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Staff Reporter-Nashville Business Journal

For the first time ever, the median sales price for a single-family home in Nashville surpassed $200,000 in June, the Greater Nashville Association of Realtors announced today.

The median price for a single-family home sold in Nashville last month was $205,950, up from $179,000 a year ago. The median price for a condo sold in June dropped to $159,000, down from $160,000 a year ago.

The previous high for a single-family home was $196,000, which was set back in June of 2007.

"Seeing prices increase may encourage some people to consider selling, which would be helpful in light of the fact that inventory remains low," said GNAR President Price Lechleiterin a news release. "Quality properties are selling very quickly right now."

There were 3,038 home sales reported in the Nashville area in June, up 23.8 percent from a year ago.


Poll: Is Nashville experiencing a housing bubble?


"The positive trends in real estate activity should not be taken for granted. Interest rates have begun to increase, which is not surprising," Lechleiter said. "But, there are questions about possible decisions by the federal government impacting the mortgage interest deduction, FHA, Fannie Mae and Freddie Mac. And, several key regulations from the Dodd-Frank legislation that negatively impact mortgage lending are scheduled to go into effect in January of 2014. We are closely monitoring what happens with these issues and working with legislators to best protect homeowners, commercial property owners and the health of the real estate industry as a whole."

Single-family homes sold in June had sat on the market for an average of 73 days. Nashville's total inventory of available homes, condos and lots stood at 16,576 at the end of June, down from 19,136 a year ago.

"Increasing sales during the summer season is typical, but the number of closings would likely be even higher if more quality inventory were available," Lechleiter said. "There is currently only about a four-month supply of single-family homes, not counting the fact that more than 3,000 of the available properties have contracts pending. Buyers are well-represented and know what they are looking for in their home searches. Potential sellers should remember that homes that are truly market-ready are moving well, but buyers are only interested in the properties that have been prepared and priced properly."

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Staff Reporter-Nashville Business Journal

Greater Nashville’s seemingly sluggish housing recovery has shifted into a summertime surge.

Home prices are breaking records, supply is shrinking, sales are climbing and builders are busier than they have been in years.

In the past few months, the ailing housing industry has made a sharp turn — in both sales and lending — toward a sellers’ market. It’s a key driver in Middle Tennessee’s economic recovery at a time when other sectors still need a boost.

“It’s been a dramatic shift,” said Jack Miller, an agent with Nashville-based Parks Realty. “We are trying our best to keep up with the demand. … In 2009 we waited for the phone to ring. Today we try to get out … the door before the phone rings. It’s a new world.”

The turnaround is not only benefiting real-estate brokers and home builders. Retailers, bankers and other industries stand to feel the bounce.

Homebuyers stimulate the economy in lots of ways. They buy furniture, refrigerators, garden hoses and lawn mowers. And when home values go up, homeowners feel better about their finances and are more apt to spend.

A healthy housing supply also is critical for business growth. Housing is at the top of the list for companies deciding where to relocate.

The recent frenzy — limited supply means bidding wars are back — is reminiscent of the early 2000s. But real estate professionals are not worried about another bubble. Construction was so constrained during the recession that a lack of supply is now driving up prices.

Suddenly, builders can’t build new homes fast enough. Buyers are snagging them before construction is complete with little to no concessions from builders.

“Builders are getting paid right now,” said David McGowan, president of Regent Homes. “Two years ago we were really struggling to keep the doors open and pay the subcontractors and the banks. It’s back to profitability.”

Home construction was up 34 percent during the first quarter in Greater Nashville, according to Metrostudy, a real estate tracking company. Meanwhile, sales of new homes were up 21 percent. The surge in home construction is a sign of job growth.

“Traffic is very strong,” McGowan said. “The latest uptick in interest rates has caused a lot of people to get off the fence, and banks have opened the door and started to lend to people who have equity. Things have greatly improved over the past nine to 12 months.”

Lending rebounds

Middle Tennessee banker Richard Herrington said the second quarter saw a “remarkable increase” in real estate activity compared to last year.

“We have never had volume like this in the 20 years we’ve been in Williamson County,” said Herrington, president of Franklin Synergy Bank. “It’s by far the best first half we’ve ever had.”

In the second quarter, the number of mortgages closed by Franklin Synergy was up 35 percent compared to the previous year. Meanwhile, the number of construction loans the bank closed was up 62 percent.

Buyers are looking for a home where they can close a sale in 30 days, said McGowan, but their options are slim.

A big worry among real estate professionals is the shortage of lots ready for home construction, said McGowan, adding that we are already seeing shortages in certain areas of Williamson and Davidson counties.

With demand for new homes outpacing supply, Nashville’s stock of new single-family homes has dipped to a two-month supply, down from a high of 3.8 months three years ago, according to Metrostudy.

With demand strong and supply low, prices are on the rise.

For the first time ever, the median sales price for a single-family home in Nashville surpassed $200,000 in June, according to the Greater Nashville Association of Realtors.

The median price for a single-family home sold in Nashville last month was $205,950, up from $179,000 a year ago. The previous high was $196,000, which was set in June 2007.

In today’s market, homes are selling on average within 1.3 percent of list price in Nashville, according to ZipRealty.

Prices have increased rapidly across the country. From May 17 to June 15, the median sales price of nearly $276,000 in the metro areas that ZipRealty analyzed was $5,000 higher than just two weeks earlier, and 15.8 percent higher than in the same period of 2012.

“Home sellers are moving back into the market with slightly greater confidence and in growing numbers today,” ZipRealty CEO and President Lanny Baker said.

Many expect the rising prices to slow.

“With the recent jump in mortgage rates, on top of steady home price increases over the past several quarters, there are good reasons to anticipate some cooling off in the housing market; however it was difficult to detect any clear signs of that change in trend as of mid-June,” Baker said.

Bidding wars return

So far this year, Realtor Stephanie Crawford of Keller Williams has done more business than all of last year.

These days she’s getting nearly 250 inquiries a month from her website. During the recession, that number was closer to 100.

If a home is renovated, located in a hot neighborhood with little inventory and priced right, it’s not uncommon for a seller to get multiple offers shortly after listing.

“Bidding wars are becoming the norm in certain neighborhoods,” Crawford said, pointing to East Nashville as one example.

“It’s crazy what’s going on over there,” she said. “I recently had a buyer that bid on a property, and we were one of 11 buyers. We bid $10,000 over list, and we did not win.”

A big factor driving Nashville’s housing recovery is corporate relocations.

“Over the last year we’ve seen both markets — local buyers and the out-of-town buyers — rebound,” Miller said. “Especially in upscale areas we have had a large influx of corporate relocations, which came to a near shutdown for years.”

During the recession, companies nationwide tightened their belts in what they were offering to move people across the country. And people who were offered an opportunity to relocate were reluctant to sell their home in a down housing market.

Real estate professionals believe the recent shift is just the beginning of the next housing boom.

“Prices [in some areas] are still not what they were at the height of the recession in 2007,” Crawford said.

And while Nashville, Brentwood and Franklin are on fire, others areas of Middle Tennessee are lagging.

“In some of the outlying areas the story is a little different,” Miller said. “Cheatham County and Fairview are still in somewhat of a lull. They haven’t turned the corner yet.”

Thursday, 15 May 2014 14:31

The Best Big Cities for Renters

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By Suzanne Woolley - Mar 6, 2013 3:30 PM CT

To many of us, renting a home seems like throwing away money. Shouldn't we buy and let that money build equity, rather than line a landlord's pocket? Turns out that in many major cities it makes perfect financial sense to rent for a few years or more, according to real estate information web site Zillow.  Zillow's "breakeven horizon" metric crunches the costs of owning or renting over 30 years -- tracking them, in the case of a home, from purchase to sale. Where the two sets of costs converge is the point after which buying is smarter. For example, if you're going to live in Nashville in for two years, buying won't give you any financial edge over renting, because the breakeven is 2.6 years. In New York, with home values high, let's just say it takes even longer.

No. 10: Nashville

Breakeven horizon: 2.6 years* 

Zillow Rent Index: 3.8%*

Homes sold at a loss: 24.56%*

On the TV show "Nashville," country music star Rayna James's home is a 6-bedroom, 12-bath, 20,533-square-foot estate. In real life, the house went on the market with a $19.5 million price tag last fall -- a far cry from the Zillow Home Value Index (ZHVI) of $140,000 for Nashville. With that number up 6 percent, Nashville's housing market has held up fairly well compared with that of Memphis, where home values are down 3.5 percent and rental rates are about flat, says Zillow Chief Economist Stan Humphries. The Zillow Rent Index (ZRI) for the city rose 3.8 percent. In Nashville, it takes just over 2.6 years before buying starts making more financial sense than renting.

*ZRI and ZHVI median figures show year-over-year percent change for December 2012. The breakeven analysis was done using data through September 2012. Home loss figures are for December 2012.

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