Last week The Greater Nashville Association of Realtors (GNAR) released the sales information for the area for September, and the numbers were staggering, with sales up 19 percent.
That’s staggering in the sense that this is the third consecutive year of similar growth, and the inventory when all of this began was at 19,622. Now there are only 15,182 properties available.
In April of 2012, there were 2,186 closed sales, a big number at the time, and last month there were 3,122 sales with only 15,122 in inventory, or a supply of less than five months.
A visit to January of 2012 shows 1,337 units sold with an inventory of 17,949, a 13-month supply.
And it’s going to get worse as Nashvillians are now realizing that this real estate market is outperforming the stock market and a new trend is developing in which more and more homeowners are purchasing new homes while retaining their current residences as rental property.
With interest rates as low as they are – the nationwide average was 4.12 percent at the end of last week, down for the third consecutive week – and equity building through the increase in property values, people are getting home equity lines of credit (HELOC) on their current residences to use as their down payment on the new homes.
In most cases, the rental income will offset the monthly payment, many times creating positive cash flow, and the renter will reduce the mortgage balance while the asset is appreciating.
As a result, property owners build equity in two properties rather than one with no additional out-of-pocket expense.
The lack of inventory should slow sales at some point, but it hasn’t happened thus far. Based on the GNAR data, the current growth rate will be sustained since pending sales at the end of September were at 3,049. There were only 2,487 at the end of September 2013.
The massive demand and the dwindling supply have affected in a predictable manner as single family home prices have increased from $195,660 in September of 2013 to $211,400 this year. Condo prices have jumped from $159,002 to $195,000, with the 1212 project’s close sales looming ahead in the coming months.
The 1212 condominium is located in The Gulch and has commanded $585 per square foot. The first 90 or so of those will begin closing next month. These closings will cause yet another spike in the months to come.
This whirlwind of activity has forced Realtors to temper the expectations of out-of-town buyers, who are flocking to the city at a rate of 80 persons a day, according to some reports.
Buyers are being warned that it is not likely that they will not be able to purchase their dream home on their first visit to Nashville. Rather, agents are using the visits to establish the areas in which the buyers will live and get an understanding of the housing needs of the buyers.
Then, when a property that suits a particular buyer finally hits the market, the buyer must submit an offer on a property that he or she has not seen.
That is a real estate model that the city has never seen.
Sale of the Week
Scott Evans, the affably intellectual Realtor with Parks, listed 1817 Cedar Lane and included this quotation in his description of the property: “The shooting star of Belmont! A charming home in every way situated perfectly on a great street with 1/3 of an acre! Lie in it, or expand on it, but don’t blink. It’ll be gone before you know it!”
Words similar to these usually forebode a lengthy stay on the market, but not in this zany environment. Kimberly Davis of Avenue Real Estate Services brought a buyer before Evans could utter one “Yea, Sewanee’s right.”
Having listed the 2,221-square-foot house for $549,000, a mere $248 per square foot, Davis’s clients had to pay $560,000, or $10,100 more than asking price in order to secure the home. That’s $252 per square foot.
The house has three bedrooms, two baths with the master bedroom, now often called the owner’s bedroom downstairs, a must for the area.
Seems that the owner of the house would own all the bedrooms, but people have been trying to replace “master bedroom” for years. Nothing sticks.
The kitchen has an electric range and cooktop, and Evans was so confident that the home would sell quickly that he did not elaborate on the amenities, noting the master bath has a shower but no tub.
The sellers fared well, as they had purchased the home in 2009 while winds of the Recession blew and paid $385,000 for their home of five years.
Richard Courtney is a real estate broker affiliated with Christianson, Patterson, Courtney and Associates and can be reached at [email protected]