Memphis' shaky housing market sees 'cautious optimism'

— -- The housing market in Memphis keeps tumbling, which makes it like many other parts of the nation — except it had been stable until very recently.

"We've not been extremely flashy," says Jon Albright, president of the Memphis Area Association of Realtors. "And over the years, the housing market has not been prone to huge swings."

But the city has been stung by home foreclosures. Initially, foreclosures were sparked by the subprime mortgage meltdown. Now they occur because of the economic downturn.

"People who became unemployed simply aren't finding new jobs," says John Gnuschke, director of the Sparks Bureau of Business and Economic Research at The University of Memphis. "And that has increased the foreclosure problem and changed its nature."

Last year, the home foreclosure rate in Memphis rose 53%, according to RealtyTrac. And its foreclosure rate ranked Memphis No. 18 out of the top 100 cities.

Most buyers are now purchasing median- and low-price distressed homes, Albright says. "That segment has got to be cleaned up to a degree before we can get back to a stable market," he says.

Home sales in Memphis were down 38.8% in January from a year earlier. And the median price dropped 15%.

New construction has all but stopped, so home inventory is decreasing.

Low home prices and low interest rates, along with the first-time home buyer tax credit available in 2009, have made this an opportune time to consider buying a home for some.

The market hasn't turned around, but more people are going to open houses, Albright says.

"There is some cautious optimism," he says. "At some point this year, we expect the market to bottom out. For those who are considering buying a home, it's a wonderful opportunity."