While the pace of the residential real estate market has slowed somewhat, particularly among higher-end homes, prices for housing less than $700,000 have remained historically high.
Developers continue to pay prices for property that would far exceed the market value of the home that rests atop the lot, pushing prices out of the affordable range for many in the city.
Habitat for Humanity of Greater Nashville President and CEO Danny Herron recently described the gentrification situation as “a scary time for a lot of people.” With his strong banking background, Herron knows his way around a profit and loss statement, so he understands that homebuilding begins with the cost of the land.
He cited the rising costs of the lots in Antioch as an example. The lots that Habitat for Humanity acquired in 2013 were purchased for $134,000 each, he says. In 2016, the lots were $153,000. Therefore, he added, it is impossible to build a home for profit in Nashville for $150,000.
Herron noted that the affordability crisis reaches into other areas of the community as the lack of opportunities for housing force many families to relocate so often that one in three children in Metro schools do not finish the year in the same school at which they began the year.
Home ownership is a cure to this malady, and Habitat for Humanity, with its homeownership program, lays the groundwork for developing strong foundations in the community. All candidates for Habitat for Humanity complete a course in personal finance and contribute hundreds of hours of sweat equity.
The 30 year mortgages are held, for the most part, by Habitat as it acts as a counseling service, as well as a bank. The vetting process and training help lower the delinquency rate to less than 3 percent among its homeowners. Habitat has a group that works with the buyers/owners after the purchase to help ensure that things continue to go well financially for the families.
All Habitat for Humanity homes come with a first right of refusal clause allowing Habitat to buy the homes back if they need to do so. In the past, the organization often opted to purchase houses, but in the last few years, the homeowners are selling the homes for profit in a profit sharing arrangement with Habitat.
The buyers of these homes are using traditional financing, and Herron says having those buyers improve the neighborhood.
While equity-building is extremely rewarding, the problem is that there are 800-900 applicants for the 40-50 homes Habitat can construct in any given year. And while values are rising, causing payments to rise, income is not in this sector.
As Herron notes, the safety net is getting tighter and tighter.
As rewarding as it is for the recipients, that joy is often shared with the volunteers that construct the house, and Danny Herron and his group insist that on the volunteer build days that “there are no broken rides, never a bad day, and that those building the houses get as big a thrill from swinging the hammer as they would riding the Flume Zoom.
Sale of the Week
Andrew Terrell, the wise-beyond-his-years leader in various Realtor organizations, has been involved in real estate since the day he was born. The son of the legendary Jim Terrell, principal broker of the Pilkerton Realtors group in Williamson County, the younger Terrell gained his real estate license as he was polishing off his college degree and quickly began listing and selling. He has established himself, blossoming into one of the top Realtors in the Midstate.
In short, the man knows how to price a house.
When he listed 313 Woodmont Circle for $699,000, chances are he prepared himself and his sellers for a mad rush to get into the house and for a multiple-offer scenario.
In the not-so-distant past, a delightfully renovated 2,620-square-foot home with a stunning owner suite, a sparkling kitchen with all of the right appliances and countertops, a screened porch, another cozy inviting outdoor area overlooking a precisely manicured back yard, with gleaming, glamorous hardwood situated on a private Green Hills street would have generated swarms of lookers and scads of offers.
Priced strategically at $699,000, many in the know in Nashville real estate circles expected it to sell for more than list price within a few hours.
It didn’t happen. In fact, it took three months to sell for $50,000 less than the asking price. How could that be?
Perhaps it’s like the Yogi Berra restaurant line: “Nobody ever goes there anymore – it’s too crowded.” It could be that buyers, exhausted from weeks of combing new listings and after making offers that were shunned by sellers in favor of exorbitantly higher offers, have become disgusted with the process.
Or is it that in the high $600,000 price range, the buyers prefer newer homes? Terrell described the home as having 1.75 stories – a new term as most houses are described as having either one, two or one and a-half stories – and consequently much of the square footage is in what appears to have been a converted attic. Maybe those don’t fly these days as the ceilings in the area formerly known as the attic can be a bit lower.
Whatever the reason, the market is slower. Although the eventual sales price of $640,000 – $250 per square foot – is a nice number for a 1.75-storied, 1941-era home, it could have fetched $725,000 in mid-2015 before the tall skinnies skipped into the neighborhoods.
Richard Courtney is a real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at [email protected].