The 2010 market in Nashville saw an average sales price increase, while units decreased.  The following is an analysis of the following cities in our region and how they compare with the Nashville market.  Cities include Louisville, Kentucky; Charlotte, North Carolina; Huntsville, Alabama; Knoxville, Chattanooga, Memphis, Tennessee; Indianapolis, Indiana; and, St. Louis, Missouri.

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Nashville’s 2010 Statistics

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Nashville compared with Charlotte, North Carolina Real Estate Statistics 2010

Nashville compared with Huntsville, Alabama Real Estate Statistics 2010

Nashville compared with Indianapolis, Indiana Real Estate Statistics 2010

Nashville compared with Louisville, Kentucky Real Estate Statistics 2010

Nashville compared with St. Louis, Missouri Real Estate Statistics 2010

Nashville compared with Knoxville, Tennessee Real Estate Statistics 2010

Nashville compared with Memphis, Tennessee Real Estate Statistics 2010

Nashville compared with Chattanooga, Tennessee Real Estate Statistics 2010

A Guest Blog By NABor Phil Miller

It hit me the other day when a young couple was sitting at my desk trying desperately to decide on whether to buy today or wait until things became financially ‘better’ for them.   There was a case to be made for them to wait, I will admit.  They understood inventory was great, prices were low, and that it was definitely a buyer’s market, in the area they were considering.  And most importantly, they absolutely loved the house.  But, when they saw the numbers, that’s when they said, ‘We can’t wait, we have to do it now.  We will swallow this short-term pill for the long-term gain.’  The short-term pain they were trying to avoid was coming off their funds for the 3.50% down payment.  Here’s a version of what I laid in front of them.

3 Years of Making Payments
4.750 – $37,558.44 in payments for $9,715 in balance reduction
5.750 – $42,017.40 in payments for $8,184 in balance reduction*
6.750 – $46,699.20 in payments for $6,850 in balance reduction**

*$4,459 more spent for $1,531 less in balance reduction  (net loss of $166.39 per month over 36 months)
**$9,140 more spent for $2,865 less in balance reduction  (net loss of $333.47 per month over 36 months)

5 Years of Making Payments

4.750 – $62,597.40 in payments for $17,003.53 in balance reduction
5.750 – $70,029.00 in payments for $14,475.63 in balance reduction*
6.750 – $77,832.00 in payments for $12,248.58 in balance reduction**

*$7,431.60 more spent for $2,527.90 less in balance reduction  (net loss of $165.99 per month over 60 months)
**$15,234.60 more spent for $4,775.53 less in balance reduction  (net loss of $333.50 per month over 60 months)

Ok, let’s say you can totally handle a Principal/Interest payment of $1,297.00 to start.  Guess what, you get a $248,500 loan for that at 4.750.  More house for the same money as $200,000 at 6.750.

There you have it.  If you are considering a home and need a mortgage, consider the numbers along with the other factors that you already agree are strong buying signals.  Rates are going up from here.

Brentwood, Tennessee has long been known as the Nashville area’s most costly area.  The average annual sales prices over the past 10 years have easily been two to three times more than the area’s mean.  In 2010, while Franklin and Nashville price increased, Brentwood took another dip down, making it even a better opportunity to move into the area.

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Home prices fell 16% from the 2007 market peak.  The good news is that 2010 brought the most unit sales since 2008, with single family homes sale spiking 19% since last year.

Obviously, 2010′s buyer’s knew that the year brought them to opportunity to move into or move up their home at the lowest price since 2005.

Translation and Implications:

• Sellers who are not in distressed situations who purchased their homes between 2006-2009 may need to sit tight if they don’t want to bring money to the table.
• Buyers who couldn’t afford the Brentwood price tag should buy in early 2011 before interest rates rise.  With Nashville and Franklin (along with numerous regional cities) hitting the bottom in 2009, Brentwood’s bottom may have been reached in 2010.
• New construction opportunities may be limited with few exceptions, but sellers who purchased before 2005 looking to resale and perhaps “move up” offer potentially great opportunities for buyers.
• This may be the lowest prices we see in Brentwood ever again.  Yeah, dramatic statement, but if trends hold true, this may be your chance!

*Statistics based on Middle Tennessee RealTracs MLS single family residential closings in Areas 1-8.  Figures include all of Davidson County including cities like Madison, Goodlettsville, Hermitage, Belle Meade, Antioch, Whites Creek, Joelton, Pegram, et.al. Numbers do not include land, condos, multi-family or commercial.  Numbers do not include closures that may be entered in the MLS as closed between 1/1/2011 and 1/5/2011 which would still be considered in the 2010 numbers.

Nashville’s housing market is potentially in its recovery according to 2010′s closing statistics*.  A 10-year historic analysis shows the there is a 28% difference from the 10 year market’s lowest price and highest price.  In the recent market, the height of the market hit its peak in 2007 with an average sales price of $228,714.

Click to enlarge. The orange bars represent AVERAGE sales price. The yellow line with circles represent TOTAL unit or home sales.

The Nashville market did not hold parallel with many national markets in the recent recession.  Nashville’s market hit recent bottom in 2009 with an average sales price of $199,329.  That’s a decrease of  12.8% from the market’s height.  2010 brought prices rising 1.785% from 2009′s figures.  Nashville’s market did ebb-and-flow with regional mirror markets (Louisville, Charlotte, Huntsville…see recent blogs following this entry for those exact comparisons).

Unit-wise, fewer homes sold in Nashville than ever in the 10 year history.  In 2001, 7949 single family homes sold.  Ten years later, 5552 homes sold, 30% less than at the decade’s start.  Unit sales hit their 10 year peak in 2006 with 10,767 sales.  2010 brought a 48.4% decrease in units from the top of the 10 year measurement.

Translations and Implications:

• A buyer who purchased his home in 2007′s peak market paying, for example, $275,000 would now expect to see a closing price of $244,750 if he were to sell it today.
• A seller who is currently on the market must have an absolutely accurate price with so few buyers seeing the closing table.
• With a potential market entry of several foreclosures in 2011, prices may slip a portion more in 2011 with unit numbers increasing as buyers enter the market for that “good deal.”  Sellers must realize in the 2011 market, they are competing for market attention with (1) foreclosures, (2) short sales and (3) well-priced homes.
• Buyers in Nashville proper can’t expect the “good deals” their peers are seeing in Florida, Nevada and California.

*Statistics based on Middle Tennessee RealTracs MLS single family residential closings in Areas 1-8.  Figures include all of Davidson County including cities like Madison, Goodlettsville, Hermitage, Belle Meade, Antioch, Whites Creek, Joelton, Pegram, et.al. Numbers do not include land, condos, multi-family or commercial.  Numbers do not include closures that may be entered in the MLS as closed between 1/1/2011 and 1/5/2011 which would still be considered in the 2010 numbers.

Realtor Magazine’s “Residential Market Outlook” leaves us all optimistic.  While there are no promises of huge leaps and bounds into an amazing financial situation in the US, experts predict a growth from 4.8 million dollars in existing residential sales to 5.2 million.  That’s enough of an increase to notice a difference.   Good news for buyers is that prices are not slated to increase much.

Read the full article here.

2010 was certainly a head-scratching year for many sellers and agents.  If we all only had a crystal ball, life would be so much easier.  Here’s the fact on the most mis-priced zip codes in the 2010 marketplace.  Davidson County’s more than 25 zip codes were measured by creating the list to sales price percentage from 2010 RealTracs MLS statistics (up to the date of this blog’s posting).  The top unit sales areas only were included in the report with a minimum of 155 home sales in the zip code.  While many of Nashville’s zip codes stayed on pace with the normal statistics of list to sales price ratio, the same did not hold true for seven Davidson County zip codes.

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Based on single family residential units (SFRU) successfully closed.

#7:  37217.  The area near the Nashville International Airport and Priest Lake with 173 SFRU sales

#6:  37209.  A diverse zip code covering the west-side’s Sylvan Park, Sylvan Heights, Charlotte Park, The Nations and Brookside with 279 SFRU sales

#5:  37207.  A geographically huge zip encompassing Bordeaux, North Nashville, Cleveland Park, McFerrin Park, Highland Heights and Trinity Heights with 241 SFRU sales

#4:  37115.  All of Madison, just north of Nashville with 257 SFRU sales

#3:  37138.  All of Old Hickory, northeast of Nashville with 155 SFRU sales

#2: 37205.  Davidson County’s most elite zip code including Belle Meade, West Meade, Brookmeade, Cherokee Park and Richland with 243 SFRU sales

#1:  37215.  An extremely popular part of Nashville known as Green Hills with 213 SFRU sales

As the previous blog speaks of, sellers in other zip codes got the pricing right.  The most intriguing part is that the #1 and #2 zips who got it completely wrong represent the zip codes with the most educated home sellers, with 70% of them hold a bachelor’s degree or above.  Across town, home sellers in an area where only 29% have a bachelor’s degree or above, were almost perfectly priced.    Three questions.  Does this mean that sellers who have advanced degrees believe they can price their homes better than real estate professionals? Does this mean that real estate professionals simply will follow the pricing strategy of a statistically more educated seller?  Does this mean that a more educated seller has more “wiggle room” in their price?  I’d love to hear your thoughts.

Lessons Learned:

An smart listing agent’s strategy is in two parts. (1) An agent must understand that you don’t price a home on a continuum based off a flat curve.  Your agent must price your home based of depreciation or appreciation factors on a bell curve, coupled with a strong supply-demand model understanding.  (2) Most difficult, an agent must be able to articulate the accurate price for your home without caving in to the “what ifs” that we all think about when selling our homes.  There are technically three prices; what the seller is willing to sell it for, what the buyer is willing to pay for it and what the appraiser will tell the bank it’s worth.  My job and any agent’s job is to help you understand all three prices and get your house IN the market, not ON the market.

Analyzing Davidson County’s 25+ zip codes and where homes sold in 2010 based on list price to sale price percentage/ratio, the results may be most shocking.  Nashville’s two zip codes which represent homeowners with the highest education level (according to the U.S. Census data) came in dead last (that blog will be released soon).

Surprisingly, Hermitage sellers had the best pricing strategies, receiving an astonishing 97.8% of list price.  Hermitage had close to the top unit sales, too, second only to the south Nashville area, with 339 total single family residential unit (SFRU) successfully closed.  Needless to say, Hermitage was the closest to the real estate market over all.  Kudos to all the rest.  [Note:  Data based off of up to the date of this blog post's RealTrac's MLS data starting January 1, 2010 on Single Family Residential Unit (SFRU) sales.]

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#6:  37204.  Often confused with Green Hills proper 37215, this west-side hot spot includes Oak Hill, Marengo Park and Lipscomb (146 SFRU sales)

#5:  37206.  Lovingly known to the locals as the true East Nashville, including Lockeland Springs, Eastwood Neighbors and Edgefield (328 SFRU sales)

#4:  37211.  South Nashville including Antioch, Woodbine and Glenrose (449 SFRU sales)

#3:  37216.  Inglewood proper (214 SFRU sales)

#2:  37221.  Bellevue (358 SFRU sales)

#1:  37076.  Hermitage proper (339 SFRU sales)

Lessons Learned:  Anything close to the three percent of asking price is historically in-line.  With the top two representing the extreme geographic east and west of Davidson County, it’s holds true that location doesn’t dictate price accuracy.  Being prices within the market’s best zone is essential for a successful, comfortable closing price.  Next up, we look at the serious lessons learned with Davidson County’s most mis-priced homes for 2010.