VOL. 38 | NO. 16 | Friday, April 18, 2014
Available residential inventory worse than we thought
The Greater Nashville Association of Realtors’ March data show there were 2,530 closings in March 2014 compared to 2,562 for March 2013.
Yes, the number of closing dropped 1.2 percent. Does that translate into a shift in the market with the pendulum beginning to swing towards the buyers? Not on your life.
Hagan Stone of the Greater Nashville Association of Realtors blamed the drop on spring break and cold weather, saying “our region experienced some poor weather…serious buyers don’t want to get out looking for a home in the cold, icy or snowy conditions. Also, March is spring break for our school systems…”
I think there are even more factors. Last year, there were 16,049 properties in inventory, and this year there are 14,894. Single-family homes and condominiums, the most visible category, has an inventory of 655 fewer units.
There are more buyers than sellers with this scarcity of inventory.
Also, as you will learn in “Sale of the Week” below, the “days on the market” information shown on the multiple listing service is somewhat confusing, making the inventory numbers staggeringly misleading.
Basically, many listings that appear as active are actually under contract and are not removed from the inventory numbers until such time as the listing agent deems that the property has graduated into the “pending” status.
For example, in homes listed for sale in Realtracs MLS Area 1, which includes Crieve Hall, Edmondson Pike, Old Hickory Area and properties towards Nolensville, there are 230 active listings as it appears on the consumer site.
The only problem is that 87 (38 percent) of those homes are under contract. Consequently, inventory is down 6 percent, and 38 percent of the inventory, at least in that scenario, is not available to be purchased.
In my opinion, sales are a bit off as a result of the lower inventory. Buyers lament there is “nothing for sale in my price range.” In actuality, there is little for sale in any price range.
This leads to the toughest situation in all of real estate for buyers, and that is when to pull the trigger and buy.
Sale of the Week
This week’s sale is located in Sylvan Park at 4511 Dakota Avenue and was listed by Jane Anderson for the duration of three days before selling.
“Days on the Market” is a term that is confusing for many, but much ballyhooed by buyers and, quite frankly, somewhat useless at face value, which is the only value it has.
For example, the multiple listing service reveals that this property lingered some 49 days on the market, but it went under a binding contract in three days. Since the sales price of $225,000 was $18,000 less than the list price $243,000, it would be safe to assume that the negotiations took a day or two.
Therefore, it began to sell within a day of entering the market, not 49 days.
When buyers in this area consider making offers on properties, the price per square is usually the first inquiry. If the answer is acceptable, then comes the “How long has it been on the market?” question. The answer is tricky.
The multiple listing shows the days on the market with the current listing agent within the terms of the current contract. However, the property might have been listed with another agent prior to this agent.
The number also could be artificially lowered by the listing agent and seller withdrawing the listing for a minimum of three days and then returning it to the market with a fresh clock.
Additionally, the clock starts over if a house goes into a pending status and returns to the market.
Back to 4511 Dakota, where the affable, diligent Jane Anderson listed the home with 2,100 square feet for $443,000. Josh Anderson, or one of his minions, brought a buyer who paid $425,000, or $202 per square foot.
Jane described the home as a classic 1920s brick bungalow with “10-foot ceilings/hardwood floors, original trim/hardware/fireplace with stone surrounding wall surrounding lot.”
She noted that the mechanicals had been updated and new windows installed.
There are three bedrooms and two baths in the house, with one bedroom and one bath on the main level.
Even with all of the improvements, the buyers seemed to have fared well financially, paying $198,000 for the house in 2000 and selling for $425,000.
By the way, “How much did they pay for it?” is the third spoke in the trilogy of pre-offer questions prior to the drafting of an offer.
This one made it to the closing table, no small feat these days.
Richard Courtney is a real estate broker affiliated with Christianson, Patterson, Courtney and Associates and can be reached at firstname.lastname@example.org