VOL. 38 | NO. 20 | Friday, May 16, 2014
Homes sales down but prices continue to rise
The Greater Nashville Association of Realtors sales data for April show 2,676 properties closed in the month, a decrease of half a percent.
That follows a one percent drop last month, although sales are up two percent from last year for the first four months. For the sake of comparison, last April was up 27 percent.
In short, the sales are accumulating at a smaller rate, but that does not reduce the frenzy that most are experiencing in the marketplace as inventory is devoured before the sun sets on the first day on the market.
As expected, the situation with more buyers than sellers has driven prices upward with the median price being $204,950 for a single family home last month, compared to $185,000 for the same period last year.
Condo sales are $158,000, down from $163,500 last year. Wait for the Twelve Twelve units in The Gulch to hit the market in August with prices from the $500,000s into the $1 million range.
A statistic startling to some is that most of the upper-end units were the first to go.
On the national level, multi-family housing activity has returned to pre-recession levels, according to Elliot Eisenberg, the PhD economist of the Graphs and Laughs newsletter. Eisenberg states that at “650,000 at starts/year single-family activity remains mired in levels only seen in recessions, despite an economy about to enter its sixth year of recovery.”
Eisenberg says that if “single-family starts were to reach one million, the average level since 1959, it would create a million more decent paying jobs and reduce the unemployment rate by seven tenths of one percent.” Perhaps other cities should follow the Nashville model.
As sales surge, and prices along with it, appraisers are having difficulty keeping up. Most contracts include contingencies stating that if the house does not appraise, the buyer has the option to terminate the contract.
In many cases, the buyer has no option but to terminate based on financial conditions. For example, if the loan requires a down payment of five percent on a $200,000, that buyer is prepared to come up with $10,000 plus closing costs which could be as high as $5,000 or a $15,000 sum for cash to close the transaction.
In that example, if the house appraises for $190,000, the lending institution will only loan 95 percent of the $190,000 or $180,500. In order to close, the buyer must have $19,500 for a down payment plus the $5,000 in closing costs – $24,500 – in order to compensate for the appraisal shortfall. Some buyers may not have the additional $9,500 cash in reserve to pour into a house that a licensed appraiser feels is overpriced.
Appraisers are the most regulated, monitored and overseen group in the real estate arena, with their work under close scrutiny from a bevy of sources. Consequently, they are required to use precise data and provide volumes of information in order to support their pricing.
If a house does not appraise for sales price, neither buyer nor seller should consider that the appraiser’s word is 100 percent accurate for what the next buyer would pay. Upon hearing that a property missed its mark by 1 percent, one well known appraiser said, “I’m not that good.” In this case meaning that there is a margin for error.
Sale of the Week
This week’s featured sale is at 404 West Brookfield Drive in Belle Meade.
Listing agent Missy Rodriguez Brower brilliantly placed the words: “Welcome to this beautiful Belle Meade home ...’’ over the photograph in the online listing. This property oozes Belle Meade.
As Ms. Brower notes, it is situated on 1.88 acres and is the “home you have always admired.” And it is just that, assuming the “you” to whom she refers travels the Belle Meade circuit and admires properties there.
She notes that it has a chef’s kitchen with, “an impressive marble island open to a gathering room, and that there is a master retreat and guest suite on the main level.’’ The “master retreat” is a nice touch that I haven’t seen. In short, Missy did a masterful job in her remarks.
In addition to the main dwelling, there is a carriage house with a full bath and kitchenette on the off chance that your carriage gets soiled or hungry.
Overall, there are five bedrooms and five full baths plus a half bath in the 6,550-square-foot palatially comfortable home, which sold for $2.4 million – a mere $366.41 per square foot – in 22 days on the market.
For those who are unfamiliar with the homes in this range, the Metro taxes are $21,276.91 and the Belle Meade taxes are $2,385.79. Amy Smith, a veteran of a number of Belle Meade sales, represented the buyer on the sale.
Richard Courtney is affiliated with Christianson, Patterson, Courtney and Associates and can be reached at firstname.lastname@example.org.