Should I Rent in Cincinnati, OH or Memphis, TN?
With Cincinnati boasting the nationโs fastest-selling housing market, it is easy to approach real estate in the Queen City with trepidation. Perhaps โboastingโ doesnโt come to mind if youโre actively house hunting and the 10th offer youโve written was denied yet again. Itโs survival of the fittest out there in the most dynamic real estate market we have been witness to since the 80s. This is a product of being highly ranked as one of the best places to live in the nation, #44 to be exact per the latest U.S. News and World Report article. Cincinnati has even more bragging rates as being ranked #17 for best places to live for families by the same news group. This makes for high demand with significantly limited housing options.
๏ปฟIn laymenโs terms, which type of market weโre experiencing (buyerโs market versus sellerโs market) is analyzed simply by looking at 5-6 monthโs of housing supply as being a balanced market. Per Cincinnati MLS statistics, Cincinnati is currently around 0.7 months of supply. A sellerโs market it most certainly is. This is a staggering shift from this time last year at 0.96 months of inventory. Cincyโs housing market is up 18% from last year, and as Zillowโs index reveals below, is growing exponentially.
Option B is to hold out, sit tight, wait until the market settles down, and rent for another year (read: sigh, seriously?). Cincinnati real estate metrics reveal that half of the real estate inventory consists of rentals. Itโs the lesser of two evils as Cincinnati also claims yet another accolade of the 6th biggest rental rate increase in the nation. Both market homes for purchase and rentals are slim pickings these days. Prices are soaring on market homes, new construction, and rental properties. This begs the question: just where do you decide to hang your hat?
Looking to our southern neighbor in Tennessee, the Memphis housing market is smoking like their famous BBQ, as sales also grew 18% from last year. Memphis offers a diversified population, major local business growth and expects at least 30k new residents to flock to this entertainment mecca in upcoming years. This could make for the perfect storm of need for housing inventory. Millennials have come to Memphis in droves, adding a new segment to the already assorted community.
As is true in Cincinnati, the Memphis rental market is being highly driven by lack of housing inventory available for purchase. ABC News local Memphis affiliate reported that rental rates are up 23% from last year. The affordable rentals seem to be few and far between in Memphis, if youโre looking for digs under $1k/month, as illustrated below.
Letโs look at the markets from an entirely different perspective-that of an investor. Friend or foe, the cash investor is in a phenomenal position right now to knock out offers from other would-be buyers in both Cincinnati and Memphis. Cash is king and in as the King would say, โIโm all shook upโ over the potential for ROI in Memphis. Per Realtor.com, rental rates are hitting historic highs as the median rent is currently $1150/month. Since many potential owner-occupants have trashed the idea of homeownership this year, out of state investors look to Memphis real estate investing as priceless treasure.
Just because sale prices are skyrocketing, it doesnโt reflect organic value growth in all cases. Memphis is experiencing home value appreciation close to 19% up from 2020 per Zillowโs value index.