORS' senior economist attributed the weakness in home sales nationally in part to psychological factors. Given the amount of media coverage we've seen on the overall declines in the housing market following the boom of 2001 to 2005, it's understandable that consumers might be hesitant to get in the market now for the first time or consider trading up to a newer or larger home.

But what those negative headlines fail to convey to consumers in Memphis is that the local fundamentals remain strong and now is actually a great time to be looking to buy your first or next home.

Mortgage Rates Are Low. In fact, the current average 30-year fixed rate of 6.63 percent is one of the lowest points for rates in 30 years. While no one can accurately predict where rates will go in the future, waiting in hopes rates go lower is dangerous. NAR economists forecast that rates are likely to increase over the next six months.

Inventory is plentiful. Over the past year, the number of homes available in the MAAR Multiple Listing Service has increased so buyers have a wide range of properties from which to choose. Increasing inventory also means sellers are more inclined to negotiate with buyers and home builders are likely to offer more incentives to buyers interested in new homes.

Real estate is still a great long-term investment. Since 2002, the median sales price of homes in the Memphis area has increased more than 9 percent, demonstrating the more measured and stable increases our market enjoys. The trend has continued throughout the first six months of 2007. Locally, the economy and job creation remain strong. In addition, demographic trends indicate that housing demand between 2005 and 2015 will exceed demand from 1995 to 2005, meaning there will be more buyers in the coming years.

Homeownership builds wealth. The Federal Reserve reports that homeowners have accumulated and average of $184,000 in household wealth compared to just $4,000 in household wealth for renters. The sooner you own a home, the sooner you begin to reap the benefits of property appreciation and build equity in your investment.

So while the national headlines about the housing market say one thing, the fundamentals of real estate in Memphis say something completely different. Now is a a great time to buy your first home or buy up to something new. Contact your REALTOR today and take advantage of low mortgage rates, a good selection of inventory, and the unparalleled long-term investment benefits real estate offers.

Property Lines as published as courtesy of The Commercial Appeal Advertising Department.

Projected median sales prices for single-family homes: Q1 2008: $143,550 Q4 2009: $150,730 Growth rate: 5.0 percent

Graceland aside, Memphis doesn't have many signature landmarks pumping up its property values. In fact, the city has been getting a bad rap because some real estate pros consider it one of the country's foreclosure capitals. But Memphis's housing market should hit bottom within the next few months, and the average home bought in 2003 still managed to sell for 12 percent more last year. Even better, prices have held steady this year, although the average number of days that homes sit on the market has grown larger. The PMI Risk Index, an econometric model developed by PMI Mortgage Insurance that predicts declines in home prices, consistently ranks Memphis as one of the nation's least vulnerable markets. And a survey by the forecasting firm Global Insight and National City Corp. has listed Memphis as one of the most undervalued markets in the United States for several years because of the low cost of housing relative to household income.

You can find some good values near Beale Street, the birthplace of America's blues scene, where a downtown condo-building craze has stranded a swath of empty units on the multiple listing service. But the best investment is one that taps into the collateral damage of the credit crunch. More couples and families will fail to qualify for mortgages and resort to renting single-family homes instead of buying them.

Source:http://promo.realestate.yahoo.com/ten_cities_ready_to_bounce_back.html