101 Clydelan Court after renovation
Moody’s Investment Service has predicted Nashville home prices will fall 20% from the recent market peak. They base that finding on mountains of research, and there is data to support their predictions.
But who determines when a market peaks?
Ralph Schulz is the president and CEO of the Nashville Area Chamber of Commerce and has led the organization since late 2006 and shepherded the Chamber through the Great Recession. During that period, Schulz would often point to the fact that the city of Nashville began to feel the effects of all of the recessions later than other cities across the nation and has been one of the first to emerge from the various recessions.
Schulz proved prescient in his forecasts, as much of the nation saw home values dip as high as 20% during the Great Recession of 2007 until 2009. Nashville-area fell about 10% during that period.
In many areas, it was hard to determine if prices fell or if homes they simply did not appreciate as much as they would have without the downturn.
Last week, there was a sale at 101 Clydelan Court for $4,407,000 for a 7,000-square-foot home situated on a 1.17-acre lot in an area off Page Road that borders Cheekwood. In 1980, a home sold on Clydelan for $30,000. By 1991, houses were selling in the $130,000 range, and by 1992 there was a sale for $143,000.
A year later, in 1993, a property sold for a staggering $165,000, and by 2007 a house actually broke the $1 million barrier, selling for an unheard of $1.3 million.
By 2009, the disparity between houses bought for habitation and teardowns – with one house selling for $450,000 and another $1.3 million – crept into the street.
In 2013, there was a $750,000 sale, and in 2016 brought a $700,000 sale. A year later came a sale of $850,000.
In 2018, the unthinkable occurred when a house there sold for $1.9 million. Things cooled with early 2022, ushering in a sale of only $1.8 million. However, in September 2022, there was a sale of $3,185,000.
And then, last week, the sale of $4,407,000. Following the Moody’s report, people are speaking of “peaks and troughs.” Has the market peaked? Or is this the trough?
Clydelan Court is a street of 19 houses located on the outskirts of Belle Meade, and if “location, location, location” matters, Clydelan Court has all three. Through recessions dating back to the 1950s caused by wars, Asian flu, oil embargoes, savings and loans, 9/11, dotcoms, the Great Recession and COVID, there is no record of any sale on Clydelan in which the owner lost money.
Those paying $1 million for houses today will not sell for $800,000 next year if they can afford to keep the home. If foreclosure sales begin to proliferate, low sales might ensue, yet recent sales feel different to Realtors than sales before the Great Recession.
101 Clydelan Court before renovation
In the years leading up to the Great Recession, some borrowers were borrowing 110% of their home’s value. Many buyers were leaving their closings with cash in their pockets when they had no investments.
In this era, buyers are investing 20%-50% of the value of their homes. If they hit a financial crisis, they will be able to lease their properties and perhaps have a positive cash flow or, at worst, a short deficiency.
The property that sold for $4.407 million was purchased last year for $1.101 million with Stacey Arender of Village scouring possible build sites for her client, who then transitioned a $1 million purchase into a $4 million-plus sale. That builder will, no doubt, not lose Ms. Arender’s contact info.
Caroline Rosenberg, hailing from Compass RE, found the gem for her clients, who will likely live in a financially safe home for years to come as the street around it continues to appreciate.
It is widely rumored among the real estate community – as well as the neighbors of Clydelan – that movie star Nashville native Reese Witherspoon purchased a home down the street for somewhere in the vicinity of $17 million. I would venture a guess that her purchase might be considered the peak. Perhaps $4 million is the trough.
I have been in worse troughs.
Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty and has participated in numerous recessions over his 43-year career.