Encore Condos Holds Open House 12-4-10

encore condos nashville open house

The Encore condos sales team is holding what very well may be the last developer open house on December 4th, 2010 from 1 – 4pm. As of November 15th, the Encore has sold 301 of its 333 total condos leaving only 9% of the building available for sale. It is my assumption that new closeout pricing and incentives will be announced at this open house. This may be the last good opportunity to secure discounted pricing from the developer before the building sells out…plus they are giving away a HDTV and concert tickets as door prizes!

RSVP to attend the Encore Open House

 encore condos nashville open house

Save the Date: Encore’s Second Annual Tour of Homes!

Saturday, December 4, from 1 p.m. to 4 p.m.

Learn more about the new pricing at Encore.

Chances to win a free HDTV or concert tickets.


FHA FINANCING AVAILABLE


3% DOWN PAYMENT


Exceptional Pricing
Homes from $199,500

301 Demonbreun Street   •   Nashville, TN 37201

See condos for sale in the Encore
Schedule an appointment to view the Encore

Nashville Condo Inventory Absorption Study

nashville condo inventory data

The below line graph is a rather simple analysis that reveals the number months required to clear the market of all current inventory. To arrive at the absorption calculation, I have simply divided the total condo inventory at month’s end by total condos sales for each particular month. While this particular chart really has no predictive value, it is an excellent glimpse into how our 2010 market stacks up against the previous 2 years. This chart represents the pulse of the market, the convergence of seller inventory with buyer action and does bear out several trends.

 nashville condo market absorption analysis

The very first trend demonstrated is that the two Federal Housing Tax Credit programs were very effective on Nashville condo buyers. The first tax credit culminated in the last quarter of 2009 when condo sales are traditionally scarce, but Nashville’s condo absorption rate gained significantly over the previous year. In fact, the 2009 Nashville condo market performed at its peak during the fourth quarter, a complete departure from the norm when the Spring and Summer months almost always outperform the Fall and Winter months. The second housing tax credit concluded in May and June of this year. Not surprisingly, the following two months saw a lack of new purchases as inventory levels actually lowered (see second analysis below). We can certainly call this phenomena the “tax credit hangover effect”.

The second trend demonstrated is the cyclical nature of the Nashville condo market. Unless there is an artificial stimulus, like a Federal housing tax credit, February through August is the period when the condo market accelerates. Of course, the 2010 summer months are skewed, but if you average the two months preceding the end of the tax credit with the two months directly following the conclusion, you’ll find that 2010 mirrors the path of 2009.

Inventory Absorption Conclusion

Averaging all of the absorption data from the previous 36 months, it appears that the Nashville condo market clicks along near equilibrium when it carries between 8.5 and 9.7 months of inventory on the market. This is the point at which prices are stable and inventories remain virtually unchanged. For the Nashville condo market to shed some weight, we need the absorption rate to drop below 8.5 months for an extended period of time. Until that time, until more new construction inventory is absorbed (I predict another 27 months), we will not see significant or sustained price increases.

nashville condo inventory data

See condos for sale in downtown Nashville
See condos for sale in the Gulch

Icon Condo Absorption Analysis in Nashville

icon in the gulch nashvilleAn interesting question was posed to me this morning, it’s a question that led me to a simple ‘back of the napkin’ analysis that I’d like to show to you. A gentleman simply asked me how long it would be until the sales staff at the Icon in the Gulch would move out of the building. I believe he was merely wondering when the sales material in the lobby would be removed, but that question led me to the more interesting question of how long will it take the developer to sell their remaining condo inventory given current sales trends. In truth, it’s a fundamental question that all condo buyers and owners should be asking.

Icon in the Gulch Condo Analysis

The Icon in the Gulch is a massive 419 unit condo development that has had great success in selling sheer volume during these trying economic times, but does volume translate to healthiness? By my projections, the Icon condo development has 2 years of inventory remaining to be sold by the developer. I come to this conclusion by using the Adelicia absorption and pricing numbers acquired during their sellout phase (thank you Ray Hensler for the road map). Additional factors that have led to this conclusion are facts like: the majority of remaining condos in the building are not premium downtown facing condos, many remaining units are 2 bedroom condos, no condos remain priced under $210,000 (apart from the occasional promotional condo) and the number of internal resale condos will increase over the next 2 years.

icon condo absorption rates nashville

* Please note that 77 condos sold in 2010 is an annualized number. Currently, 67 condos have sold through November 10, 2010.

Is the Icon a Healthy Condo Project

To address the question of healthy project versus hopeless project, one can firmly conclude that the Icon is a very healthy project for those who do not plan on reselling their condos over the next 2 years. The projected 2011 drop in average price per foot is mostly attributed to the fact that mostly larger condos remain as well as many of the remaining condos will not have view premiums. The projected 2012 price decline is attributable to the larger condos as well as the anticipated closeout pricing for the last 10-15% of the building (a time which bargain hunters should be anticipating).

Nashville Real Estate Data October 2010

nashville housing market stats 2010

nashville home prices rise 2010There were 1,495 home closings in Nashville reported for the month of October 2010, according to figures provided by GNAR. This figure is down 30.3% from the 2,145 closings reported for the same period in 2009. Year-to-date closings through October 2010 are 17,424, representing a 1% decrease from the 17,598 closings reported through October 2009.

The median residential price for a single-family home during October was $173,525, and for a condo it was $152,950. This compares with last year’s median single family home and condo prices of $160,000 and $144,000, respectively. Total inventory at the end of October was 22,826, compared to 23,398 in October 2009, a moderate, yet encouraging 2.5% decrease.

There were 1,439 sales pending at the end of the October 2010, compared with 2,106 pending sales at this time last year. The average number of days on the market for a single-family home was 94 days, 9 days longer than October 2009.

Micro-analyzing Monthly Real Estate Data

The practice of micro-analysis can produce somewhat harmful buying and selling decisions. I have always maintained that a larger data focus is necessary in order to more fully understand how to better prepare yourself for a real estate transaction. It is with this principle in mind that I fear a false positive for rising home prices in Nashville (although, I did predict an increase in Nashville home prices in May).

On the graph below, the red trend line represents the total housing inventory. The green line is the average median home price and the blue line is the total number of home closings in Nashville. One glance at the trend lines shows a rather drastic upward trend in pricing based upon a rather small decline in inventory coupled with a small increase in the total number of closings. This is a pricing trend that seems wholly unsustainable based upon the past 6 years of data for the Nashville housing market.

nashville housing market stats 2010

Unsustainable Nashville Real Estate Trend

Clearly, there are an infinite number of additional market forces that affect the direction of the Nashville housing market, but indulge me in this oversimplified analysis for a few more minutes. Based upon the trends, it seems as if real estate prices reacted extremely favorably once the total housing inventory began to only plateau or stabilize. Via a miniature quarterly increase in closings and certainly a decrease in new housing starts, the pricing component of the Nashville market is completely out of whack. What could explain this increase? Did the Federal Housing Stimuli artificially hold prices lower beginning in Q3 2009 and ending in Q2 2010? Are Nashvillians so susceptible to positive news that we’ll run right out and pay more for real estate? Only time will tell.

Nashville Housing Market Prediction

It is my opinion that median home prices will ultimately fall into the $164,000 neighborhood by Q1 2011 as total inventory continues a modest decrease. The gains from increased closings in 2011 will be negated by the return of shadow inventory to the market as renters cycle off leases. This leads 2011 to become a rather blah year in terms of sustained recovery. I do not believe 2011 will become the year we look back upon and say, “that was the bottom of the market”. Rather, I believe we’ll look back and say, “2009-2011 was the bottom of the Nashville real estate market”.

Icon in the Gulch Downtown Condo for Sale

icon condo building in the gulch

icon condo building in the gulchWelcome to your own private sanctuary in the sky, complete with panoramic views of Nashville’s growing skyline! Located in the Icon in the Gulch high-rise, residence #1413 is currently the highest downtown facing condominium available for sale in the entire building. Fully upgraded, this condo features the designer kitchen package which includes an optional island with pendants, glass tile backsplash, backlit glass door cabinets, under cabinet lighting and an Advantium oven. The bath features designer vessel sinks, glass tile shower and rich dark cabinetry. Even with all of these upgrades, it’s all about the panoramic skyline view. It’s truly breathtaking in the evenings, so be sure to preview this residence at sunset!

Don’t worry about paying for parking, this luxury unit comes with 2 deeded parking spaces, a complete rarity in the Icon. Priced, below $350,000, this condo is priced to sell based upon the last 3 comps in the building: $347,900, $409,900, $345,900 (none of these condos had 2 parking spaces and the developer won’t allow you to buy one either). This floor plan is called the “Skyline” floor plan and is an open concept design. Should you want a dividing wall to be constructed, we are more than happy to build a wall or install a sliding glass wall system.

Call me anytime to schedule a preview of this incredible resale: 615-945-7123

View all condos for sale in the Icon in the Gulch

Condo Foreclosure in the Viridian

viridian condos in nashville

While not a rarity in 2010, this foreclosure in the 31 story Viridian condo building is a little surprising. It’s not the fact that the condo was foreclosed, it’s the fact that this sunset view condo in the 19th floor is listed for only $169,900. This is a condo that was purchased for $212,700 during pre-boom times and once worth almost $250,000. If I am considering living in a downtown Nashville high-rise, this condo in the Viridian is extremely high on my list.

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