It’s official. The Nashville real estate market has hit bottom and is in the process of rebounding. The Greater Nashville Association of Realtors announced recently that November sales for 2011 were up 20 percent over November, 2010. That statistic is staggering.
Additionally, pending sales are up over 2010 as well. December will be the seventh consecutive month of increased sales and 2011 sales for the year will surpass those in 2010. This has not happened since 2006 surpassed 2005.
Sales are increasing across the area. Chad Wohlers of Village Real Estate Services has been working with various condominium developments since 2005, including Bristol on Broadway, Bristol West End, the Icon and the Rhythm.
He says a strange phenomenon occurred at the Icon last month. A unit flipped. Some of you older readers may remember the term “flip.” It is the act of purchasing real estate on speculation that the price will rise and selling the unit at a higher price in a relatively short amount of time. Flipping was big in South Florida during the early, early 2000s and had a brief run at the Viridian in Nashville before the condo craze descended upon the city.
When cranes were stretching over high rises such as Icon in the Gulch, Encore, Rhythm at Music Row, Adelicia, Terrazzo and a pocketful of smaller condos around Music Row, there was concern that the city had overbuilt. Some may recall that prior to the Tony Giarratana’s Cumberland and the subsequent Viridian there were only 464 residents calling downtown home. Now downtown and Midtown have nearly 5,000 residents, many of them homeowners, and there are half dozen apartment buildings under construction joining the Music City Center in returning cranes to the Nashville skyline.
The developers are being proven accurate in their beliefs that there is a market for urban living in Nashville. And while failed developments like Fifth and Main provide fodder for the “I told you soers,” the success of the others cannot be overlooked. And as Wohlers notes, those that have purchased the downtown/Midtown condos have invested well.
The reason for this is that there is little, if any, money available to construct new condos as the lenders are more comfortable with apartments. This is an understandable situation inasmuch as there are more renters than buyers. Consequently, there are no high rise developments on the horizon for the area.
These developments have a long gestation period as a certain number – in the past 50 percent – of the units must be presold before construction can begin. Construction can take as long as two years. Therefore, it is safe to say that there will be no competition in the market for the next five to seven years.
Richard Courtney is a real estate broker with Pilkerton Realtors and the author of Come Together: The Business Wisdom of the Beatles. He can be reached at [email protected].