505 Belgrave Park
As recession looms and the boom fades into a distant memory, there are concerns for those who decide to sell their homes in what is a dwindling market. Yet, in houses priced at $1 million or more in the Greater Nashville area, sales continue to hold their own and even improve.
Richard Exton of Manier and Associates, one of the most-experienced and highly regarded appraisers in Middle Tennessee, says the best way to determine how a market is trending over a period is to compare the sales of the same house closing twice during a relatively short time.
Last week, the market was given just such an example. The property at 505 Belgrave Park sold for $950,000 in February 2021, before the Federal Reserve began its 11 separate interest rate increases and when the interest rate for a jumbo mortgage were slightly more than 3%.
This year, the same loan on the same property would be approximately 7.5%. If the buyer in 2021 borrowed $600,000, the payment would have been in the $2,694. Now, it would be $4,195.
Mike Garretson of Wesley Mortgage stated that ideally a house payment should be equal to one third of the borrower’s monthly income. Therefore, a buyer would need to earn an additional $4,545 per month or $54,540 annually in order to obtain the $600,000 loan. Garretson says underwriters will allow a higher ratio in some cases if there is sufficient income, the it is at the buyer’s discretion.
In short, a person with an income of $97,963 could afford a $600,000 loan in 2021. That same buyer would have to $152,000 in the current market. They would be more likely to be approved for $400,000 today.
In Nashville, at least for now, houses selling for $1 million-plus will continue to sell well, and the Belgrade seller experienced that phenomenon as the house sold for $1.6 million last week. This is the same house that sold for $950,000 in February 2021.
While the Fed held on increasing interest rates at the meeting last month as inflation appears to be in check, examples like this sale continue to make Nashville unique. Unique? Yes. Insane? No. The house endured two price reductions and stayed on the market 63 days before securing a binding sales agreement.
The home on Belgrade – In Abbotsford between Abbott Martin and Hobbs roads in Green Hills – entered the market in May with a price of $1.85 million, almost twice what the seller paid when the property was acquired in 2021.
As a reminder, the Fed raised rates May 3 by another 25 bps, and July 26 the Federal Reserve raised interest rates to 5.25-5.5%, which was the highest in 22 years.
After two weeks of feedback and no contracts, the price was reduced by $55,000. Three weeks following the first price decrease, the listing was reduced by another $100,000. That’s a total of $155,000 in reductions before landing at $1.695 million.
The property was listed by a Brett Sheriff of Pilkerton Realtors, a perennial top producer who partnered with Theo Antoniadis several years ago. Sheriff was lured into the real estate business by his late wife, the legendary Jenkins Hardin, as her business exploded and he managed the burgeoning workload during her battle with cancer.
The Jenkins, a condominium development on the corner of Belmont Boulevard and Blair Boulevard, was named to honor Jenkins for her efforts in restoration and development in the area. Jenkins died in November 2015, and Brett and Theo have carried the torch into new and expanded horizons. Brett has long since established himself as a successful, award-winning broker and carries that background into his listings.
Many sellers say buyers are watching their homes under the scrutiny of financial microscopes and note that a reduction is a sign of weakness, eagerness or duress by the seller. Actually, buyers will pay what they feel a home is worth, and a lower price introduces different buyers to the properties.
As noted in the earlier example, a $155,000 price drop would allow a buyer to earn significantly less money to purchase the home. The buyer’s agent Paula Hinegardner who is with Keller Williams Realty noticed the price change a delivered the buyer.
In the world of Nashville enigmas, Hinegardner looms large as her efficient skillset, exemplary customer service and decades of experience, especially in executive luxury relocation, have allowed her business to grow in a manner that is unparalleled in the Middle Tennessee.
She has been the top-selling agent in the entire state of Tennessee for Keller Williams on numerous occasions and was recently named the top-selling KW agent for the Southeast United States.
In a recent conversation, Hinegardner said “Aspirational pricing does not work in the current market.” She has noticed that listings in the upper-upper end will sell quickly if they do not need work and are not overpriced.
Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty, LLC and can be reached at [email protected].