Business column: Housing slump pushes prices down in Middle Tennessee suburbs
Appeared in The Tennessean on July 14, 2008, written by Chas Sisk:
“Home sellers from New England to Southern California have been slashing prices this year, and many people have held that before long, local homeowners would capitulate as well.
New data from the Greater Nashville Association of Realtors seemed to prove them right last week. The median price of a single-family home sold in June was a sharp 6 percent less than in the same month a year ago.
But not all Middle Tennessee homeowners are feeling pressure to accept less for their homes.
According to Richard Exton, principal appraiser at Manier and Exton, a gap has opened between sellers in Davidson County and those in other parts of the region.
Average asking prices for single-family homes in six of Davidson County’s eight real estate zones are actually up, Exton says, but average asking prices are down in practically every major suburban community.
In five towns — Franklin, Mt. Juliet, Lebanon, Columbia and Dickson — homeowners have come off their prices by more than 10 percent.
“It’s most notable in areas where there’s been a lot of new construction,” Exton said. “It appears they’re not getting their money back out of it and having to sell it for less.”
Buyers settle for less
Lawn signs declaring price cuts abound in the suburbs. But prior to June, lower asking prices had not translated into a decline in home values across the region.
Exton’s data may help explain that discrepancy. Davidson County, which accounts for about one-third of the region’s home sales, appears to be stabilizing the market.
So why the shift in the suburbs? Builders may be taking the lead. They’re far more apt to accept less profit than sellers who have their life savings tied up in a home. It could also be higher gas prices or the demographics of Nashville’s urban core.
But just as likely, it’s a change in the mentality of suburban buyers.
A few years ago, with valuations on the rise and money cheap to borrow, many were eager to stretch into a bigger home. Now, with valuations unlikely to take off again and banks avoiding risky loans, more suburban homebuyers are settling for less.
That has put downward pressure on asking and closing prices, said Grant Hammond, a real estate agent who deals in high-priced homes.
“A family that was willing to stretch to get into a $900,000 home is just making the sound economic decision for their family not to do so,” he said.
In Williamson County, lower asking prices have led to a 3 percent decline in closing prices so far this year. That means the average homeowner got about $10,000 less than his neighbors did a year ago.
But with the median price for a home in Williamson County still at $370,000, buyers there shouldn’t think they’ve gotten a huge bargain. Three years ago, the median price of a home in Williamson was $315,482 — more than $50,000 less than today.
So don’t pity the suburban home seller quite yet. That seller may be getting less than he or she wanted. But after years of gains, many are still pocketing profits.”
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