If you’re thinking about investing in real estate right now—especially through a platform like Arrived Homes—it helps to look beyond the marketing headlines and get into the actual numbers. Two cities that keep popping up for investors are Memphis, Tennessee and Phoenix, Arizona. Both are active Arrived markets. But while they’re both on the radar, they’re moving in completely different directions in 2025.
Phoenix is growing fast, with new construction still ramping up and vacancy rates rising. Memphis, on the other hand, is tightening—fast. Supply is shrinking, rents are rising, and occupancy is pushing past 94% in the city’s strongest submarkets. Whether you’re looking for short-term cash flow, long-term appreciation, or just trying to make a smart entry into real estate, knowing how these two markets stack up is the key to deciding where your next dollar should go.
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Tight Supply, Rising Rents, and Strong Cash Flow Potential
Memphis isn’t flashy—but for real estate investors, that’s kind of the point. What you get here is a stable, landlord-friendly market with rents that are rising, occupancy rates that are climbing, and home prices that are still within reach. Multifamily construction in Memphis has slowed to a crawl. New starts dropped 60% in 2024, and completions are down another 36% in 2025. That kind of supply squeeze is exactly what drives investor returns.
Occupancy is already strong—sitting at over 94% in East Memphis, Midtown, and Collierville—and net absorption is projected to outpace new deliveries by more than 50% this year. That means fewer units are coming online and the ones that do exist are filling fast. As a result, rents are beginning to climb again—between 2.4% and 4% depending on the neighborhood. That’s especially encouraging after a relatively flat 2024.
Affordability is another key reason Memphis stands out. Median rents for all units range from $1,300 to $1,342, with one-bedroom apartments averaging around $1,100. Investors aren’t paying a premium to enter this market either—median home prices are still hovering around $190,000. That makes Memphis one of the best cities in the U.S. for cash-flow-focused investing, especially if you’re building a diversified portfolio through fractional ownership.
And unlike what we’re seeing in oversupplied metros, concessions in Memphis are rare. Landlords don’t need to offer free rent or move-in bonuses to fill their units. Demand is strong enough to stand on its own, and that puts investors in a great position to earn consistent, stable returns from day one.
High Vacancy, Heavy Concessions—but Long-Term Promise
Phoenix is almost the opposite story. It’s still one of the fastest-growing cities in the country, with a steady stream of new residents relocating from California, the Midwest, and beyond. But in 2025, that population growth hasn’t kept pace with the surge in new rental inventory. Active listings are up 20.5% year-over-year, vacancy is sitting at 7.5%—well above the national average—and over half of all listings (56%) are now offering concessions just to attract tenants.
For renters, that’s great news. There’s more selection, more negotiating power, and lots of opportunities to score deals. But for landlords and investors, the math is trickier. Rent growth has essentially stalled, up just 1.2% over the past year. Most property managers are projecting flat rent performance until 2026, when the excess supply is expected to get absorbed and growth potentially picks back up to 4–6%.
Phoenix is also more expensive on nearly every front. The average rent is $1,646—over $300 higher than Memphis—and larger units easily push past $2,100 per month. While that can translate to higher gross rents, it also means higher acquisition costs, greater tenant turnover risk, and a more competitive landscape for landlords trying to fill vacancies.
Still, Phoenix has something Memphis doesn’t: scale and long-term upside. The city’s economy continues to expand. Infrastructure is improving. And the west side, where much of the new supply is concentrated, is expected to stabilize over the next 12–18 months. For long-term investors who can handle softer returns in the short run, Phoenix could still deliver strong appreciation over time.
Which City Wins in 2025?
If you’re asking which city gives you the better investment opportunity right now, the answer is simple: Memphis. It has rising rents, tightening supply, high occupancy, and investor-friendly prices. You don’t need to offer tenant incentives. You don’t need to worry about competing with hundreds of other landlords. And you can still buy into this market at a price point that leaves plenty of room for cash flow.
Phoenix, meanwhile, is better for renters in 2025. They’re enjoying a rare moment of leverage—more supply, lower rent growth, and generous concessions. For investors, the current picture is more complicated. Yes, Phoenix still has long-term potential. But it’s a tougher market right now. If you’re investing in Phoenix, you’re betting on the rebound—waiting for the oversupply to shake out and rent growth to resume.
But if you want to start earning reliable rental income now—not in 2026 or beyond—Memphis is where you want to be putting your capital today.
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Arrived Achieved A Total Return of 34.7% On Their Biggest Sale Yet — Diversify Your Monthly Income Stream With Fractional Real Estate
Arrived allows individuals to invest in shares of rental properties for as little as $100, providing the potential for monthly rental income and long-term appreciation without the hassles of being a landlord. With over $1 million in dividends paid out last quarter and a growing selection of properties across various markets, Arrived offers an attractive alternative for investors seeking to build a diversified real estate portfolio.
In October 2024, Arrived sold The Centennial, achieving a total return of 34.7% (11.2% average annual returns) for investors. Arrived aims to continue delivering similar value across our portfolio through careful market selection, attentive property management, and thoughtful timing in sales. Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.