Mississippi Real Estate Market Trends & Analysis

The Mississippi real estate market has been impacted by the same inventory crisis facing the rest of the country. While improving economic conditions and attractive mortgage rates have spurred more prospective buyers to participate in the market, there simply aren’t enough available properties for sale. As a result, prices have increased steadily since 2014.

Despite nearly six consecutive years of appreciation, however, real estate in Mississippi is still considered to be very affordable. With a median home value well below the national average, more people can afford to buy a house in Mississippi. Not only that, but there’s reason to suspect Mississippi real estate will appreciate at a faster rate than the national average—albeit modestly.

The Top Mississippi Real Estate Markets

While the best real estate market in Mississippi is up for debate, here’s a list of the cities investors may want to pay special considerations to:

• Biloxi

• Gulfport

• Hattiesburg

• Jackson

• Southaven

Mississippi Real Estate Fees & Regulations

Real Estate

Closing Conducted by:	Title Companies, Lenders, Real Estate Agents, Attorneys
Conveyance:	Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method:	Non-Judicial
Process Period:	2 - 3 months
Notice of Sale:	Trustee
Redemption Period:	None

Taxes

Income Tax:	3% - 5%
Corporate Tax:	3 - 5%
Sales Tax:	7.00%
Estate Tax:	No
Inheritance Tax:	No
Median Property Tax:	0.52%
Property Taxes by County:	http://www.tax-rates.org/mississippi/property-tax#Counties

Average Transactional Costs

Closing Cost:	$2,560.00
Transfer Fee:	No Fees
Origination Fee:	$1,931.00

Mississippi Housing Market Overview

• Median Home Value: $129,300

• 1-Year Appreciation Rate: +5.0%

• Median Home Value (1-Year Forecast): +2.3%

• Median Rent Price: $1,135

• Price-To-Rent Ratio: 9.49

• Average Days On Market: 71

• Unemployment Rate: 5.2% (latest estimate by the Bureau Of Labor Statistics)

• Population: 2,986,530 (latest estimate by the U.S. Census Bureau)

• Median Household Income: $42,009 (latest estimate by the U.S. Census Bureau)

• Percentage Of Vacant Homes: 13.87%

• Foreclosure Rate: 1 in every 4,166

Mississippi Median Home Prices

The average home price in Mississippi was $126,502 as recently as December 2019. It is worth noting, however, that the state’s most recent valuations aren’t reflective of what has transpired over the course of a decade. Much like the rest of the country, in fact, real estate in Mississippi has experienced both ends of the price spectrum since the last recession. At its lowest point of the Great Recession (January 2014), the median home value in Mississippi bottomed out around $103,000. Since then, prices across the entire state proceeded to increase for six consecutive years—to the tune of 22.8%.

Price increases across the Mississippi real estate market (from the depths of the last recession to present day) were most likely the result of the same factors driving national trends: a strengthening economy, improving confidence in the housing market, and a distinct lack of available inventory. The unique combination of these factors increased home values across the country. On a national level, the country’s median home value increased 35.1% over the last six years (January 2014 to December 2019). To put things into perspective, the median home value in the United States is now $243,225—nearly double that of Mississippi’s.

Despite falling well below the national average, the median home value in the Mississippi housing market has actually appreciated at a faster rate than the rest of the country in the last 12 months, albeit modestly. While the median home value across the country increased 3.8% in one year’s time, Mississippi’s median home value jumped 4.0%. The difference may be attributed to the state’s relative affordability. Prices across the country are starting to reach a tipping point, whereas real estate in Mississippi still appears to have more room to increase.

Looking forward, it appears as if Mississippi real estate is positioned to once again outpace national appreciation trends. While modest, real estate in Mississippi is projected to appreciate by as much as 2.3% in the next 12 months. The median home value in the United States, on the other hand, is forecasted to jump 2.2% in the coming year.

Mississippi Median Rent Prices

There is a distinct correlation between existing home values and asking rental rates: As home values increase, respective rents tend to do the same. Therefore, after several years of appreciation, it shouldn’t surprise anyone that rental asking prices followed a similar trajectory. After about six years of appreciation, in fact, the median rent in Mississippi is approximately $1,160, up from $980 in January 2014. That means rental listing prices increased 18.3% in as little as six years.

With a median rent of $1,160 and a median home value of $126,502, Mississippi’s price-to-rent ratio is 9.08. It is actually cheaper to buy a house than to rent one in most parts of the state. Despite six consecutive years of appreciation, it is currently more affordable for Mississippi residents to buy than rent.

Mississippi Foreclosure Trends & Statistics

The Mississippi real estate market has grown synonymous with a relatively low foreclosure rate. With a mere one in every 4,420 homes in some stage of distress (default, auction or bank owned), the state of Mississippi’s foreclosure rate is an encouraging 2.2%. Thanks—in large part—to the same factors that have facilitated the latest bout of appreciation across the state, the foreclosure rate in Mississippi is at a level most other states would love to see. To that end, the foreclosure rate in Mississippi is well below the national average, which is now somewhere in the neighborhood of 3.6%.

It is worth noting, however, that while the Mississippi housing market currently boasts a low foreclosure rate, the distribution of distressed homes has increased year-over-year. As recently as November 2019, “the number of properties that received a foreclosure filing in MS was 16% lower than the previous month and 40% higher than the same time last year,” according to RealtyTrac.

Following the latest increase, certain neighborhoods have exercised an increased foreclosure rate across the state. The following counties, in fact, represent the areas with the highest distributions of distressed homes across the entire state:

• Hinds (1 in every 1,602)

• Rankin (1 in every 1,975)

• Jasper (1 in every 2,080)

• Choctaw (1 in every 2,093)

• Madison (1 in every 2,465)

Real estate investors in Mississippi should pay special considerations to these neighborhoods, as distressed homes tend to coincide with more attractive profit margins. That said, marketing in areas with higher distributions of distressed homes could result in more viable leads. Foreclosed homes for sale in Mississippi could pay huge dividends for patient investors. Let’s take a closer look at what local real estate investors can do with his information in the following section.

Tax Lien Investing

• Tax Lien or Deed: Tax Lien State

• Interest Rate:18% (=1.5% per month)

• Redemption Period:2 Years

Mississippi Real Estate Investing

Real estate investors in Mississippi have learned to prioritize distressed assets over traditional homes. If for nothing else, the nature of distressed homes suggests they may be purchased for a discount. While not always the case, there is a higher probability that distressed homes will exhibit higher profit margins. Perhaps even more importantly, distressed homes are typically in the possession of owners who may be willing to sell sooner rather than later. As a result, Mississippi real estate investors will want to prioritize local auctions.

Real estate auctions currently hold about 80.7% of Mississippi’s distressed inventory, easily making them the most abundant source of foreclosed assets across the entire state, according to RealtyTrac. Investors looking to secure a deal with good profit margins should look in the one place they are most likely to be: local auctions. By focusing their attention where distressed assets are most likely to be, real estate investors in Mississippi can increase their odds of landing a deal. Outside of auctions, investors in Mississippi should check with their local banks and loan originators, or any other institutions tasked with repossessing foreclosed assets. There, they’ll find the remaining 19.3% of the state’s distressed inventory.

Investors will need to know a lot more than where to find their deals, however. Locating viable deals is only part of the investing equation. Once investors locate and secure viable deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Mississippi real estate investors? What should local real estate investors do with these assets once they acquire them?

Nationwide, most investors have responded to today's historically high prices with long-term strategies. At the very least, rental property investing grants investors across the country the ability to offset the market’s relatively high acquisition costs. Ideally, investors will justify today’s higher asking prices with years of cash flow, and investors in Mississippi are no exception. Long-term rental strategies appear to be the preferred exit strategy across the state.

Let’s say, for example, buyers were to us a 30-year fixed-rate conventional mortgage with a 3.685% interest rate (the average rate for a 30-year fixed-rate loan in Mississippi) to buy a home for $126,502 (the median home value in Mississippi). In the event they are able to put down about $25,000 (20%), monthly mortgage payments would come out to be somewhere around $831. Subsequently, the median rent price in Mississippi is $1,160. The $329 difference is enough to warrant considering adding a property to any rental property portfolio.

While $329 may not sound like much (and there are other expenses to account for), most rental properties in Mississippi are cash flowing, which means investors have the potential to pay down their mortgages with other people's money. The best rental market in Mississippi, on the other hand, has the potential to return even more. The likelihood of building equity in Mississippi with someone else’s money tilts in favor of investors.

Of course, real estate in Mississippi is affordable enough to warrant just about every other exit strategy, too. With a median home value well below the national average, local investors will find relatively affordable deals across the state. Not only that, but investors who are able to secure a rehab deal (preferably of the distressed variety mentioned above) will find that competition should facilitate more attractive profit margins. The state’s 9.08 price-to-rent ratio will see to it that more residents are inclined to buy, which bodes well for investors who have already secured deals.

Mississippi Housing Market Predictions

The Mississippi housing market has managed to keep pace with the rest of the country, for the most part. Home values, recent appreciation rates, and even forecasts predicting the next 12 months all share more similarities than not. Nonetheless, it’s always a good idea to try and translate what the current market is trying to tell people. Making educated guesses as to where the Mississippi real estate market is heading could give investors the edge they need to succeed. It is entirely possible to take historical data and apply it to what may transpire in the foreseeable future. Therefore, let’s take a look at what is most likely to happen in Mississippi over the next year:

• Appreciation rates in Mississippi will outpace the national average: While only a modest difference is expected over the course of the next 12 months, there’s reason to believe real estate in Mississippi will appreciate at a faster rate than the national average. If for nothing else, the Mississippi real estate market is more affordable than most others, which means there’s more room for growth. Whereas most markets have neared a tipping point, Mississippi appears to have a little more room for growth.

• Optimism will grow in conjunction with the economy: Nearly every state in the country has seen improvements in their local economies, and Mississippi is no exception. While unemployment has crept up slightly, the economy has improved year-over-year, which bodes incredibly well for the real estate sector. Simply put, more people are ready and willing to participate in the housing sector, which will serve as a catalyst for activity.

• Inventory will remain tight: Much like the rest of the country, Mississippi is short on available inventory; there simply aren’t enough homes to meet demand. As a result, pries have risen almost exponentially in the last six years. Help is on the horizon, but new listings will take some time to hit the market. Whether they are new builds or existing homes, new inventory will come, but it will not be immediate. Mississippi will see home prices rise until more can be done to bring new listings to the market.

Summary

Prices in the Mississippi real estate market may fall well behind that of the national average, but the state’s relative affordability has made it a hotbed of investor activity. For all intents and purposes, real estate in Mississippi is nothing less than a commodity. Investors are able to find affordable deals, and—perhaps even more importantly—buyers for their projects. This unique combination should serve as the perfect storm for local investors. However, everyone participating in the housing market looks like they may have something to look forward to for the foreseeable future.

Sources:

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https://www.census.gov/quickfacts/fact/table/MS/PST045218
https://www.bls.gov/regions/southeast/mississippi.htm#eag
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ms/
https://www.realtytrac.com/statsandtrends/ms/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/
https://www.zillow.com/home-values/
https://www.attomdata.com/news/market-trends/u-s-foreclosure-activity-down-24-percent-in-august-2019-14th-consecutive-month-over-month-decline/