April sales numbers, released recently by the Greater Nashville Association of Realtors (GNAR), are staggering. As has been the case for years, sales are up and inventory is down; however, this month’s numbers are some of the more astonishing of recent times.
In comparing the residential real estate overall condition from 2015 to 2016, there were 2,695 sales in the single-family residential market segment in 2016 compared to 2,394 last year. But inventory is down from 8,853 to 8,318, and many of those are under contract or in the process of going under contract.
One of the most surprising statistics is the number of homes that are listed as pending, meaning that the properties are under contract and set to close. That number has jumped from 3,198 in April of 2015 to 3,756 this year, suggesting last May’s number of 3,558 closed sales will be surpassed as inventory depletion continues.
In the condominium market, there were 365 closed sales and only 771 listed as for sale, or active.
While the newly revamped Realtracs system now allows for Realtors to view which houses are under contract, that was not possible in the prior to last month, so there is no way to compare year to year numbers.
With 771 condos for sale and 365 closed, there would appear, at least mathematically, to be a two-month supply, but there are several hundred of those under contract, revealing a true inventory of slightly more than one month in the condo market.
A balanced market, as defined the National Association of Realtors (NAR), would be a six-month supply.
What is surprising is that sales can continue to climb and inventory can continue to slide, both dramatically.
In such a scenario, it would seem that the volume of the sales would eventually devour the inventory to the point that the sales numbers would diminish. But the abundance of new construction is feeding the inventory thereby allowing for more sales as the market is reacting to the demand and producing more product.
So what can curb that growth?
With new construction abounding, the only obstacle to growth would be if there was shortage of any component associated with new construction.
In this case, it would be the building lots, the most vital ingredient to the construction recipe. Already in short supply, lots are being manufactured by the demolition of existing houses, not an unusual sight in the current cityscape.
With houses falling and prices rising, residents who are being displaced cannot afford the houses that are replacing the teardowns. So they move into the homes that will become tomorrow’s teardowns. There is no end in sight for that cycle.
Sale of the Week
Those familiar with the Nashville area’s residential Nashville real estate market know there is a scarcity of contemporary homes in the area, especially in the luxury home segment. Historically, Nashville has been a town steeped in tradition, which is reflected in its architecture.
Contemporary homes have occasionally worked their way into a subdivision here and there, and the results have been mixed at resale time. Some have been bought within minutes, while others linger forever, reminding observers why contemporary homes were rarely built.
Even though the Nashville real estate market has flourished for the past three years, particularly in the upper-end homes, with sales of 536 homes of $1 million or more in the past three years in Davidson County alone, according to Realtracs.
Yet with all of the activity in that spectrum, only 22 homes have sold for $3 million or more, with nine of those coming in the past 12 months.
Therefore, the home at 5335 Stanford Drive is a double outlier.
This home of contemporary design was listed by Mary Beth Thomas of Parks and sold in one day for $3 million. She also delivered the buyer.
Having a single agent involved in a transaction is not commonplace, it is understandable on this house as Mary Beth Thomas has become an expert in upper-end contemporary sales.
Thomas noted in her description that the home was designed for a fully integrated SieMatic kitchen with Miele coffee system and a Miele speed oven. SieMatic is a German manufacturing company founded in 1929 and will no doubt become more prevalent in Nashville.
With a heated saltwater pool, the 5,433-square-foot structure is set among the high-reaching trees on Stanford atop a 4.1 acre lot. The property was purchased in late 2013 for $1.5 million, a big number for that day, but it proved a wise investment for the owner.
Richard Courtney is a real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at [email protected].