Nashville Real Estate Market Analysis – July 2009

2009 Percent Change JulyThe Middle Tennessee MLS (Realtracs) just released July 2009 stats. The following graph and analysis are based upon the residential single family homes and condos market. As you may recall in June, closings dramatically increased over May’s numbers. Did July continue to make an impression?

Total Inventory (Okay, Getting Better)
Inventory levels continued to slightly decrease in July, down 0.41 percent from June, but still up 10.19 percent since January. There were a total of 17,530 active homes and condos in Nashville last month, compared to July 2008 when there were 18,437 on the market, an encouraging year over year drop of 4.92 percent.

Pending Sales (Mixed, Improving)
Pending sales in Nashville are up rather significantly in 2009. Since January pending sales have soared 68 percent, but did not increase significantly since June. Compared to the same period in 2008, total pending sales are down 11.5 percent when 2,394 properties were pending. That may sound bad, but the gap between 2008 and 2009 pending sales has decreased a whopping 12.71 percent in the past 3 months alone.

Closed Sales (Good, Getting Better)
There is a very similar story to tell for Nashville’s closed sales as well. Since January closings have skyrocketed an astonishing 130.9 percent, a full 6.49 percent gain over June which was a 16.3 percent gain over May’s closings. Compared to the same period in 2008, year over year closings have only decreased 11.76 percent when 2,385 properties closed. In addition, we have narrowed the gap over 2008 by 14.1 percent during the past 3 months and that is better than 90 percent of all major US cities at the moment.

Median Prices (Better)
Median prices continue to remain extremely stable in the first 7 months of 2009, up 4.6 percent. Since June the median price eased slightly 1.24 percent to $172,628. Also, that median price is only down 3.84 percent since July 2008 when the median price was $177,665. The price gap has now narrowed by 6.06 percent in the last 60 days.

Months of Inventory (Better)
Based on July’s closed sales, it would take 8.21 months to clear it out our excess inventory. Based on pending sales (contracts accepted but not closed yet) it would take 8.16 months. Our absorption rate is significantly better over the past 2 months when we had 10.2 months of inventory based upon the same calculations – a 20% burn off decrease.

As I compare the year over year numbers in addition to looking at the past several months I am seeing an improving trend. If I was a day trader who traded on the trends, I would be very close to executing a trade. 3 of the 4 major indicators in the above analysis show a year over year narrowing trend while the fourth major indicator is running parallel. Taking seasonality into account, the 2009 numbers look as they should, but I am hesitant to allow for a full seasonal adjustment in this economy. I prefer to compare the current data to 2008 as the declining year model and make predictions based upon that assumption. If I also use 2006 as the increasing year model, I find that the trend analysis is more similar than dissimilar.

In other words, it may be time to definitively declare that the Nashville real estate market has bottomed out and is already rebounding. BUT, we might also be at a false bottom with another drop looming around the corner…only time and possibly Ben Bernanke can tell.

Reference the June 2009 analysis and the May 2009 analysis.

Short Sale in Brentwood’s Hampton Reserve

Hampton Reserve short saleWhen you think of Brentwood’s Hampton Reserve most of us think of the 2004 parade of homes and the amazing opulence of the custom built multi-million dollar homes. It was the first time that I had ever seen a full size golf simulator, wet sauna, 20 foot mahogany bar and poker room in someone’s basement. Wow. Fast forward to 2009 and Hampton Reserve is not immune to the housing downtown.

In fact, words that used to be reserved for Antioch are now common descriptors on the MLS: “motivated seller”, “lease/purchase”, “limited listing service”, “trade” and the dreaded “possible short sale”. Maybe stranger are the common place price reductions by $100,000, $200,000 and even $325,000.

The short sale home pictured above is 9576 Hampton Reserve Drive. This owners previously listed this executive home on the market in March of last year for $1,679,000 and first reduced to $1,579,000 and now to $1,295,000 which is lower than its September 2005 purchase of $1,525,000. The home has 7,782 square feet, 5 bedrooms, 5 and 2 half bathrooms and a 5 car garage. It also has other rare features like an elevator, theatre room, stocked wine cellar and gap equity in your investment.

Should you be interested in purchasing a short sale or foreclosure in Hampton Reserve, be sure to consult an expert real estate agent as well as your attorney. Grant Hammond is that expert real estate agent. He can be reached via email or via phone 615-945-7123.

In 2009 4 homes have sold in Hampton Reserve, 2 were bank owned foreclosures, 1 was a ‘motivated seller’ and 1 appears to be a clean sale. Currently there are 17 homes on the market: 1 is a SunTrust foreclosure, the other is a short sale opportunity. I suppose that it is indicative of the times, but it is still hard to stomach the news that the Governors Club and Hampton Reserve have 7 combined foreclosures and short sales on the market today.

The property featured is listed by Keller Williams Realty from Franklin, TN

Icon in the Gulch Condo Price Update

Icon pool viewAfter a quick trip to the Davidson County register of deeds Friday morning, I have confirmed that 38.33% or 161 condos have closed as of 8/21/2009. The Icon is averaging over 11 closings a month for the past 3 months which would put the development at sell out in approximately 2 years.

This is a pretty strong absorption rate for what most believe to be the worst real estate market in more than 2 decades. Not surprisingly, mostly downtown view condos are the ones closing. What may be shocking is that the 1 bedroom Edge floor plan and 2 bedroom Panorama floor plan in the tower section of the building are beginning to go up in price since last month. They have actually sold and closed more than 60% of both floor plans.

The tower section of the Icon in the Gulch is beginning to fill up. There are still deals to be negotiated on the downtown facing 1 bedroom Skyline floor plans as well as on the downtown facing 2 bedroom Vista floor plan. On the back of the tower, I can show investors how cash flow and CAP rates are better and how an ultimate sales price will fetch you a greater long term gain than on the front of the tower.

The rental demand in the Icon is still huge, even as we pass through the summer months. The Icon has become one of the top living choices for all professionals, younger and older. As I write this article there is only one property vacant and available for lease. As such, rental rates are beginning to rise in this building. It is not unheard of to demand and get more than $2.00/foot for premium condos.

If you are considering a purchase in the Icon in the Gulch, either as a residence, second home or investment, you should speak with me first. My proven track record with saving my clients wheel barrel loads of cash in this building is undeniable. Others have made the mistake of not taking advantage of my services. I have the closing numbers to show that my clients are getting better deals and are making more money.

Email me or text/call me 615-945-7123.

View all condos for sale in the Icon in the Gulch

Existing Home sales up 7% in July

Nationwide existing home sales rose 7.2 percent in July – the first time in five years sales have increased 4 consecutive months and the first time in a decade the month over month gain was over 6 percent, according to a report released Friday. In addition, Nashville has experienced positive price appreciation for 3 consecutive months.

The National Association of Realtors (NAR) said 5.24 million homes sold last month. That’s more than the 4.89 million sold in June and the 4.99 million sold in July 2008.

The housing market has decisively turned for the better,” said Lawrence Yun, the association’s chief economist. “A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.”

A practitioner survey conducted by the Realtors association showed first-time home buyers represented 30 percent of the sales last month, while 31 percent were distressed home purchases.

Other July existing home sales data included:

• Inventory of existing homes for sale rose 7.3 percent in July.

• Median home price was $178,400 – 15.1 percent lower than July 2008.

• Sales of single-family homes increased 6.5 percent for the month and 5 percent for the year.

• Condo and co-op sales rose 12.5 percent for the month and 5.9 percent for the year.

• Regionally, sales in the Northeast jumped 13.4 percent, 10.9 percent in the Midwest and 7.1 percent in the South, but dropped 1.7 percent in the West.

• PMI ranks Nashville as one of the top 10 most stable real estate markets in the United States.

• The US Bureau of Labor Statistics reports that Tennessee created 15,600 more jobs in July than it lost.

Nashville Medical Trade Center Close to Reality

medical tradeThis article entitled “Medical trade center closes in on downtown location” appeared in the Nashville Business Journal on August the 21th, 2009. The author is Jenny Burns:

“Market Center Management Company is in negotiations for a downtown location to bring its mammoth medical trade center to Nashville, a move that developers say will bring thousands of health care professionals to Music City annually to a center larger than the city’s planned convention center.

Executives with the Dallas-based Market Center would not yet reveal the site for the $300 million Nashville Medical Trade Center, but say the existing building will allow the company to open 275,000 square feet of exhibit space by July 2010 and then start construction on the remaining phases at a nearby location.

Only a few buildings downtown offer that much space. The AT&T building has 280,000 square feet available, and the new Pinnacle tower slated to open in January has 240,000 square feet available, which wouldn’t be enough room unless they split up the space, says Whit McCrary, office division leader for real estate broker Colliers Turley Martin Tucker.

The entire project is 1.5 million square feet of medical convention and trade center space – larger than the city’s planned construction of the 1.2 million-square-foot Music City Center south of Broadway. The trade center will take several years to complete, but developers don’t have a set timeline.”

You may also recall that Market Center has recently retained long time Nashville resident David Osborn to serve as a key consultant to the project. Osborn has thick Vanderbilt ties as well as ties to venture capital based health care solutions.

Yes, I too think that we are jumping the gun on what only amounts to site selection, but if you’ll recall a very similar flurry of stories hit back in 2005…just before Nissan North America announced its headquarters move to Nashville, TN. However, Nashville has been named to PMI’s top 10 most stable real estate markets and Nashville has added jobs to its city in this exact manner before. If I had to guess, I would say that both the new convention center and medical trade center will be building and/or completed within the next 5 years.

PMI Ranks Nashville as Top 10 Most Stable Market

This July 7, 2009 press release from the PMI Mortgage Insurance Company clearly ranks Nashville as one of the most stable real estate markets in the United States.

60% of Top 50 MSAs have greater than 50% probability of lower home prices in Q1 2011; Buyers: 98% of nation’s 381 MSAs show higher affordability.

WALNUT CREEK, Calif., July 7 /PRNewswire-FirstCall/ — PMI Mortgage Insurance Co., (NYSE: PMI), today released its Second Quarter 2009 Economic and Real Estate Trends Report, and its widely cited U.S. Market Risk Index(SM). The quarterly report projects the likelihood that the nation’s housing prices will be lower in two years. As many as 324 – approximately 85% – of the nation’s 381 MSAs (Metropolitan Statistical Areas) are now facing increased risk of lower home prices in 2011. Florida, California, Nevada and Arizona continue to have the highest risk scores – 36 of the most risky MSAs are located in these four states – but an increased risk of lower future prices is now spreading across all regions of the nation, due to the significant increases in unemployment and foreclosure rates.

“Rapidly rising foreclosure and unemployment rates, continuing declines in house prices, and weakening consumer demand all worked to increase risk in the general economy, and the housing market specifically,” said David Berson, PMI’s Chief Economist and Strategist. “As a result of the continued weakness in prices, and the relatively low level of interest rates, improvements in affordability across the nation’s MSAs will continue to incentivize repeat and first-time home buyers back into the market.”

Second Quarter 2009 PMI U.S. Market Risk Index (First Quarter 2009 data)
10 Riskiest and 10 Most Stable MSAs out of 50 Largest MSAs

10 Riskiest of the 50 Largest MSAs

Risk Rank MSA Risk Index Afforability Index
High Riverside-San Bernardino-Ontario, CA 99.9 114.95
High Miami-Miami Beach-Kendall, FL 99.9 115.90
High Los Angeles-Long Beach- Glendale, CA 99.9 113.65
High Fort Lauderdale-Pompano-Deerfield Beach, FL 99.9 122.03
High Las Vegas-Paradise, NV 99.9 160.34
High West Palm Beach-Boca Raton, FL 99.9 134.18
High Orlando-Kissimmee, FL 99.9 127.06
High Tampa-St. Petersburg-Clearwater, FL 99.9 126.57
High Santa Ana-Anaheim-Irvine, CA 99.9 114.12
High Phoenix-Mesa-Scottsdale, AZ 99.9 134.59

10 Most Stable of the 50 Largest MSAs

Risk Rank MSA Risk Index Afforability Index
Minimal Cleveland-Elyria-Mentor, OH 1.5 204.18
Minimal Pittsburgh, PA 1.5 155.54
Minimal Columbus, OH 2.1 178.41
Minimal San Antonio, TX 2.8 135.92
Minimal Houston-Sugar Land-Baytown, TX 3.7 146.83
Minimal Dallas-Plano-Irving, TX 3.8 141.54
Minimal Fort Worth-Alington, TX 5.8 142.93
Low St. Louis, MO 12.9 146.90
Low Charlotte-Gastonia-Concord, NC 15.0 143.11
Low Nashville-Davidson-Franklin, TN 16.6 135.47

A complete copy of the PMI Second Quarter 2009 Economic and Real Estate Trends report and Appendix that provides data for all 381 U.S. MSAs is available at:

The PMI Economic and Real Estate Trends (ERET) containing the U.S. Market Risk Index is published quarterly by PMI Mortgage Insurance Co., (NYSE: PMI). The Risk Index is a proprietary statistical model that measures geographic house price risk by predicting the probability that home prices in the nation’s 381 largest metropolitan statistical areas (MSAs) will be lower in two years. The PMI U.S. Market Risk Index is based on data including the Repeat Transaction Home Price Index from Loan Performance, labor market statistics from the Bureau of Labor Statistics, and the PMI Affordability Index, which uses local per capita household income, home price appreciation, and a blended to calculate the local share of mortgage payment to income relative to its baseline year of 1995. The PMI U.S. Market Risk Index scale ranges from one to 100 and translates to a percentage. For example, a score of 50 indicates a 50 percent chance that home prices will be lower in two years.

Who is PMI Mortgage Insurance Co.?

PMI Mortgage Insurance Co. (NYSE: PMI), is headquartered in Walnut Creek, CA and provides credit enhancement solutions that expand homeownership while supporting our customers and the communities they serve. PMI offers residential mortgage insurance and credit enhancement products. For more information:

SOURCE PMI Mortgage Insurance Co.

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