Comments on: April 2010 Nashville Real Estate Market Analysis

By: Grant Hammond

Grant Hammond — Fri, 30 Jul 2010 03:45:16 +0000

Falcon2 - I realize that I am about to start a philosophical debate with one of the most knowledgeable people in the Southeast, but here goes nuth’in:

Of the 513 condo owners within these 15 buildings, I only show less than 12% of these owner units for sale on the MLS. The vast majority are in the Viridian. I understand the point that 27% of all condo owners could potentially be underwater if they were to sell, but that number is not relevant to how many are selling or are going to be selling in this market. I also realize that many condo owners would place their condos on the market if they could sell for more than what they paid, but isn’t that statement true for most any commodity?

I am certainly not disagreeing with the fact that if one had to sell their condo right now, in this market, they have a better than average chance of selling for less than what they paid in 2005-2008. I also agree that a certain percentage of the current 513 condo owners will run this unfortunate gauntlet over the next few years. But, I do not believe that 27% of the 513 condo owners will lose money when they do chose to sell their condos.

I am also not worried about any current negative or positive equity in any real estate asset at the moment. For the most part, banks have frozen everyone’s home equity lines no matter how much positive equity you may have. It’s a non-starter for me at the moment, at least, until banks free up credit lines in the future.

Comparatively speaking, I also agree that the downtown condo market has fared worse than the average residential property in Tennessee. However, this is to be expected as the core sample size is drastically different. The ability for a much larger sample size to normalize or avoid the extremes is a well documented economic principal. In turn, I would expect when properties begin to appreciate, the downtown condo market will appreciate faster than the average Tennessee property.

Newspapers, TV newscasts and the general public seem to enjoy pointing their fingers towards downtown, but the people who live downtown tell a much different story. The development of downtown Nashville as a residential haven is not over the hump, but give us another decade and all of the growing pains will be met with reward.

By: Falcon2

Falcon2 — Tue, 27 Jul 2010 18:41:52 +0000

Below is a front page NBJ article from Friday on condo sales, pricing and foreclosures. Buyers in Icon and Encore are now starting to cut their losses and sell for $50k or more less than they paid for their units. The Icon developer disputed that this is having an impact but here is a quote from a broker that is handling a short sale in the Icon:

As the agent for a short-sale in Icon in the Gulch, Storolis said any price reduction on the unit has been met in kind on new units by the developers, a partnership between Bristol Development Group and MarketStreet Enterprises. “The developers are watching us do this stuff, and they respond to us,” Storolis said

Read more: Downtown condos battle falling prices, resale values - Nashville Business Journal

http://nashville.bizjournals.com/nashville/stor...

By: Grant Hammond

Grant Hammond — Thu, 22 Jul 2010 04:26:59 +0000

The condo market has softened on the whole since the end of the tax credit, but the good buildings are still booking sales at higher than expected rates and prices. Since 4/30/2010:

The Adelicia has closed 7 condos and has 1 pending. The average price/ft is $358.27/ft. Wow. The Icon has closed 30 condos and has 13 pending. The average price/ft is $302.96/ft. Very respectable

Certainly, I don’t want to paint a rosier picture than reality in the downtown condo market. The Viridian, Encore, and Terrazzo sales and slowed significantly and I don’t even show a MLS recorded closing for The West End during this period.

By: Just Curious

Just Curious — Wed, 14 Jul 2010 00:41:04 +0000

Just curious if you've noticed any significant change in new condo prices since the tax credit expired on 4/30/10. Since buyers had until 6/30/10 to close, it seems inevitable prices will fall, but that may not yet be reflected in prices just yet. (Also, I thought I heard the time to close had been extended beyond 6/30/10 for contracts prior to 4/30/10, which may further delay the impact of the loss of the tax credit.)

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By: Grant Hammond

Grant Hammond — Thu, 20 May 2010 19:05:30 +0000

Thank you Buck. I am actually going to be posting a predictive weighted average mean price compared with volume of sales study today and it does appear that home prices in the Nashville market won't completely recover until May of 2011. However, if you try to time the bottom, you'll almost always miss it. I am recommending buying this Fall.

By: Buck Snyder

Buck Snyder — Thu, 20 May 2010 17:00:26 +0000

Fantastic market analysis. I appreciate that you boil these numbers down to their practical implications and make it available to everyone. But as a rule, reducing the numbers to this level only tells us more simply what has happened, not what will happen. Your analysis has helped me form my view on the market, and I look forward to a follow up down the road.