Still On Shaky Ground

Still on shaky ground
Another jump in foreclosures suggests more trouble for the region's homeowners [From our print edition in Monday's City Paper]
Print By E. Thomas Wood


06-29-2009 12:06 AM —
To the welter of recent economic indicators that show the national economy going up, down or sideways, add one more perplexing number for Nashville. In the past month, after an extended decline, the volume of foreclosure actions filed in Davidson County has abruptly risen to a new peak.

From June 1 through June 26, the Davidson County Register of Deeds recorded 425 of the notices normally filed to begin the process of foreclosure. At a rate of more than 21 per working day, the pace of these filings has increased by 34 percent over the rate seen in May, which saw 318 filings for the entire month.

The sudden jump comes after two consecutive months of decline. With two days left in June, Nashville has eclipsed the highest monthly tally previously on record, 409 filings, recorded in March of this year.

Lenders give notice of foreclosures through “appointment of substitute trustee” filings. A substitute trustee takes the place of the original trustee under a deed of trust, which pledges a real estate property to a lender as security for the loan. In Tennessee, such a filing is normally the first public notice that a loan is in default.

Some substitute-trustee filings involve either foreclosures on commercial properties or trustee substitutions made for reasons other than foreclosure. The vast majority, however, involve home foreclosures.

Differences in how various statisticians count foreclosure filings make it impossible to compare Davidson County’s recent experience with statewide and national data on home losses. But research by real estate data provider First American CoreLogic indicates high concentrations of pending foreclosures, as of April, in Nashville’s Bordeaux/Whites Creek area. Other concentrations (visible on the map on page 14) are seen in areas around Cross Plains in Robertson County, Pleasant View in Cheatham County, Bethpage in Sumner County and La Vergne at the border of Davidson and Rutherford counties.

Explaining the numbers

In a time when several economic indicators, locally and nationally, suggest better times for the economy, Nashville’s foreclosure surge is as jolting as it is mystifying. None of the experts contacted by The Post could offer a definitive reason why the increase is occurring now, but all cited possible contributing factors.

Several noted that foreclosures are a trailing economic indicator and that Nashville has so far suffered less economically than many other parts of the country. It could simply be that the financial contagion has finally spread to a critical mass of local property owners. Yet little other evidence points in that economic direction.

Plunging home prices, for instance, correlate with high foreclosure rates. The Federal Housing Finance Agency’s most recent House Price Index showed Greater Nashville with exactly zero price appreciation between the first quarters of 2008 and 2009. That figure placed the metro area 89th out of 294 U.S. housing markets in one-year home price gains — not a stellar result, to be sure, but zero growth is certainly preferable to the 15 to 30 percent declines posted by numerous cities in California and Florida that are among the nation’s foreclosure capitals.

The rise in filings seems to track with predictions by some observers that months of efforts by both the government and financial institutions to stem the tide of foreclosures might merely postpone the misery for many borrowers. (For some examples of recent local cases, click here.)


Lenders and those who represent them, however, don’t see things developing that way.

“The mortgage companies are really trying to salvage these loans,” says Memphis attorney Arnold Weiss, who has served as substitute trustee on hundreds of Nashville foreclosures. “They really are trying to work out agreements with the people who have these mortgages. They postpone foreclosures up to four or five months just to get a shot at trying to work something out.”

Weiss notes that the filing of an initial notice doesn’t necessarily mean foreclosure will happen. “A lot of times, they set it up for foreclosure, but they don’t go through with it,” he said. “They try to do modifications or extend the loan or something.”

Indeed, as The Washington Post reported last week, lenders nationwide are increasingly holding off on foreclosing even when the owner has abandoned the house. Often, they are simply overwhelmed by the number of properties they have to deal with; sometimes they still hope to work out less costly arrangements such as “short sales,” in which the borrower sells the home for less than its loan value and turns over the proceeds to the bank.

Another factor that a number of real estate and financial professionals cited is the possibility that an especially poorly underwritten batch of loans has met with an inevitable fate. As we all know by now, lenders got to be far too creative for their own good in the roaring middle years of this decade.

Suppose, hypothetically, that there was a fad among local mortgage brokers in the late winter of 2004 to sell 5/1 ARMs — adjustable-rate mortgages that begin with a five-year, interest-only term at a set rate, shifting after five years to an adjustable rate (usually higher) with required payment of principal along with the interest.

Early this year, those loans would have repriced. Borrowers who could not keep up would typically have faced foreclosure notices after 90 days in default.

And then there is the “kitchen sink” hypothesis. Perhaps banks that have been holding iffy mortgages for some time have chosen to write them off by the bucket-full before they report their results for the quarter ending June 30 — dump the whole kitchen sink, as it were. Many banks are posting tidy profits overall, so maybe they are choosing this moment to cut their losses.

Jim Schmitz, Middle Tennessee area president for Regions Bank, doubts that any of his peers are massaging their books in that manner. In the current regulatory environment, he says, there’s no leeway for such hijinks.

“We’re risk-rating and judging our portfolio on a very frequent basis,” Schmitz says. “That’s happening industry-wide. The examiners are far more involved today than before in talking with us on a regular basis to make sure we have things accurately classified.”

Taking control: Nashville lawyer works to turn troubled condo projects into cash

Taking control: Nashville lawyer works to turn troubled condo projects into cash
Nashville Business Journal - by Turner Hutchens Staff Writer


When condo development dreams are shattered, Nashville’s courts have turned to one man to pick up and sell off the pieces.

So far this year, John Cheadle Jr. has been appointed receiver of three major luxury condominium projects: 5th & Main in East Nashville, The Braxton in Ashland City and, most recently, Rolling Mill Hill in downtown Nashville.

Combined, those projects have more than 300 units and are valued at more than $135 million. Turning that value into actual cash is what Cheadle’s job is all about.

It’s important to get the right person in charge of a project gone bad, says attorney James Kelley of Neal and Harwell PLC.

“They need to be trustworthy, because they’re obviously looking after a rather substantial asset,” says Kelley, who is representing Bank of America, the lender for the Braxton and Rolling Mill Hill projects, in the receivership claims.

Beyond that, a receiver has to have the flexibility and amicable personality to deal with all parties involved in a project, including tenants, creditors and contractors, Kelley says. Cheadle’s track record of success stretching back more than two decades is what often makes him the receiver of choice for bankers, he says.

“He’s a person that everybody has confidence will do the right thing,” he says.

Nashville — like many U.S. markets — saw a boom of new condo developments in the mid-2000s, with thousands of high-end units hitting the market, particularly in the downtown and Midtown areas. Earlier projects sold out, but those that have come on line in the past year have had trouble closing sales — even those that were under contract because buyers got cold feet and banks restricted mortgage lending for condos.

“There’s clearly a lot of that business out there,” says Cheadle, a lawyer who represents creditors in his “day job.”

Cheadle now is in control of more Nashville condos than anyone except 12th Avenue Ventures, the partnership between Franklin-based Bristol Development Group and Jay Turner’s MarketStreet Enterprises, which developed the Icon and Velocity condos in the Gulch neighborhood. The developers still have about 280 Icon units for sale, and Velocity has delayed opening its 265 units.

The 55-year-old Cheadle is modest about his role in charge of the prominent and troubled developments.

“My job is as an administrator,” he says. “We hire people to do the heavy lifting.”

A receiver is a court-appointed manager of an asset, who generally steps in after a borrower has defaulted on a loan secured by the asset.

For instance, the Rolling Mill Hill developers had more than $20 million in outstanding development loans, and when they failed to pay the property’s mortgage note (or even its water bill) for several months this year, the lenders sued to install Cheadle as receiver.

In the case of real estate assets, the goals are usually “get through it as quickly as possible and look for a way to liquidate the asset as successfully as possible,” Cheadle says.

Cheadle graduated from the Vanderbilt University Law School in 1978, going to work for his family’s law firm. John Cheadle Sr. was a Nashville attorney, along with the younger Cheadle’s brother and sister, who all practice together at Cheadle and Cheadle. The elder Cheadle had been a receiver as well and occasionally took his son to work with him.

A receiver has to anticipate future problems in an often unfamiliar field, says John McLemore, a Nashville lawyer often named as receiver by the courts.

“Even if you don’t know what’s going on in the business, you’ve got to learn it, and you’ve got to get capable people, and you’ve got to have the authority to hire those people,” McLemore says.

Unlike bankruptcies, receiverships aren’t well defined by law, so individual filings lay out what receivers can and can’t do, McLemore says.

A receiver has to make sure the court gives him enough power to take care of everything needed in the first order, to avoid conflicts and more litigation later, McLemore says. That ranges from the power to use rent money to pay the electric bill to the authority to sell off parts of an asset and hire or fire employees.

GM picks Michigan over Spring Hill

GM picks Michigan over Spring Hill
2,500 Tenn. workers had hoped to build small car
By Bonna Johnson • THE TENNESSEAN • June 26, 2009

A decision by General Motors to build a new small-car line in Michigan has disappointed Spring Hill workers and leaders, but they are holding out hope that GM — or another manufacturer — will not forget them.

"There's a lot of sadness, some anger," said Michele Burley, 50, who has worked for GM for 28 years. "But we still have a chance of getting something else, maybe just not right away."

General Motors is expected to formally announce today it has selected a plant in Orion Township, Mich., dashing the hopes of some 2,500 Spring Hill workers who are facing layoffs, buyouts and early retirements at the factory GM plans to idle later this year.

"It's disappointing news that GM has not chosen this plant," said state Rep. Ty Cobb, a Democrat representing Spring Hill, who confirmed GM's intentions to The Tennessean on Thursday.

"But I think we're still in the running for something," Cobb said. "Long term, good things will happen at this site."

Many auto analysts believed that Spring Hill was the most logical selection. Built with great fanfare in the late 1980s to manufacture Saturn cars, the plant recently underwent a $600 million retooling to build the new Chevrolet Traverse.

But politics could have played a part in the decision, especially after Tennessee Sen. Bob Corker initially fought the bailout of the auto industry and Gov. Phil Bredesen caused a stir when he publicly complained that GM wanted at least $200 million to locate the small car line here.

Michigan politicians, meanwhile, strongly lobbied for the plant, going so far as to submit petitions with 20,000 signatures. They argued their state needed more help because seven of the 14 plants targeted for closure in the automaker's bankruptcy were in Michigan.

"Tennessee didn't want to play, and that left the field open," said Jeremy Anwyl, CEO of Edmunds.com.

And just because Spring Hill lost this round, that's not to say GM will necessarily shutter the plant, one of the newest it owns, or sell it.

(2 of 2)


The Spring Hill plant has a skilled work force, a desirable location, was recently modernized and is in a region with a growing auto industry, said David Cole, chairman of the Center for Automotive Research. "When the market takes off, they could have it ready to go," Cole said.



Announcement today
Local labor and political leaders are scheduled to hold a 10:30 a.m. news conference today at the UAW hall in Spring Hill to discuss the plant's future.

On Thursday afternoon, GM spokesman Chris Lee said officials had nothing to announce. Bredesen's office said it had not received official word of GM's decision. And leaders of UAW Local 1853, which represents GM's Spring Hill workers, declined to comment until an official announcement is made today.

"All we have to go on is the assumption that it's still part of GM's long-range business plan," said Frank Tamberrino, president of the regional economic development group Maury Alliance. "I've said all along, rightly or wrongly, GM will need capacity when the market picks back up."

If that were to happen, Spring Hill could be up and running in the next 12 months, compared to the two years it will take GM to begin production on the new small car, Tamberrino noted.

"I think we all have to accept there may be some unknowns for a while at this plant," he said.

Michigan, Tennessee and Wisconsin, which has a closed GM plant in Janesville, all offered incentive packages to GM in an effort to lure the small-car line. The automaker had planned to produce up to 51,000 subcompacts per year in China and ship them to the U.S. starting in 2011 but later agreed to build the three-door hatchback in the U.S.

Earlier Thursday, Bredesen spoke about Spring Hill's future when he told reporters that Tennessee submitted the best bid possible. One problem, he noted, was that the supply chain for the small car's parts did not exist in Tennessee.

"I think there still is a very bright future for the Spring Hill plant," Bredesen said. "It's a very attractive plant in a host of ways, and we're going to keep pushing forward. … As the car market comes back, there are going to be a lot of needs for new capacity."

The governor added, "You don't win them all."

State Rep. Cobb said he understands why Michigan-based GM put the jobs on its home turf. In the end, he doesn't believe Tennessee's lack of incentives had anything to do with losing the deal. "I guess they felt it was better to have it there locally," he said.

All Cobb can do now is make sure Spring Hill workers get some job training to find new work. "People are upset with the news," said Cobb, noting that many families face tough decisions, especially if they have set roots in Tennessee and have spouses with good jobs here. "But I feel good about this plant."

Existing Home Sales Rise: Good News, But Don't Get Carried Away

The following article on the national residential housing market was found on Seeking Alpha.

Existing Home Sales Rise: Good News, But Don't Get Carried Away By Dirk van Dijk
June 23, 2009

Sales of existing homes rose 2.4% in May to a seasonally adjusted annual rate of 4.77 million from April’s 4.66 million pace. April’s activity was revised down from its initial read of 4.68 million. The increase in sales happened despite a slight uptick in mortgage rates, which averaged 4.86% in May vs. a record low 4.81% in April.

Currently, mortgage rates are at 5.38%, which though still at historically very low levels, might represent enough of an increase to take some of the steam out of the nascent recovery in existing home sales. A year ago, mortgage rates were 6.08%. Existing home sales have been relatively stable for awhile now, with the current level being just 3.6% below the pace of a year ago.

A big part of the stabilization and now minor recovery in activity has been the decline in prices. The median price of an existing home is now $173,000, which is down 16.8% from a year ago. (The median price is not the best measure of housing prices, since it is greatly influenced by the mix of houses being sold. However, the median price measure is broadly in line with what better measures like the Case Schiller index have been showing.)

In other words, the market does work, even for housing. When prices drop, sales pick up. Further evidence of this can be seen in the details of the report:

In the West, the median price is down a whopping 30.6% from a year ago, yet sales are up 11.8%. For the month they dropped 0.9%. In the Midwest sales rose 9.0% for the month and are down just 4.4% from a year ago. The median price in the Midwest is off 10.4%. In the Northeast sales were up 3.9% on the month but down 10.1% from a year ago, with the median price down by 12.5%. In the South, sales were unchanged vs. a month ago and off 8.9% from a year ago. It has seen the smallest decline in median prices at just 9.9% from a year ago.

Both single family and condo sales improved for the month with single family sales up 1.9% but down 3.0% from a year ago, and condo sales up 6.1% for the month and down 8.9% from a year ago. The median price of a single family home is down 16.1% from a year ago, while the median condo price is down 21.9%. This made the median prices of single family homes and condos almost equal -- $172,900 for single family homes and $173,800 for condos. Keep in mind that lower sales prices will mean lower property tax revenues for municipalities and school districts, further pressuring budgets.

Perhaps the best news in the report is that inventories dropped by 3.8% to 3.80 million, or 9.6 months of supply vs. 10.1 months in April. Also, distressed sales fell to 33% of the total from 45% in April. While 33% is still a very high number, the large drop is very encouraging.

I would caution that there is still a large shadow inventory out there of people who want to sell their homes but are waiting for a better market, and also of banks that have been holding back on listing some of their foreclosures. However, it is very hard to quantify the shadow inventory, and it exists regardless of the state of the official inventory.

As the graph below shows (from Calculated Risk), inventories are still very high relative to sales, but we have been making erratic progress for over a year now. However, months of supply are still about twice as high as the norm of a few years ago. The pickup in sales is good news, but do not get too carried away by it.

Existing home sales do not directly affect the economy the way that new home sales do, but they do have some positive effects. The stabilization of existing home sales is good news for firms like Bed Bath & Beyond (BBY) and Sherwin-Williams (SHW), since when people move to a new house they are likely to redecorate and paint.

Study: Green investments would create 10,000 Nashville jobs

The following article was posted in the Nashville City Paper. While it doesn't deal specifically with real estate, I thought it was a bit of potential good news, especially in light of questions about the future of the Spring Hill GM plant.

Study: Green investments would create 10,000 Nashville jobs
By Geert De Lombaerde
Posted on June 18, 2009 at 1:37 pm

A report from UMass researchers, the Natural Resources Defense Council and Green for All says that ramping up Middle Tennessee clean-energy investments of $815 million a year — a figure based on what a think tank sees being generated by stimulus, subsidies and the like — will generate more than 10,000 jobs in the region, more than half of them for people with high-school degrees or less.

The $815 million number is based on a $150 billion national number that amounts to 1.1 percent of GDP. For some perspective, that amount equates to the construction of five Pinnacle at Symphony Place office towers every year.

Developers of new convention center hotel unveil plans

Nashville Business Journal - by Jenny Burns Staff Writer
Wednesday, June 17, 2009, 10:23am CDT

The chosen developers for the 1,000-room hotel adjacent to the Music City Center unveiled their 40-story curved design for what will become the largest hotel downtown.

The development team, Colorado-based Phelps Development and Atlanta-based Portman Holdings, was chosen Tuesday by the Metropolitan Development and Housing Agency.

Developers and architects say the curved design of the $300 million hotel would fit in with the wave design of the Country Music Hall of Fame and the rounded design of the nearby Sommet Center.

The winning team’s proposal was chosen from 10 proposals submitted. MDHA will now pick an operator for the hotel.

The combined team, called Phelps Portman Nashville, will now enter the complete design process for the project and oversee all financing and construction of the hotel.

Phelps Portman recently completed the design and development of the 1,190-room Hilton San Diego Bayfront Hotel, which the development team’s senior vice president Roger Zampell says was launched just after Sept. 11.

He uses that successful project as an example to say that all projects have their challenges and Nashville’s hotel will be no different as the team begins this task during a recession.

Zampell says they did not bid on other convention center hotels in other cities, saying they picked Nashville because of its central location, its strength as a convention market and the city’s entertainment component. Phelps Portman has been involved with the development of 10 hotels with 1,000 or more rooms.

Zampell says he expects to have the design process completed by the first quarter of 2010 and the start of construction will begin three months later. Hotel construction will take 34 months and it must open by 2013 when conventions are scheduled for the new Music City Center.

The hotel entry will have glass ceilings and be a vibrant, energized space, the architects say. It will offer 100,000 square feet of meeting space, ballrooms, restaurants and retail.

Butch Spyridon, president of the Nashville Convention and Visitors Bureau, says a 1,000-room hotel is necessary to allow conventions to take an 800-room block, an industry standard, and leave extra rooms available for small groups or guests.

Spyridon says Portman has been interested in this project for three years and was a good choice for the job.

MDHA director Phil Ryan says the next steps are for the hotel developers to do the design work and MDHA to start buying up land for the convention center. Other steps include the city working on financing the convention center and the hotel developer to work on hotel financing. He says those steps will take several months.

The hotel will be built on property south of the Country Music Hall of Fame.

Several local firms, including R.C. Mathews and Morgan & Morgan construction companies, Earl Swensson Associates architects and the Nashville office of Tower Investments will be part of the Portman development and construction team, Ryan says.

Rolling Mill Hill Condos head into receivership

The following article appeared in the Nashville Business Journal on June 11, 2009
by Turner Hutchens. As the article mentions, this is the 3rd big condo complex to fall into receivership in the last six months.

Lenders have seized control of another Nashville condo project.

The Rolling Mill Hill condominiums were forced into receivership Tuesday by a lawsuit filed by Bank of America on behalf of itself and other lenders. The suit also asks the court to allow foreclosure on the three-building project on Hermitage Avenue.

The lenders claims non-payment of $21.4 million in construction loans taken out by the property’s owners, RMH Development 1 LLC, a Wisconsin-based holding company for the project’s investors. The original construction loans were $42.8 million, but that amount was reduced in a loan amendment on Sept. 26.

Direct Development, out of Green Bay, Wis., was teaming with the Metro Development and Housing Agency to redevelop the 34-acre Rolling Mill Hill site south of downtown along the Cumberland River. Direct had planned a $55 million project with four condo buildings on the site of the old Nashville General Hospital, but canceled plans for one of the buildings last year.

John Hopfensperger, president of Direct, said Tuesday that his firm was no longer involved in the project, and that the remaining development was being handled by the investor group, RMH. A contact with RMH could not be reached for comment.

The lenders’ suit says the loan has been in default since Jan. 14, and the owners are now so short on cash that they were unable to pay their utility bills, which resulted in water service to the buildings being shut off last week.

Though the project was completed by mid-April, no units in any of the buildings have been purchased, according to records with the Davidson County Register of Deeds. The roughly 75 condos were primarly priced between $230,000 to $680,000. Fifteen of the project’s units had been designated as “affordable housing” and were priced at $139,000 per unit.

The development ran into problems because Direct was undercapitalized, without enough money to pay for expenses even after work was completed, says Walker Mathews, president of R.C. Mathews, general contractor for the project.

He says the condos have great features, and construction was finished by April 14, as promised two years earlier.

“The unfortunate thing is we got all the way to the finish line, and it turns into a mess,” Mathews says.

It is too early to tell what will happen with the properties. John Cheadle, who has been appointed receiver of the project, will have to evaluate the potential avenues for disposing of the property, says John Kelley of Neal & Harwell, which is representing the lenders.

A Davidson County Chancery Court date is set for Wednesday for Cheatle to present his initial findings.

The condos are just a portion of Metro Nashville’s larger Rolling Mill Hill revitalization effort, which has been in the works for more than a decade.

A public-private partnership between MDHA and select developers, the project includes plans for retail shops and apartments.

A timeline for the buildout remains unclear. But Tuesday’s filing includes only the three existing residential condos — two new high-rise buildings and a renovated historic hospital buildling.

This isn’t the first setback for the project. Last September, Baltimore-based Struever Bros. Eccles & Rouse, who had eyed the site on the west bank of the Cumberland River for a major mixed-use project, closed its Nashville office and abandoned efforts with the development. Plans had called for 214 condos, a 224,000-square-foot office building and up to 50,000 square feet of retail.

Metro has already put about $10 million into the purchase of land and infrastructure for the condos and has established a $3.5 million tax increment finance zone around the project to pay off development bonds, says Joe Cain, development director for the housing agency, which is acting as the master developer for the area. But the city retains no ownership of the property and has no future liability for it, he says.

The project has faced the same troubles as many new condos, Cain says.

“Just like it’s hit everywhere across the country, these projects coming on line are having trouble getting the (units) sold,” he says.

This is the third large-scale condo development to go into receivership in the past six months, following 5th & Main, just across the Cumberland River from downtown Nashville, and the Braxton in Ashland City.

GREATER NASHVILLE HOME SALES CONTINUE RECENT TRENDS; PENDING SALES REACH 2,000

The following is the summary letter for the May Sales Report from the Nashville Association of Realtors. Number of sales and prices are down as they also were in the May Report for Williamson County. About the only bright spot was condo prices have remained relatively stable in Williamson and Davidson. If you would like me to e-mail the actual report, just let me know and I'll send that out.

GREATER NASHVILLE HOME SALES CONTINUE RECENT TRENDS; PENDING SALES REACH 2,000


There were 1,783 home closings reported for the month of May, representing a 28.9 percent decrease from the 2,508 closings reported for May of 2008. Year-to-date closings are 7,149, down 31.2 percent from the 10,406 closings reported for the same period last year.



The median price in May was $169,900 for a single-family home and $156,250 for a condominium. That compares with last year's median residential and condominium prices of $189,975 and $159,000 respectively. There were 2,000 closings pending at the end of May and the average number of days on the market for a single-family home was 92.



Inventory at the end of May was 24,598, down from the 25,096 properties on the market in May of 2008.

That woosh you hear is Williamson home prices plummeting

The Williamson County Association of Realtors announced the May sales reports. The following article appeared in Nashville City Paper. Sales from the Nashville Association of Realtors to follow.

By Geert De Lombaerde
Posted on June 8, 2009 at 1:49 pm

From the Williamson County Association of Realtors comes word that home prices in the county, which had held up well over the past year, appear to be giving way to ‘We need to sell this now’ pressures:

The Williamson County Association of REALTORS® today announces the sale of homes statistics for Williamson County, Tn. for the month of May. There were 219 residential and condominium closings reported for the month, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle-Tennessee area.

Compared to May of 2008, the residential home closings decreased 37 percent and the median price for residential homes decreased by 14.6 percent. Days on the market (DOM) for residential homes increased by 19 days as compared to May 2008. Condominium closings decreased by 36 percent. The median prices for condominiums decreased by 1 percent and days on the market also increased by 11 days compared to May 2008.

Nashville Real Estate Market Scales Back

BRENTWOOD, Tenn., June 2 /PRNewswire/ -- The economic slowdown has forced Nashville real estate developers to back off some of their more ambitious plans. Commercial and single-family homes, as well as Nashville condos and apartments have all been adversely affected. "From homes in Brentwood to high-rise condominiums in Nashville, everyone is being forced to adjust," said Jeff Fulmer, a Nashville Realtor.


The downtown Nashville condo market has experienced tremendous growth in recent years, but now developers are scrambling to scale back. The premier Nashville condominium, Signature Tower, has reduced its grand vision, from 70 stories with 400 units to 50 stories with 50 larger sized units. Condo developments, such as The Braxton in Ashland City and 5th and Main in East Nashville managed to finish construction, only to end up in receivership. Woodland Commons (formally 800 Main) has announced it is downsizing from a 336 to a 266 unit apartment community.


There are "green shoots" in the Nashville real estate market. For example, the new high-rise Nashville condo in The Gulch, Terrazzo, recently sold units ranging in price from $349,000 to $734,000. Icon in the Gulch began selling last summer and has nearly sold out; however, many of their buyers have been slow to close due to the economy. The midtown Nashville condo development, The Adelicia, sold out earlier this year after offering reductions on their remaining units.


This trend toward downsizing is also spreading to the suburbs. The Brentwood Journal reported that only 12 permits have been issued to build new homes in Brentwood TN this year. During the same period, there were 50 permits for new homes in Brentwood TN in 2008; 109 permits in 2007. Meanwhile, the number of permits for add-ons and remodels for Brentwood homes has stayed steady in all three years at around 60.


According to the latest Zillow Real Estate Market Reports, homes in Brentwood TN have decreased 3.7% in the first quarter of 2009, compared to the first quarter of 2008. Nationally, home values have decreased 14.2% during the same period. Single family homes in Williamson County (which includes homes in Franklin and Brentwood) have decreased 10% in value in the last year.


On the average, Franklin TN condos and Brentwood TN condos have lost 4% of their value in the last year, while actual closings have dropped by 29%. "Naturally, developers are going to think twice before breaking ground on a project when faced with those kinds of numbers," Fulmer said. "It's positive that less is being built right now, so demand can catch up to inventory."


While it is a painful time for developers, it is a unique opportunity for buyers and investors looking for Nashville real estate. "I know of condos in Franklin and Brentwood TN that are priced well below market," Fulmer added. "If you've been on the sidelines, now is a great time to take advantage of the deals." For more information, contact Jeff Fulmer at http://www.jefffulmer.com/ or 615-545-8611.


SOURCE Jeff Fulmer Real Estate