Tuesday, December 22, 2009

US STOCKS-Wall St advances on optimism about housing sector




By Leah Schnurr

NEW YORK (Reuters) - The S&P 500 logged another 14-month high Tuesday as stocks rallied on a surge in existing home sales, which indicated more stabilization in housing and boosted optimism about the economic recovery.

Housing stocks led the way up with the Dow Jones U.S. home construction index up 3.9 percent following data that showed U.S. existing home sales rose in November at the fastest pace since February 2007.

Shares of D.R. Horton Inc ( DHI - news - people ) rose 3.8 percent to $11.15, while Toll Brothers Inc ( TOL - news - people ) gained 4.5 percent to $19.21.

"We definitely had a positive reaction off the housing numbers," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

Any sign of stabilization in housing lends a big boost to investor sentiment. It was the fallout from that sector's downturn that recently drove the economy into its worst recession since the 1930s and propelled the U.S. unemployment rate above 10 percent to a 26-year high.

"The housing numbers were very, very strong," Detrick added, "and that's what we've been seeing for several months."

For entire article, click here.

Sunday, December 20, 2009

Glut of shadow properties could hurt housing prices

Expert says 'Pipeline of default coming'
By Alejandro Lazo and Tiffany Hsu • LOS ANGELES TIMES • December 20, 2009


A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the U.S. housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.

A variety of measures to keep discounted bank-owned properties off the market — including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford — has helped to increase a backlog of so-called "shadow inventory" by 55 percent in the year ended Sept. 30, according to a report Thursday from First American CoreLogic, a Santa Ana, Calif.-based real estate research firm.

These shadow inventory properties are homes that have not been tallied into official inventory numbers tracked by Realtors and other real estate professionals. They include homes taken back by lenders through foreclosures and similar actions, as well as those homes where borrowers are at least 90 days delinquent on their mortgage notes. A year earlier, the pending supply of homes not yet up for sale totaled 1.1 million.

A debate among real estate professionals and market watchers has emerged as to how big an impact such shadow properties will have on housing prices and sales if they emerge as part of the total mix of homes for sale next year.

Some argue that lenders, concerned over potential losses, will spread out the pace of repossessions to avoid depressing the market. Others say efforts by the government won't be able to keep up with the sheer number of defaults brought on by unemployment and depressed home values.

"One of the key questions is the timing, and a lot of the timing issues are really related to the administration's HAMP program," or Home Affordable Modification Program, said Sam Khater, a senior economist for First American. "If many of the loans that are delinquent are able to be successfully modified, and those loans perform, then that should alleviate this issue of the pending supply and shadow inventory."

Such success is proving elusive. Data released last week by the federal government showed banks are doing poorly turning the growing number of temporary mortgage modifications into permanent ones. Only 31,382 of more than 700,000 mortgage modifications under the federal program had been made permanent by the end of November.

"Our forecast is that (home) prices will drop," Khater said. "We are basically expecting that the program will continue to proceed as it has in the recent past; there might be a slight improvement, but it is a drop in the bucket relative to the size of the pipeline of default that is coming up."

In California, home prices and sales have shown steady improvement in part because foreclosure properties have made up a smaller slice of the for-sale housing mix in recent months.

LINK TO ARTICLE

Monday, December 14, 2009

Comparison of prices shows effect of recession



Brentwood, Franklin and Spring Hill comparables all show declines
By Nancy Mueller • FOR WILLIAMSON A.M. • November 27, 2009

The average price of a home sold in Williamson County last month was $385,665. That's $65,807 less than the average sales price two years ago, according to the Williamson County Association of Realtors.

Sellers do not see such a statistic as good news, but they can take comfort in the fact that the average price is still higher than the $363,267 average of 2005.
At the same time, there's no doubt that buyers these days are getting more for their money than they have in years.

Some cases can be found by looking back at a story that was published in Williamson A.M. in July 2007 (before the recession really hit here), which compared home prices in Brentwood, Franklin and Spring Hill. The point of that story was to see how much more home you could buy for the same money in Spring Hill and Franklin compared with Brentwood by looking at the prices of comparable homes in each community.

Today, those price points are an interesting place to begin comparing what you can get for the money in today's market; in many instances buyers can find asking prices steeply reduced from prices two years ago.

Differences are noticeable

That story from July 2007 began by describing a house for sale in the Brentwood subdivision of Fountainbrooke. It was 4,127 square feet, with five bedrooms, 4½ bathrooms and a three-car garage. The price was $684,900. Someone who is shopping for a similar type home in Fountainbrooke today will really see a difference in prices. There are two homes for sale there now that are very close to that one in size and amenities, but they cost thousands less:

• There's 403 Hollow Springs Court, a 3,944-square-foot home built in 2002 and priced at $619,900. It is a 1½-story home with four bedrooms, 3½ bathrooms and a three-car garage.
• There's also 2204 Saint Josephs Court, a house with 4,876 square feet, built in 2005 and priced at $625,000. This home is a two-story traditional, with four bedrooms, 3½ baths and a three-car garage.

Similar homes to these can be found in the Franklin subdivision of Carlisle. In the July 2007 story, we mentioned one that was for sale in this neighborhood for $594,990. It had 4,022 square feet, four bedrooms, 3½ bathrooms and a three-car garage. Go to Carlisle today and you can find eight homes for sale, including two comparables to the one in that story. They are both almost $100,000 less in price:

• There's 1108 Stone Mill Lane, listed for $499,000. It has 3,950 square feet plus an additional 750 square feet that is unfinished over the three-car garage. That unfinished space is plumbed for a half-bath, too. The house, built in 2004, has four bedrooms, 4½ bathrooms.
• Also available in Carlisle today is 1204 Vintage Grove Lane, priced at $499,900. This 2002 home has 5,479 square feet, five bedrooms, 4½ baths and the three-car garage.

Spring Hill sees a dip

Home prices get more affordable as you travel farther away from Nashville, so some of the best home prices in Williamson County are found in Spring Hill.

The Wades Grove subdivision is a good neighborhood to shop for homes in the 4,000-square-foot price range in Spring Hill. In 2007, there was a 4,128-square-foot house with five bedrooms, 4½ baths and a two-car garage listed for $459,900.

A homebuyer looking at that neighborhood today would find 13 homes for sale, including two comparables with substantially lower list prices than two years ago:

• 2021 Keene Circle, 4,200 square feet, built in 2006, is listed at $295,000. It has five bedrooms, 3½ baths and a two-car garage.
• 2044 Keene Circle, 3,490 square feet, also built in 2006, is listed at $324,900. It has five bedrooms, three baths and a two-car garage. Both of these homes are the highest-priced homes for sale in Wade's Grove (as of Nov. 12).

Wednesday, December 9, 2009

GREATER NASHVILLE HOME SALES INCREASE MORE THAN 50 PERCENT IN NOVEMBER




There were 1,973 home closings in Greater Nashville during November, representing a 58.7 percent increase from the 1,243 closings reported during November of 2008. And, there have been 19,571 closings so far in 2009, which is 14.3 percent lower than the 22,824 closings for the same period in 2008.

The median residential price in November of this year was $158,500 and for a Nashville condominium the median price was $144,400. That compares with median prices of $165,500 and $150,000 respectively in November of last year.

Inventory is down to 22,528, compared with 23,467 in November of 2008. You can click here for a copy of the news release with more detail on home sales for November. And, you can click here for access to historical home sales data available on the GNAR website.

Saturday, December 5, 2009

Big Bargains at West End Condos




There has been much speculation about the auction of the luxury condos on West End and 31st, but no one really knew what to expect. These are beautiful condos with large living spaces and upgrades throughout. Like a lot of people, I was surprised with how low they went.

2 bedrooms with great downtown views went from $300K to $365K. For example, a few on the 4th and 5th floor (with views of West End and the Nashville skyline) went from $310K (previous asking price was $740K) to $330K (previous asking price was $765K), which translates to about 60% discounts.

There were only about half as many bidders that braved the cold today than at the heavily hyped Terrazzo auction a few weeks ago. The Terrazzo saw their list prices drop around 30% at their auction. Many have said the Terrazzo buyer is different(hip, possibly younger) than the West End condo buyer (traditional, more mature), but most of the bidders at both auctions had one thing in common - they were all looking for a deal.

All 5 of the West End 1 bedrooms sold from between $227K to $295K. Only about 7 of the 3 bedroom units and 3 of the 2 bedrooms (all on the back side) went unsold. I counted a total of 30 sales. Of course, some of the ones that were "sold" may not close. But those that placed a winning bid got a very nice deal today.

For more information, contact Jeff Fulmer at 615-545-8611 or jeff@jefffulmer.com

Friday, December 4, 2009

Things To Do This Weekend




If you are looking for something to do this weekend and have any interest in the downtown Nashville condo market, here are a couple of suggestions:

1. If you are more in the mood to browse than buy, you may want to check out a few of the units on the tour of homes at The Encore this Saturday from 1 to 4 at 301 Demonbreun in "SoBro." Units start in the $200,000 and go up. Click here for more information.

2. As I've mentioned here several times (see prior blogs), The West End is having their auction this Saturday. You need to be pre-registered by today (Friday) if you intend to bid. These high end units start in the $300,0000 for a one-bedroom and go up into the $700,000s for a two bedrooms, although it's anticipated that prices will be coming down dramatically tomorrow. If you would like more specifics, click here for more information on the auction.

If you decide to go to either event, let me know. Hope to see you there!

Tuesday, December 1, 2009

West End Condo's - On the Auction Block


This Saturday, the West End condos will take their turn on the auction block. These luxury condominiums will have to take much lower prices in order to move their high end units. Just a couple of weeks ago, the Terrazzo managed to auction off 30 units at an average of 33% off list price. Now the Terrazzo has re-set their prices to reflect the new pricing structure. West End has not hyped their auction to the extent the Terrazzo did, which may mean even better opportunities to bidders.

Below, I have reprinted a recent article in the Nashville Business Journal on the upcoming auction. If you are interested, you can scroll down my blog for more articles on the Terrazzo, the West End, and the Nashville condo market. If you would like more information on the West End auction, you can go to their web-site here. You can also contact me if you have other questions and/or would like pre-registeration information by going to my web-site.



After Terrazzo, all eyes on West End
Monday, November 23, 2009
Nashville Business Journal - by Eric Snyder Staff Writer

Days after Saturday's auction generated 27 sales inside the Gulch's Terrazzo condominium, attention is now turning to the auction of 45 units in The West End Luxury Condominiums on Dec. 5.

Twenty-one units were sold to the highest bidder Saturday, at an average square-footage rate of $235, an average of 62 percent of original list prices.

Grant Hammond, a real estate broker with a focus on condos, had said he was monitoring the auction to gauge the viability of the downtown Nashville condo market. Monday, he said he was encouraged by what he saw.

“I feel like that downtown living is probably a little more viable than it was the day before the auction,” he said.

Though not all of the 35 units on the block sold Saturday, Hammond said 27 sales is still a strong figure — particularly because Terrazzo units are not eligible for FHA loans, thereby limiting the number of potential buyers.

“The auction itself has proven that there is $7.3 million ready to move in one day, in one building,” he said, referring to the total value of sales Saturday.

While other condos may be forced to lower their list prices following Saturday's auction, Hammond said that won't be based on Saturday's average rate, which he called a “one-day anomaly.”

Hammond likened Saturday's sale to a bon-fire — what comes next, he said, will be a “slow burn” that won't require such drastic cuts to square footage rates.

What will have a bigger impact on area prices, he said, is when Terrazzo revises its list prices for remaining units. Crosland Tennessee President Bill Barkley, developer of Terrazzo, acknowledged Saturday that list prices will be revised downward.

Hammond said those revisions will have a larger impact because, unlike a one-day bon-fire, they will be informing the opinions of area buyers and realtors as the new prices remain posted on the local MLS for the weeks and months ahead.

The upcoming auction of The West End units will be conducted by Jerrold Pedigo Realty. Owner Jerrold Pedigo said that, though he has hasn't fully explored the data resulting from Saturday's auction, there may not be many conclusions to draw on The West End auction as a result.

“I think the Terrazzo and The West End are two different products,” he said.

A number of units will be sold at The West End without a minimum reserve, though how many — and what the reserve will be for the remaining units — has not been finalized, Pedigo said.

Like the Terrazzo auction, there will be a possibility of ending the bidding early.

“That's the case of most every auction you'll see,” Pedigo said.

That The West End will sell all 45 units seems far fetched to Hammond, who estimated that 20 of the units — some of the largest in Nashville — will sell if they can be bought, like Terrazzo units, for 33 percent discounts.

And while the Terrazzo auction drew 250 people and TV cameras, Hammond said he hasn't seen the same level of marketing for The West End auction that would draw such a crowd. He said he spoke to some potential buyers Saturday who hadn't heard of The West End.

“It's been an anecdote to the Terrazzo auction,” he said

Friday, November 27, 2009

Upside-down rate goes inside out

By J.R. Lind

Posted on November 24, 2009 at 12:43 pm

First American CoreLogic released its quarterly negative-equity report today, saying 22.6 percent of the nation’s mortgages as underwater — far lower than the second quarter. An encouraging sign on its face, except First American revised its methodology for determining when a mortgage does upside down.

[The new] proprietary model … factors in loan amortization and utilization rates for home equity lines of credit (HELOC), providing a more precise view of “underwater borrowers.”

Under the older methodology — which didn’t use amortization or lines-of-credit data — the underwater rate would have been 33.8 percent.

In Tennessee, things are much better by comparison. The report shows 13.2 percent of Tennesseans in a negative-equity situation. That is, however, higher than most of the eight states bordering Tennessee; only Georgia and Virginia were higher, both hovering near 24 percent (no data was available for Mississippi).

The change in method paid big dividends for the Nashville area, too. First American reported 9.84 percent of area mortgages as underwater. Had the old method been used, the number jumps to 26.9 percent, up from the second-quarter’s 25.4 percent.

Wednesday, November 25, 2009

Nashville's Terrazzo lowers prices on 30 condo units




Wednesday, November 25, 2009
Nashville Business Journal - by Eric Snyder Nashville Business Journal

Saturday's auction of Terrazzo condo units was billed as a way for the public to decide what fair market value is for its units.

Leading up to the auction, Crosland Tennessee President Bill Barkley, Terrazzo's developer, didn't offer specifics on how rates set at auction would influence prices going forward. True to billing, however, they appear to have set the condo tower's new fair market value — prices for an additional 30 units inside Terrazzo have been reset to fall neatly in line with those set at auction.

The 30 units represent about 40 percent of the condo's unsold stock, including Saturday's sales figures. The building features a total of 117 units.

Before bidding was halted Saturday, 21 units were sold at rates between $213 per square foot and $269 per square foot (six additional units were sold Saturday using auction rates).

The post-auction pricing rates range from $213 per square foot to $266 per square foot, keeping with the roughly 33 percent average discount from list price established at auction.

One of those who bought a unit at Saturday’s auction was Ray Hensler, president of Market Realty Advisors and developer of The Adelicia condo in Midtown, who said sticking with the pricing set at auction is a smart move for Terrazzo.

“They’re being very realistic about the current plight of the market and capitalizing on the success and momentum of the auction. After this next batch they’ll be approaching 70 percent closed and I think that changes everything for them,” he said.

Keeping the prices at auction rates — as opposed to tacking on a several extra bucks per square footage — is also a smart move, Hensler said.

“Momentum is everything. Right now they have it and nobody else does. Why risk it?” he said.

Hensler said he bought a unit Saturday as an investment.

“They were our main competitor so I know their product and I know their upscale buyer,” Hensler said. “The building is gorgeous ... the only drawback they ever had was pricing. Now they've made that their strongest feature.”

For the revised units, prices now range from $199,000 for an 891-square-foot one-bedroom, one-bath unit to $399,000 for a 1,654-square-foot two-bedroom, two-bath unit.

Though it may be awhile before prices at Terrazzo return to levels over $300 per square foot, Hensler said that day will come.

“Once they push past 70 percent, even more buyers will jump in, especially as other buildings sit at or below 50 percent,” he said. “And although it'll be a few years before they see the original pricing again I think they'll jump back to at least $300 a foot as soon as they sellout ... probably a year from now.”

Sunday, November 22, 2009

Terrazzo buyers get deal at auction



Prices could set tone for market
By Naomi Snyder • THE TENNESSEAN • November 22, 2009


Buyers at an auction for the $68 million luxury Nashville condo building Terrazzo walked away with 27 units Saturday at prices about one-third lower than previous buyers in the development have paid.

The sale had been much anticipated as a way to reset prices in the future for the nearly stalled condo market downtown.

The 117-unit, glass-walled Terrazzo building in the Gulch had sold just 15 units since sales started in March.

"I thought the auction was good because of the economy. We got good prices,'' said Nanda Kemkar, who is married to a Cookeville doctor and bought a one-bedroom condo for $243,000 on Saturday.

The sale had been much anticipated as a way to reset prices in the future for the nearly stalled condo market downtown.

The 117-unit, glass-walled Terrazzo building in the Gulch had sold just 15 units since sales started in March.

"I thought the auction was good because of the economy. We got good prices,'' said Nanda Kemkar, who is married to a Cookeville doctor and bought a one-bedroom condo for $243,000 on Saturday.

She said they intend to rent out the condo until they retire in a few years, at which point the couple plans to move into the Terrazzo. "When we retire, we need a nice city,'' she explained.

The developers plied the crowd at the Renaissance Nashville Hotel with Jack Daniel's glazed ham and jumbo shrimp in a room decorated with a glass sculpture of the Terrazzo.

Six sales negotiated

The room erupted in applause after the first winning bid. But after a few more sales, the prices began to fall and auctioneers halted the bidding after the 21st sale, a one-bedroom that went for $190,000, almost half off its asking price.

Then, auctioneers negotiated another six sales on the auction floor with individual buyers. The developers had put 35 condos up for sale. The average sale price Saturday was $233 per square foot.

"I think we had a great turnout,'' said Bill Barkley, president of Crosland's Tennessee division, which is Terrazzo's developer. "It's a real indication that the momentum is back in the market. That's what we wanted to see.

"This market is not overbuilt. We are in a rebuilding climate with our economy, and it's only going to get better."

Crosland had hired auctioneers Accelerated Marketing Partners, a firm with offices in Boston and San Francisco, which has conducted similar sales across the country to jump-start stalled condo purchases


"The bidders got a good price, '' said Jon Gollinger, the chief executive officer of Accelerated Marketing Partners. "But we can live with it."

Betsy McIness, who bought a one-bedroom condo in the Terrazzo in April with her daughter for roughly $373,000, said she was initially fearful of what the auction would do to the value of her condo.

But she said Saturday she was happy that more people will be moving into the building, and she thinks condo values eventually will go back up.

"It's a shame we had to do it like that,'' she said. "I'm happy they didn't go for half off. I'm thinking my daughter is going to be able to hold onto it for a few more years."

Several people said they showed up at the auction just to see how it went. Even former Sen. Bill Frist of Nashville showed up for the auction, although he said he was just curious and didn't bid.

Auction has impact

Appraiser Richard Exton said the auction probably will affect prices for condos going forward.

"Obviously, the market is showing some declines, and this is probably further evidence," he said.

The West End Luxury Condominiums, another condo project where sales have been coming in at a trickle, is due for its own auction of up to 45 units in two weeks, on Dec. 5.
The Terrazzo has an outdoor pool, a 24-hour concierge and has environmentally friendly LEED-Silver certification from the U.S. Green Building Council.

Developers had lined up financing for the auction with SunTrust Mortgage, MetLife Home Loans, CityLife Lending Group and Bank of America. The lenders were offering loans for as little as 3 percent down for owner-occupied units.

Thursday, November 19, 2009

West End Condos Auction





Because of the upcoming auction (see blog below and/or link), I stopped by the West End condos today to see them for myself. I have to say, I was impressed. The quality of the construction seemed top notch.

Fireplaces and whirlpool baths make these condos very comfortable living spaces. Many have long entry ways with travertine floors. The two and three bedrooms are actually big enough to get turned around in. Big square patios and floor to ceilings windows help make the space feel even bigger. About half of the units have views of the downtown. From the 6th and 7th floors to the 3rd floor, all views are unobstructed.

The various floorplans are named after French impressionist painters (at least the ones I recognize). The units right on top of each other will match, so 605, 505, 405,305, and 205 will all have the floorplan ("Chagall"). However, each unit is unique with distinctive granite, cabinets, and flooring combinations.

These are expensive units, with asking prices for 2 bedrooms ranging from $525,000 (or $279 a square foot) to $760,000 ($354 a sq. foot) and 3 bedrooms going for $695,000 ($299 square foot) to $948,000 ($375 a sq. foot). One bedroom units are available on the 8th floor for $385,000 ($263 square foot) to $595,000 ($383 a square foot).

Less than 10 units have sold, which is why they are going to auction....What prices the auction will bring on December 5th is anyone's guess. This is not an "absolute" auctions so the developer can decide not to sell them if the prices don't meet minimums. However, they do plan to sell all 45 units, so this could be a rare opportunity to get a great deal on a beautiful condo on West End.

To participate in the auction, you must be pre-registered in advance. Bring a cashier's check for $5,000 and be prepared to put 5% down. Closings will be by the middle of January. If you have any questions or would like to look at the condos, feel free to contact me at 615-545-8611 or jeff@jefffulmer.com. You can also find me through my web-site, http://www.jefffulmer.com/.

Tuesday, November 17, 2009

West End luxury condo tower to auction 45 units


Thursday, November 12, 2009
Nashville Business Journal - by Eric Snyder Staff Writer



Even more condo units will soon be sold at auction.

Forty-five units at John Coleman Hayes' The West End Luxury Condominiums will be sold at auction Dec. 5.

The condo tower, located at West End and 31st Avenue, features 72 units. Since opening in April 2008, five have sold.

Current list prices for the units range from $385,000 to $948,000. The auction will include five one-bedroom units, 25 two-bedroom units and 15 three-bedroom units.

The average square footage of offered units is 2,100 square feet.

Units at The West End evoke single-family homes, featuring tall ceilings with crown molding, fireplaces, oversized bathrooms and large closets.

“This is an unprecedented opportunity to purchase superior, quality condominiums in one of the most desirable, hard-to-acquire locations in Nashville,” John Coleman Hayes said in a news release.

“We believe the Vanderbilt/West End area provides the highest potential for increased property values over the next few years of any location in town.”

The “unprecedented” claim may be suspect. Thirty units at Terrazzo in the Gulch will be sold at auction Nov. 21, which will be the first auction of this type in Nashville. Minimum asking prices at the Terrazzo auction hover around 50 percent of original list prices.

Some of the West End units will be sold with no minimum bids required, Hayes said. How many, as well as minimum pricing on other units, is still being finalized, he said.

However, Hayes said he sees only “limited” overlap between interested buyers at The West End and Terrazzo.

“It's just a totally different product,” he said. “We encourage and invite any interested buyers to compare our product with any other condo in town, whether it's for sale now, whether it's for auction now or whether it's now sold out.”

Dwight O'Neal, president and managing partner of RealtyTrust Auctioneers, agreed that The West End and Terrazzo offer different products. However, he said he would not try to sell 45 units in one day, as finding 75 new condo buyers in a matter of weeks may be a tough sell currently.

“My personal opinion is, you've got a market that up until this point has not been able to sustain itself” or close sales at a high rate.

O'Neal said he would dole out The West End units ten at a time for several months, allowing time to market the properties to potential consumers. Such a method, he said, would allow the owners to back away if the units were not fetching desired prices.

Hayes said he was working to organize the auction before Terrazzo's was announced.

“We would've liked to have been first,” he said. “We were working on bank approval, and apparently we got beaten out.”

Jerrold Pedigo Realty, of Murfreesboro, will run the auction.

O'Neal said he saw neither Terrazzo nor The West End having an advantage for being first or second; however, he said they may have an edge over future condos that go to auction.

“The first people in will get to take advantage of the small pond out there,” he said.

Jerrold Pedigo said the format of the auction is still being determined. For instance, while the condos could be auctioned off unit-by-unit, the auction can also be structured on a square-footage basis. In that model, every bidder bids their maximum rate per square foot each round, with the winning bidder selecting their preferred unit.

“Each time there’s a round of bidding, it encourages you to bid the best you can, because your unit is up for sale right now,” Pedigo said.

Monday, November 16, 2009

Realtors: Housing, economy outlook hopeful




Monday, November 16, 2009
Nashville Business Journal

The housing industry and the overall economy appear headed for a sustainable recovery, according to the National Association of Realtors.

The organization says housing has been boosted by the expansion of the federal tax-credit for home buyers through the middle of next year.

“In fact, the credit is working better than first projected — it now looks like we’ll have 2.3 million to 2.4 million first-time buyers this year,” says Lawrence Yun, NAR chief economist.

NAR says first-time buyers accounted for a record 47 percent share of home sales during the past year, up from 41 percent in a 2008 survey. The share has risen steadily from 36 percent in 2006.

Existing-home sales are expected to total 5 million in 2009, a gain of 2 percent from last year. NAR forecasts such sales to rise 13.6 percent to 5.69 million in 2010.

“A steady drawdown of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy,” Yun says.

New-home sales are projected at 397,000 this year and 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 in 2009 and grow to 752,000 in 2010.

The 30-year, fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year, NAR predicts.

Tuesday, November 10, 2009

Nashville home sales rise for first time in 3 years


Nashville home sales rise for first time in 3 years
Incentives push Nashville-area market to first gains in 3 years
By Naomi Snyder • THE TENNESSEAN • November 10, 2009



Nashville-area real estate agents applauded last week when Congress extended a series of tax incentives designed to boost home sales, and on Monday, the latest monthly numbers showed the area has already seen sharp gains in sales — particularly among first-time home buyers.

In fact, the Nashville real estate market saw its first increase in home sales in three years in October, when the number of completed deals jumped 23 percent compared with a year earlier as a result of the federal government's aid.

Agents attributed the double-digit increase to more first-time buyers scrambling to take advantage of what had been an expiring $8,000 tax credit, which Congress has now extended into next summer. Congress also added a new $6,500 tax credit for others who have lived in their current residence at least five consecutive years in the past eight. If they buy a new home before June 30, they get the smaller tax break. Real estate sales professionals hope the new incentives keep sales rolling and prop up the market over the winter, when the pace of sales normally slows.

"The phone calls I'm receiving, the open houses, I just feel like there is so much more positive energy right now than a year ago,'' said Christie Wilson, president of Wilson Group Real Estate Services in Nashville. "A year ago, it was unnerving how scared the marketplace was. Right now, everyone is cautiously optimistic. That wasn't true a year ago."

The Greater Nashville Association of Realtors also reported that the median sales price for a single-family home in October stayed the same as the past three months — $160,000 — or a 6 percent decline from a year ago. Realtors said that was a sign that first-time home buyers, who tend to buy less expensive homes, are continuing to affect prices. The median price for a condominium sold was $144,000, down 5.6 percent from the same month a year earlier.

Tax credit is popular

Tennesseans in particular seem to love the federal tax credits.
The U.S. Government Accountability Office said last month that Tennessee had the fifth-highest rate per capita of people taking advantage of the first-time home buyer credit, with 35,836 people taking $256 million worth of tax breaks as of Aug. 22.

"That obviously is the driving catalyst" for home sales, said Mike Nichols, president of the Greater Nashville Association of Realtors. "We don't know where the bottom is for first-time home buyers."

People such as Julia Crownover, a 23-year-old public school teacher, said they wanted to buy a house, but the tax credit pushed them to act sooner.
Crownover signed a contract on a new three-bedroom cottage to be built in Sylvan Park for less than $300,000. She didn't want to disclose the exact purchase price on the home in West End Station, which is being developed by Village Real Estate Services. Homes in that neighborhood start at $249,500.

"This is the time to buy, when the market is down,'' she said, adding that she planned to get roommates to help her pay the mortgage. She now lives with her parents.

The foreclosure rate in the Nashville area also continues to edge up, and statewide unemployment remains high at 10.5 percent. "In Nashville, (a recovery) is really going to be dependent on the recovery of the job market,'' said David Stiff, chief economist at Fiserv, a financial data consulting firm that monitors home prices in 384 cities.

The company forecasts that average home prices in the Nashville area will continue to fall 4.3 percent in the year ending in the second quarter of 2010, compared with an 11.3 percent drop for the nation as a whole.

see whole Tennessean article by clicking here.

Saturday, November 7, 2009

$8,000 homebuyers tax credit extended

$8,000 homebuyers tax credit extended
President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes.
CNNMoney.com RSS FEEDS (close) By Les Christie, CNNMoney.com staff writer
November 6, 2009: 3:18 PM ET

NEW YORK (CNNMoney.com) -- President Obama signed an extension and expansion of the first-time homebuyers tax credit on Friday.

The $8,000 credit was scheduled to lapse on Dec. 1 but will now be in effect through the end of June. Homebuyers must sign a contract before April 30 and close by June 30. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

"The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Who qualifies?
Nicholas provided four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

• Harry owned a home in 2001 and 2002 but sold it to relocate for a job. He would qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

• Sue purchased a home in 2004 and has lived there since. If she decides to buy a new home, she would qualify for the $6,500 tax credit because she has lived in the same residence for five consecutive years in the past eight.

• Jane purchased her home in 2002, lived there for five consecutive years before she rented it out in 2007. She would qualify because she was an owner/occupier for at least five consecutive years in the past eight.

• Mark purchased a home in 2006 and lived there for the past three years. He would not qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for five consecutive years out of the past eight.

How it helps the economy
Legislators and industry experts expect that the credit will encourage buyers such as Jane and Sue to move up their purchase plans.

"This bill will shift demand from the second half of 2010 into the first half," said Pat Newport, a real estate analyst with IHS Global Research. "As a result, home sales and prices will get a boost in the first half of 2010, with payback in the second."

That's not a bad thing, according to Bill Kilmer, vice president of advocacy for the National Association of Home Builders. It's important to stabilize real estate markets quickly to help bring the economy out of its tailspin.

The original $8,000 tax credit appears to have helped accomplish that goal: Home prices have inched up the past few months, according to the S&P/Case-Shiller Home Price Index.

Would it have happened anyway?
But critics still see the program as being ineffectual because it rewards buyers who would have purchased a home anyway. Newport estimates that fewer than 400,000 of the 2 million who have claimed the original credit made their purchases solely because of the tax advantages.

Furthermore, buyers do not, in reality, receive the entire benefit. "The credit helped prices stabilize," said Newport. "So the credit has been split between seller and buyer. The sellers are getting higher prices and buyers paying more than they would have without it."

The housing industry, however, is pleased with the extension, although the credit has not been quite as effective as they hoped.

The industry thought the credit would provide a ripple effect, with sales to first timers triggering as many three additional "move-up" sales.

That did not happen, according to Lawrence Yun, NAR's chief economist.

"It did not have the chain reaction impact it was supposed to," he said. "Instead, many first-timers turned to vacant, foreclosed or other distressed properties the sellers of which were unlikely to be move-up buyers."

So, the tax credit helped prop up the low end of the market without having much impact on the rest of the spectrum. Expanding the benefit to existing homeowners should boost those segments. That should produce additional benefits, according to Yun.

"Preventing further price decline or even nudging prices up a bit stabilizes housing wealth, which makes homeowners more comfortable in their spending," said Yun. "They're more likely to go out to the stores or buy a new car. That provides a boost to the overall economy."

Wednesday, November 4, 2009

Deals in the Gulch



A difficult downtown Nashville condo market is providing opportunities to potential buyers who are looking for a great deal. The Gulch is the latest area to get aggressive with price reductions and incentives.

The Terrazzo is offering up 30 of its units at an auction to be held on Saturday, November 21st. The starting bid will be at around 50% of their most recent asking prices. That means 1 bedroom/1 bath (891 square feet) that was $332,700 will start bidding at $159,000. A 2 bedroom/2 bath (1,320 square feet) that was $534,900 will start the bidding at $250,000. Of course, where the prices go from there is any one's guess.

The Terrazzo is the highest-end, "green" building in the up-and-coming Gulch. The units themselves have state of the art appliances and upgrades that you would expect from a luxury high rise. From the bamboo floors, wall windows, and high ceilings (although some are unfinished concrete), these units are very industrial chic. If there's a knock, it's that the views are often of the Icon (the next building over) or overlook I-40. I just previewed some of the auction units today and found a few units that have a nice downtown or Music Row view. The price has obviously been an issue, but that is changing.

Just down the street is the Velocity, which is having its grand opening party tonight (Thursday - November 5th). Velocity offers smaller, less expensive units than its Gulch counterparts (Icon and Terrazzo). This mid-rise condo development has 50% of its units under contract, and while they aren't drastically dropping their prices, they are offering incentives to encourage more buyers to the closing table. Whether it's a trip to Atlanta, Ikea furniture, or cash toward closing costs, Velocity is ready to deal.

Velocity units with 420 square feet start at around $140,000, 550 square feet - $160,000, 620 square feet - $170,000... moving up to the 2 bedroom/2 bath units - 1000 to 1250 square feet would be in the $260,000 to $340,000 price range. 1st floor units have 15 foot ceilings, patios, and access to walk out courtyards. Velocity also has some good gathering spaces, like a nice lounge area, fitness facility and rooftop deck.

If you couple the deals being offered with the $8,000 first time home buyers credit (which looks to be extended through April 2010), there are some tremendous opportunities in the condo market. The Gulch is on its way to becoming a vibrant downtown area. In the next few years, I believe we'll look back at this as the time to have bought in.

If you would like more information or help with any of these or other Nashville condos in the Nashville area, feel free to give me a call or write me jeff@jefffulmer.com. You can also visit my web-site at www.jefffulmer.com.

Velocity condo opens doors in Gulch


Monday, October 26, 2009
Nashville Business Journal - by Eric Snyder Staff Writer


More than two years after putting some of its 263-units up for sale, developers cut the ribbon Monday on The Gulch’s Velocity condominium.

Velocity, featuring one- and two-bedroom units and 21,000-square-feet of retail space, was originally to open in April.

Ground was broke on the project in October 2007, with the units first being made available for sale in May 2007. Developers of the project, a partnership between Bristol Development Group and Marketstreet Enterprises, announced the sale of 85 units on the first day of sales.

However, 17 contracts have actually closed since. According to a spokesperson for the developers, 50 percent of the units are under contract.

After Monday’s ceremony, Jay Turner, managing director for MarketStreet, said having a completely finished project will help close some of those and future contracts. Turner said developers hope to have the building at 320 11th Ave. S. sold out in about two years.

In his remarks, Bristol CEO Charles Carlisle lauded average sales price of Velocity units, which he placed “just over $200,000.” He said 50-units have been designated as affordable work force housing, with some units starting at $135,000.

Carlisle said he was struck by progress in The Gulch, standing in what he said was once “an industrial wasteland.”

“Today just marks one more step in the progress of The Gulch,” Carlisle said.

Bristol and MarketStreet also partnered on the neighboring Icon condominium, which Turner said opened one year ago Monday.

Nashville Mayor Karl Dean helped cut the ribbon, tying his remarks into the need for a new downtown convention center.

“Very few downtowns are as exciting as ours, and The Gulch is a big part of that excitement,” Dean said.

Wednesday, October 28, 2009

Get into a house for just 3.5% down


Get into a house for just 3.5% down
Dangerous subprime lending might be history, but you can still buy a home with little money down -- if you qualify for an FHA-backed mortgage. Is one right for you?

By SmartMoney
The days of putting little money down to buy a home aren't over.


Fixed-rate or adjustable mortgage?
After years of risky mortgages backed by small down payments, most lenders aren't underwriting loans without significant sums upfront and high credit scores. But a decades-old program can still put homebuyers in houses for next to nothing.

Mortgages insured by the Federal Housing Administration allow borrowers to get approved with down payments as small as 3.5%, without high credit scores.

As millions of Americans now realize, getting into a house with little money down has its disadvantages. Borrowers who have pumped scant equity into their homes are often more willing to walk away during lean times that keep them from making payments. This risk is further elevated when home values decline and troubled borrowers are unable to refinance or sell at a price that covers their losses.

Still, FHA-insured mortgages are far less risky than the subprime mortgages that lenders originated before the housing bust. FHA-insured mortgages require documentation and proof that the borrowers are capable of making the monthly payments. (Most subprime mortgages didn't require such proof.)

Compared with the terms of traditional home loans, the looser terms of FHA-insured mortgages have helped make them more popular. Today, FHA-insured mortgages make up about 25% of the mortgage market, up from 3% in 2006, FHA Commissioner David Stevens said. The FHA insured nearly 1.95 million loans in fiscal 2009 -- up 62.3% from a year earlier.

"FHA-insured mortgages are one of the only games in town, especially if you can't qualify for a traditional mortgage," said Gibran Nicholas, the chairman of the CMPS Institute in Ann Arbor, Mich., which trains and certifies mortgage lenders and brokers. "Now that the subprime market is gone, FHA is filling the gap."

Here's how to determine whether an FHA-insured mortgage is right for you.

Do you meet the qualifications?
Most borrowers of FHA-insured mortgages have stable incomes and need more flexibility with their credit histories and debt loads than conventional mortgages might allow, said Lemar Wooley, a spokesman for the Department of Housing and Urban Development, of which the FHA is a part.

"When analyzing the borrower's credit, we expect lenders to examine the overall pattern of credit behavior rather than isolated occurrences of poor performance or relying solely on a credit score," Wooley said. This includes a borrower's rental or mortgage payment history, debts, collections, previous foreclosures and bankruptcies. Borrowers with credit scores lower than 500 must make 10% down payments to be eligible, he said.

Today, 78% of FHA-insured purchase mortgages belong to first-time homebuyers, thanks to looser requirements and the comparatively small 3.5% down payment, Wooley said. Another perk is that borrowers are permitted gift assistance for the down payments from their families or their employers or from a government entity -- but not from the seller.

Rigorous documentation requirements mitigate the risk associated with making a small down payment -- in stark contrast to the glory days of subprime mortgages, when documentation was rarely required and verified, said Nicholas, of the CMPS Institute. FHA borrowers must prove that they have the cash to close the mortgage by presenting their most recent bank statements. They also must show W2 statements and pay stubs to prove that they can repay the mortgages.

In addition, borrowers' total mortgage payments (including principal, interest, taxes and insurance) cannot exceed 31% of their gross monthly income, and total debt-to-income ratio (total mortgage payment plus all other debts) cannot exceed 43% of their gross monthly income.

Can you afford the costs?
Interest rates on FHA mortgages are generally half a percentage point to three-quarters of a point higher than those on non-FHA mortgages. Thirty-year fixed-rate FHA-insured mortgages had an average rate of 5.86% on Oct. 22, compared with an average rate of 5.15% for similar non-FHA mortgages.

In addition, there are unique fees that accompany an FHA-insured mortgage. A borrower is required to pay 1.75% of the loan amount upfront, or that fee can be financed into the mortgage. FHA-insured mortgages also require a 0.5% annual premium based on the outstanding loan balance, which is financed into the mortgage. These fees pay for the FHA insurance that makes the loan possible, HUD spokesman Wooley said.

A borrower who has a high credit score -- typically, a minimum of 720 -- and a 20% down payment is often better off with a traditional, non-FHA mortgage, which carries fewer fees. However, the math gets tricky when a borrower has a high credit score but a down payment of less than 20%. In those cases, the borrower will have to pay for private mortgage insurance (PMI). Depending on your situation, PMI can cost less, the same as or more than FHA fees.

Crunch the numbers here to see how much you would pay in PMI.

What protections are in place for the lender?
Lenders are comfortable providing FHA-insured mortgages because they don't bear the loss if a borrower defaults and goes into foreclosure -- the FHA does.

In such a scenario, the FHA pays the lender an insurance claim equal to the sum of the unpaid principal balance of the loan, the foregone interest and a portion of the foreclosure expenses, Wooley said. The FHA pays for these losses by dipping into its insurance fund, which holds the insurance fees borrowers pay, Nicholas said.

What about for the borrower?
When borrowers are unable to keep up with mortgage payments, lenders are required to work with them to avoid foreclosure, Wooley said. This is part of the FHA's loss-mitigation program.

Now mortgage servicers can use this program to reduce monthly mortgage payments to 31% of the borrower's monthly gross income, said Keith Gumbinger, a vice president at HSH Associates, which tracks mortgage data. To qualify, borrowers must be unable to keep up with their mortgage payments but cannot be more than 30 days delinquent.

Although this program can help prevent foreclosures, it doesn't guarantee that borrowers ultimately will be able to hold on to their homes, Gumbinger said.


Who is taking the biggest risk?
Under certain circumstances -- primarily, rampant FHA-insured mortgage underwriting and declining home values -- these mortgages present a significant risk to the economy. When home values decline, a borrower who has little equity in a home and is falling behind on payments is more likely to walk away from the property than a borrower who has more invested in a home, said Dean Baker, a co-director at the Center for Economic and Policy Research in Washington, D.C.
Fixed-rate or adjustable mortgage?

If a significant number of FHA-insured mortgage borrowers go into foreclosure, the FHA insurance fund could become depleted, and the government might have to bail it out, Nicholas said. Those losses could ultimately be borne by taxpayers or get added to the country's debt, Baker said.

This article was reported by AnnaMaria Andriotis for SmartMoney.

Friday, October 23, 2009

Home sales rise 9.4 percent in September

‘There's a mini-boom going on in the housing market,’ pollster says

Michael Conroy / AP


WASHINGTON - Home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.

Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August, the National Association of Realtors said Friday.

That pace was the strongest in two years and beat Wall Street forecasts. Sales had been expected to rise to an annual rate of 5.35 million, according to economists surveyed by Thomson Reuters.

"There's a mini-boom going on in the housing market," said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm.

Nationwide sales are up nearly 24 percent from their bottom in January, but are still down 23 percent from four years ago.

Prices, however, continued to be dragged down by foreclosures and short sales, where the mortgage exceeds the sales price. The median price last month was $174,900, down almost 9 percent from $191,200 a year earlier, and slightly lower than August's median of $177,300.

The inventory of unsold homes on the market fell about 7 percent to 3.63 million. That's less than an eight-month supply at the current sales pace, and the lowest level since March 2007.

Sales rose around the country, especially in the West, where they grew 13 percent from a month earlier. Foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.

First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. These buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000, if the sale is completed by the end of November.

The tax credit is so important to some buyers that they are adding a clause to their contracts, allowing them to back out if the sale doesn't close by Nov. 30. However, economists note that bargain-priced foreclosures and low mortgage rates are making a big contribution to the sales boom.

"We think the housing market has touched bottom and it is now only a matter of time until home prices stabilize — something that we anticipate to occur in late 2010," wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

Prices could fall further because rising unemployment leads to more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to fall behind on their mortgages.

"There's more supply that's going to come into the marketplace," said Stan Humphries, chief economist at real estate Web site Zillow.com. "That additional supply will outpace demand."

With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

Realtors and homebuilders are loudly in favor, arguing that the tax credit is crucial to get the housing market back on its feet.

"We are not there in terms of removing the consumer fear factor," said Lawrence Yun, the Realtors' chief economist.

However, some analysts say the tax credit may not be as critical to the housing market as real estate agents suggest. "The group has an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit's effects," wrote Zach Pandl, an economist with Nomura Securities.

One potential roadblock to an extension also emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.

At a hearing on Thursday the Treasury Department's inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old.

Click here to link directly to article.

Tuesday, October 20, 2009

Open house to showcase 'green home'

Open house to showcase 'green home'
Friday, October 16, 2009

Nashville Business Journal

An open house later this month provides the chance to glimpse the future and help a good cause.

Castle Contractors, the Brentwood-based custom home builder, is inviting the public to visit “The Living Green in Green Hills Show House” next weekend.

Advance tickets are $10, available at castlecontractors.com, or $12 at the door. Proceeds will benefit the Ronald McDonald House.

“From details behind the walls such as cellulose insulation and radiant barrier house wrap to roof decking to regulate temperature, to reclaimed and rebuilt newel posts, flooring, light fixtures, breams and bricks, the home embraces the future of green living,” claims a news release.

The home at 4208 Arundel Court is a certified as a National Association of Homebuilders Green Home.

It will be open for tours from 10 a.m. to 8 p.m. Oct. 23-24, and from 1 p.m. to 6 p.m. Oct. 25. Free shuttle bus service will be available at Woodmont Baptist Church, 2100 Woodmont Blvd.

According to the Castle Contractors’ Web site, the 4,739-square-foot home is listed for sale at $1.3 million.

Friday, October 16, 2009

Investing your IRA in Real Estate




Did you know you can invest your retirement account in real estate? Few people are aware that the IRS allows the use of self-directed IRAs to purchase an investment property. All rental income would accumulate tax free, as would any capital gains when you sell the property. Just like any other investment in an IRA (stocks, mutual funds), all appreciation derived from real estae is tax deferred. If you have a Roth IRA, capital gains and income would be exempt from any taxes. With so many bargains out there right now in real estate, this can be a great way to invest your IRAs or SEPs.

Most brokerage firms or mutual funds are not equipped to deal with the administration of holding individual properties of real estate in an IRA account. I'll be glad to answer questions you might have and/or put you in touch with administrator who specializes in these real estate related IRAs. I can also help you find an investment property that is right for you. You can reach me at 615-545-86511 or at jeff@jefffulmer.com.

Wednesday, October 14, 2009

Williamson County Association of REALTORS® Announces September Housing Numbers




October 7, 2009 (Franklin, TN)—The Williamson County Association of REALTORS® today announces the sale of homes statistics for Williamson County, Tn. for the month of September 2009. There were 220 residential and condominium closings reported for the month of September, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle-Tennessee area.

Compared to September of 2008, the single family residential closings decreased 10 percent and the median price decreased by 5 percent. Condominiums closings have decreased by 8 percent and the median price decreased by 8 percent. The average days on the market (DOM) for residential homes have increased by 12 days and condominiums have increased by 5 days. Days on the market have been consistent since the onset of 2009, with the days ranging from 89 – 104 days.

"Williamson County’s real estate sales continue to perform more strongly than most of the Country’s sales, but that performance has not mitigated consumer apprehension in spending money on large investment items. Conversely, at entry price points, many individuals are scrambling to take advantage of the first-time home buyer tax credit before it expires at the end of next month. This is a great time to take advantage of low interest rates and excellent incentives by the Federal Government and some builders,” said Diane Johnson, 2009 President of the Williamson County Association of REALTORS®.

The Williamson County Association of REALTORS® is the professional trade organization servicing the real estate industry in Williamson County. Established in 1962, the association provides professional development and support services for real estate professionals. The association has over 1,550 members and is headquartered in Franklin, Tn.

For Full Report, click here.

Monday, October 12, 2009

SEPTEMBER HOME SALES STEADY, PENDINGS REMAIN STRONG


SEPTEMBER HOME SALES STEADY, PENDINGS REMAIN STRONG
October 8, 2009


There were 1,935 home closings reported for September, which is down 6.7 percent from the 2,075 closing reported in September of last year.

Third quarter closings were at 6,213 for 2009, down 9.1 percent from the 6,836 closings during the third quarter of 2008.

Year-to-date closings are 15,453, compared with 19,833 through September of 2008, which is a decrease of 22.1 percent.

There were 2,120 sales pending at the end of September and the average number of days on the market fo a single-family residence was 86.

The median price for a single-family home was $160,000 in September, while the median price for a condominium was $142,500. That compares with median prices of $168,900 for single-family homes and $148,500 for condominiums in September of 2008.

Inventory is at 23,975 properties, compared with 24,270 available at the end of September last year. Single-family inventory is actually down and condominium inventory is nearly the same amount as was available at this time last year. Multi-family and farm/land/lot inventory continues to be higher than last year's levels.

You can click here for a copy of the news release with additional details on home sales data for September, the third quarter and year-to-date 2009 compared with 2008.

Tuesday, September 29, 2009

Housing Prices Rebounding

Housing Prices Rebounding
September 29, 2009
Zacks Investment Research - Zacks.com

The Case-Shiller Index, the gold standard of housing price indexes, showed widespread increases in July versus June.

Housing prices do have an element of seasonality to them, so it is best to look at the seasonally adjusted numbers. Most of the press makes the mistake of using the unadjusted numbers, so this analysis might have some differences from the headlines you see elsewhere.

However, on both a seasonally adjusted and unadjusted basis, the story is much the same: at least for now, the bear market in home prices appears to be over. On a monthly basis, the composite 10 index (or C-10, which has a much longer history) rose to 154.69, a gain of 1.26% on the month and cutting the year over year decline to 12.79%. From the peak in May of 2006, the C-10 is down 31.62%.

The broader Composite 20 index posted a monthly gain of 1.15%; it is off 13.32% from a year ago and 30.60% from the May 2006 peak of the housing market. The gains were widespread, with 17 of the 20 cities posting gains.

While home prices are way off from the bubble peaks, overall they remain about twice as high as the stable 75 to 85 range they were stuck in for almost a decade between 1988 and 1998. In real terms, then, home prices are coming back towards normal -- they are not particularly cheap. The graph below shows the history of the two composite indexes.





For the month, the biggest gains came from Minneapolis, rising 3.09%. On a year-over-year basis, prices in the Twin Cities are down 17.3% and are off 29.5% from May 2006. San Francisco took the silver with a gain of 2.90%, but it is down 17.9% from a year ago and 39.46% from the peak. Chicago took the bronze with a 2.10% monthly gain. Home prices in the Windy City are down 14.23% from a year ago and are off 23.33% from the peak.

This time in Las Vegas the house didn’t win, although Vegas does win for losing. For the month, home prices fell 1.85% -- by far the largest monthly decline. Over the last year, those who gambled on housing there are down 31.4% and are off 53.30% from the peak. Detroit might have been able to break into the win column in football, but its losing streak in housing continues. Motown posted a 0.36% decline for the month and is off 24.69% for the year and 38.35% from the peak.

Keep in mind that these indexes cover the whole metropolitan area, not just within the city limits, so it is not just the prices of giveaway abandoned homes in the city center that are still declining. Seattle was the only other city to see a decline for the month, falling 0.26%. It is off 15.36% on a year-over-year basis, and 22.35% from the peak.

The second graph below has an interesting way of presenting the city-by-city data. It shows the decline from the peak (actually from the individual city peaks; the percent declines I mentioned above were from the national peak date) currently and through December of 2007 (blue bar) and December 2008 (yellow bar). Thus if the red bar is below the yellow bar, prices in that city are down year-to-date.

It shows that there is no real clear pattern between if a city was a big early decliner and more recent price movements. Las Vegas and Detroit were both hit hard early in the housing bear market and continue to face difficulties. San Francisco and San Diego were also hit hard early, but have seen only minor declines year to date. Cleveland was hit early, but has actually been seeing gains so far this year. Dallas and Denver had relatively small early losses and are now also seeing year-to-date gains. Other early holdouts in the price declines like Seattle and Portland are showing some of the largest year to date declines.




The back-to-back increases in the Case-Shiller index are very significant in that they provide some hope that the number of people who are underwater in their houses is going to stop rising (except perhaps in Atlanta. But that is a different issue). Owing more on your house than it is worth is the single largest predictor of if a homeowner will stop paying the mortgage and eventually be foreclosed upon.

Those foreclosures obviously hurt the bottom line of the whole mortgage complex, from the big banks like Bank of America/Countrywide (BAC) that made the loans, to the myriad of institutions that hold the paper that those mortgages were sliced and diced into, to the private mortgage insurers like MGIC (MTG) and PMI Group (PMI) to the GSEs Fannie (FNM) and Freddie (FRE), and ultimately we the taxpayers, who own 80% of each of them.

I doubt that we will see a rebound in housing prices that will lift significant numbers of people who are currently underwater back into a position of having equity in their houses again. However, this recent stabilization will stop their numbers from swelling further. That is a major step forward and is good news.

Monday, September 28, 2009

Powerful neighborhood associations shaping Nashville development


Powerful neighborhood associations shaping Nashville development


Sunday, September 27, 2009 at 10:45pm
By Kyle Swenson

Still smoldering after a year's worth of intense land use issues — from the high-wire dramatics of Bells Bend to the continued back and forth over a downtown convention center — Nashville has reached an important crossroads in regards to development.

Out of the grab bag of buzzwords and concepts, infill has emerged as the championed chosen path that many feel is the best route for shaping Nashville's future growth. However, as the city now turns its back on sprawl and grapples with how to rethink older areas of the city, one group of stakeholders is likely to take on a growing role: Nashville's neighborhood associations.

Numbering more than 200 organizations citywide, the groups are a significant presence. Many of the long-standing groups, such as the Hillsboro-West End, Lockeland Springs and Belmont-Hillsboro, are strong in membership, savvy to the process and equipped with a clear vision for their area.

First organized in the 1970s as a front against absentee landlords, predatory lenders and the boorish bureaucracy of Metro government’s old guard, tcomm. It’s a progression that one longtime neighborhood activist describes today as “power passing back into the hands of the people from whence it should have come.”

For many that ascendancy peaked with Bill Purcell, a mayor supportive of a vibrant city patched together from distinct neighborhoods. Today, the groups are empowered by the community plan process, an approach that lets citizens map out with Metro’s Planning Department the land use of their area. Thanks to this influence, the associations arguably have as strong a hand as any of the other players at the table.

In fact, some developers complain that planners and politicians tilt too readily toward the associations' wishes.

But now the classic clash between builders and communities has been altered. Today, spiking the usual brew of development tension is market uncertainty; with a shipwrecked economy, many of the development opportunities available only a year or two ago are off the table. As development lurches forward from the current snag, some members of both the building community and the planning department wonder if the very detailed community plans outlined over the last decade will accurately reflect the type of building that will be available down the road.

“I think there's a real tension in the community plans between trying to lay out what's going to happen in the future, wanting some certainty that the plan is going to be followed, and the need to keep it flexible to respond to a changing market,” said Metro Planning Department’s Jennifer Carlat.

If the market reality doesn't support what's in the fine print, the question rises as to whether or not strong neighborhood association will be flexible to alternations to their plans — what many residents hold to be the holy writ of how their areas grow.

This fallout from the economic bust means it's likely all the parties involved in development — from planners and politicians to neighbors and developers — are going to change how they plan the future.

Neighborhood groups get savvy

In Metro’s current setup, the main thrust of the neighborhood associations' influence comes from the community plan process.

The Planning Department has chopped the Metro area into 14 community plan areas; each section goes through an update process every seven to 10 years.

“That update is the most important time for the community to be involved because that's when we do the visioning of what should be preserved, what should be changed, what should be created from scratch, and what needs to be scratched,” Carlat said.

Through a series of feedback sessions, the department meets with area neighborhood associations, as well as city officials, Metro Council members, institutional representatives and developers. By bringing all the parties to the table, the aim is to have as open and honest a discussion as possible. One plus to [that] approach is that changes to the community’s makeup can be discussed from a distance, without the heat often stirred up by zone change requests.

“The idea is we can have this conversation a bit more calmly,” Carlat said. “We can think a little more broadly in terms of long term impacts and also in terms of what's my community's role in the overall county.”

What emerges is a document outlining the land uses for every single piece of property in an area. Neighborhood leaders involved in the most recent community plan process for West Nashville say they appreciate the voice the current system gives to the community.

“I think the plan will encourage development where neighbors are comfortable,” said Rob Robinson, a leader in the Sylvan Park Neighborhood Association. “I hope that it will make sure that if someone does go in and develop in an area neighbors are sensitive to, they'll develop in the right way.”

Things change

But Carlat acknowledges the planning staff sees a catch in the current community plan setup. As neighborhood groups become more savvy to the process and seek more specificity about the density and land use assigned to a parcel, that specificity comes at the cost of flexibility.

Members of the development community echo the same feeling. According to James Weaver, attorney for Waller Lansden Dortch & Davis, the plans reflect a snapshot of market possibilities at the time they're devised. However, the end success of a development rests on whether or not businesses, restaurants and retailers will buy into the available options in later economic conditions.

“The apprehension our clients have about the community planning process is that what it sometimes is not designed to be is a living document, and the market is a living phenomenon — it changes,” Weaver said. “What may be feasible today, may not be feasible tomorrow.”

The community plans aren't ironclad; the planning mechanics allow for projects with an alternative land use to apply to amend the current documents. When those alternatives are proposed, developers and neighborhood associations are drawn back into the ring, sparking dialogues that have proven to be everything from constructive to contentious.

However, with the markets fluctuating as rapidly as they have, Carlat says the Planning Department does expect to see more rezoning requests in the future.

Some rough patches

Nashville's recent history of plan amendments has not been altogether smooth. Ideally a chance to engage in a constructive dialogue about planning, the amendment process at its worst can break out into pitched battles between development interests and neighbors on the defensive.

The Green Hills area was recently bruised-up in such an ugly squabble regarding a development in the heart of the neighborhood. Last spring, developer Brent Smith unveiled plans for a 300-plus unit development off Abbott Martin Road. According to Smith, the local neighborhood groups immediately took issue with his project, despite the fact that the Planning Department staff recommended the proposal.

Following a series of contentious public meetings, Smith pulled his project after the area’s Metro councilmen, Carter Todd and Sean McGuire, deferred to the neighbors.

Looking back, Smith says a vocal minority of association members hijacked the discussion without knowing all the facts. But he doesn't rest blame entirely on the groups. Instead, Smith believes the council members should have taken more of a leadership role in the process.

“I think the real problem lies more in the amount of weight that our council members give the neighborhood associations,” Smith said, adding if Metro Planning staff approves but the neighbors oppose, council members should not be afraid to stand up for a project with long-term community value.

Also, council members are wrong to measure community support by polling public meetings held on projects, Smith argued, because often only citizens in opposition attend, which creates a potentially false sense of majority for an opposing viewpoint.

So, instead of exercising judgment, the developer says, council members easily allow sound development to collapse under the volley of public outcry.

Council members counter that community input is essential when dealing with a plan amendment.

In East Nashville, Councilman Mike Jameson is current working with community members to measure the support for a 6,000-square-foot mixed-use development at 16th Street and Ordway Place. For Jameson, the public meetings on the project have been important.

“As squeamish as it makes people, a show of hands is at least an indication of the neighborhood consensus,” he said. “It's not the be-all and end-all of development decisions. I caution people that this is simply a factor that goes into it, along with the Planning Department's recommendations, and other council members' input.”

Zoning’s political pitfalls

If the choppy market does force more zoning amendment proposals to surface, charged land use disputes could follow. As Nashville Neighborhood Alliance leader John Stern points out, plan amendments are tricky political terrain.

“I think it's safe to say zoning issues make or break council candidates,” Stern said. “That's one of the things that people don't easily forget.”

As an example, Stern points to Councilwoman Pam Murray's precipitous pitfall into her current recall, a situation set off after neighbors were upset with how their representative handled a rezoning request.

The neighborhood associations are not without their own political push. Both as individual groups and as umbrella organizations, such as the Neighborhood Alliance and the Nashville Neighborhood Defense Fund, the neighborhoods have successfully lobbied for civic initiatives such as storm water management and animal control, as well elements that play directly into the political process.

Stern and others played a role in putting the current councilman recall provision in Metro's charter. The group's candidate questionnaire, a look into the development proclivities of candidates, is a popular election season reference.

Through persistence and push, the neighborhood associations have managed to “increase the number of council members that are respectful of the community and constituencies,” according to Stern, but he added that “there still are outliers out there causing problems.”

Stern acknowledges too that most of the older neighborhood groups have matured beyond the not-in-my-back-yard attitude.

“We're at the point where we have to say what we envision as well as what we don't envision,” he said.

In part it's because of how far they've come that the neighborhood associations could play such an important role ahead. As the post-May Town pressure for infill increases and changing markets potentially upset the specificity of community plans, neighborhood groups could take the lead working with developers.

However, according to Carlat, these groups must begin to think beyond their own neighborhood. By thinking of every neighborhood as a piece of ‘the whole,’ associations, planners and developers can quilt together the right citywide mix.

“Neighborhood leaders need to take responsibility to think about the impacts of development not only on their community, but on the broader community and on Davidson County,” she said.

Thursday, September 24, 2009

Developers rely on creativity, passion in restoring historic buildings


Nashville Business Journal - by Jenny Burns Staff Writer
Friday, September 18, 2009



A public square with buildings reminscent of Paris. A train shed with a one-of-a-kind gabled roof. A pre-1800 era home on Gallatin Road.

These are pieces of Nashville’s past that have been lost.

But many others have been saved and turned into viable uses for today’s economy: The Hermitage Hotel, Union Station, Werthan Mills, the Bennie Dillon, Third National Bank, downtown lofts and retail spaces along Second Avenue and Broadway.

Behind these projects are developers and architects who used their business acumen and love of all things old to push past the obstacles to save some of Music City’s treasures. They will tell their stories when the National Trust for Historic Preservation holds its annual conference in Nashville in October. They’ll talk of how they used tax credits, saw vision in a pigeon-infested buildings and found creative ways to make a building economically viable today.

The challenges are many.

Foremost, it typically costs 10 percent to 20 percent more to preserve an old property than to build a new one, said Aaron White with Nashville-based Core Development, who transformed the Werthan Mills bag factory on Eighth Avenue into a $35 million condominium community. Core also has converted several downtown buildings into lofts, including the $10 million Kress building, the Art Avenue Lofts, Church Street Lofts and the $9 million Exchange building.

“By the time that you restore it properly, you will have spent more than you would have spent on new construction,” White said.

But that doesn’t always mean a higher sales price. Buyers generally don’t put a premium on a condo restoration, White said. Often, new construction can offer amenities that preserved buildings can’t offer. However, tthere is a segment of buyers that prefers the charm of 100-year-old exposed brick to shiny new buildings.

“You really have to do it because you love it, because buildings are worth saving,” White said. “You have to build a group of socially responsible investors and owners. The reason to do them is not the money.”

It takes specialized craftsmen to customize a layout for a re-use, because in the case of condos, every unit typically is different to fit the building.

“Werthan took a lot more design time. Ultimately the costs are less predictable,” White said.

Developers who specialize in preservation said the booming economy of the past several years helped Nashville save some of its important buildings such as Werthan, the Kress, the Stahlman Building and the old Nashville General Hospital. Today’s rocky environment has made it more difficult to get financing for projects.

Creativity and unconventional thinking also is required when making old spaces new again and usable for today’s lifestyles.

White said many of the best located, most architecturally interesting buildings have been renovated. Most of the remaining buildings downtown are too small to put in lofts large enough to suit buyers and still satisfy city codes.

Many of Nashville’s historic brick structures are being used on the ground floor for retail shops, but few have any use in the top floors. The long, narrow buildings only allow for windows in the front and back, making condos virtually impossible and offering little window frontage to retailers, said architect Ron Gobbell of Gobbell Hays Partners Inc. in Nashville. The spaces also have no room for parking, and some are too small for elevators.

“Key to all of this is finding viable business uses for these properties. We’ve got hundreds of historic structures that are just dying,” he said.

Gobbell was able to make his office building on Fifth Avenue viable by turning the back of the long building into a parking garage. The Kress building did the same, using a “car elevator” to take vehicles to the bottom level of the garage.

Some of the buildings that have been transformed into lofts have cut skylights in the ceilings to let in natural light and create a courtyard atmosphere inside. Lofts on Second Avenue have such a courtyard, as does Homewood Suites, an office building turned hotel on Church Street.

Gobbell points to the “piano building” at 242 Fifth Ave., along with others next to it, as structures in need of saving. Preservation convention goers will tour all floors of the building to see its challenges.

The building is so named because it was at one time a store that sold pianos. Today, the tall, carved building is only being used on the ground floor as a beauty supply store.


“Cities have built entire tourist industries around historic structures,” said Gobbell, pointing to Nashville’s Second Avenue and Broadway districts. “Historic structures do a much better job to create a fabric of the city than a lot of our modern structures do. If they don’t function, it winds up being a surface parking lot. You lose the history, you lose the character, but you also lose the overall fabric of the city.”

The former Third National Bank building sat empty for 10 years after the last tenant moved out in 1986. At one time, a developer was going to demolish the property and build an office tower. Those plans eventually fell through, and Nashville’s first steel skyscraper was saved by a Charleston, S.C., developer. The government’s historic tax credit made it possible, said Gary Everton, architect for the Marriott Courtyard that now fills the space.

Everton points to the hotel’s marble floors, ornate gate doors and limestone features that were there before the building was converted. He said craftsmanship like that can never be recreated in a new building. It’s just too expensive to do today, he said.

“There’s something about that heritage of who we are that makes us feel more grounded and connected. You feel you are part of an ongoing heritage,” Everton said.

That’s why he bought an old church on Fourth Avenue and turned it into his architecture offices. Everton’s office has high ceilings with the exposed beams of the church’s steeple.

Gobbell did the same thing with a building that was a dance school. Both will be featured in the tours during the October convention.

Downtown buildings, Nashville’s urban neighborhoods and the area’s historic plantations will be a laboratory for professionals to gain insight. The conference attendees with go on 37 tours and attend 100 classes on what went right and wrong in Nashville.

Ann Roberts, who served as the director of the Metropolitan Historical Commission for 26 years, has been helping The National Preservation Conference organizers set up tours of Nashville’s icons. Such work reminds her of those that aren’t here to be shown.

A Home Depot now stands on Gallatin Road, where an historic home dating before the 1800s used to be.

Nashville had a courthouse square in 1784 with 19th century buildings that “looked like Paris,” she said. They were demolished in the 1970s.

Roberts wasn’t involved in that battle, but she does remember the fight to save the train shed in the late 1980s. The structure was behind Union Station and had a unique gabled roof. The owners couldn’t pay the taxes on it, and rather than repairing it, they demolished it in 2001 because some trusses were not safe.

The preservation movement has been propelled by the green movement, as more consumers demand buildings not be torn down and materials thrown into land fills. Preservationists hope environmental stewardship, as well as the tourism dollars that historic buildings can draw, will keep these projects viable.

While the pace of preservation has slowed because of wobbly financial markets, it won’t stop, said Bert Mathews, developer of the lofts in the $14.5 million Stahlman and a $5.5 million renovation along Second Avenue.

He’s pushing to get an historic tax credit on the trolley barns that are part of the Rolling Mill Hill development and slated to converted into retail shops.

Others are pressing on, too. White is beginning his next phase of Werthan Mills. And developers of the downtown Hotel Indigo, two former bank buildings on Union Street that are being renovated, will open this fall to guests.

The National Trust for Historic Preservation chose Nashville for its conference four years ago for its preservation ethic in local government, walkability and wealth of historic resources, said Lori Feinman, assistant director for conferences and training for the trust.

She said Nashville’s preservation efforts are successful because of people’s passion for its music heritage and Civil War history — a passion that breeds sustainability.

“Why tear down what’s there? This is the way we can green our cities,” Feinman said.