Where Housing Will Be in 2012

Home prices are likely to fall for the next year, then stabilize, with a rebound in 2012 as the overall economy takes off again Bloomberg Businessweek

By Peter Coy, Mara Der Hovanesian, Christopher Palmeri, Amy S. Choi and Tara Kalwarski


Americans have not seen a boring housing market since the last millennium. You know—the average, ordinary kind of market where supply just about matches demand, prices are steady, and real estate ceases to be a topic of daily conversation. Instead, we've had six years of upside craziness followed by three years of downside terror. Now we're in a tug-of-war between those who think we've finally found a bottom and those who are convinced that the overhang of unsold homes is going to push prices considerably lower.

By 2012 we may finally get back to blissful boredom. With any luck, three years should be long enough for the U.S. economy to recover and for the nation's housing inventory to shrink to more normal levels. At that point, housing will return to its old ways, with prices governed not by national mood swings and global credit crises but by local issues ranging from zoning to immigration to job growth.

Prices? While they're likely to keep falling a while longer under the weight of foreclosures, the market is definitely closer to the bottom than the top. "We expect prices to drop for another year and then stabilize before starting to rise with incomes," says Standard & Poor's (MHP) Chief Economist David Wyss. Moody's Economy.com (MCO) predicts the S&P/Case-Shiller U.S. National Home Price Index, maintained by data specialist Fiserv, will fall about 16% this year before regaining ground. Based on the National Association of Realtors national median home price of $180,000 for the fourth quarter of 2008, that would mean a median of $152,000 at the end of 2009 and then a rebound to $179,000 by the end of 2012.

ALL REAL ESTATE IS LOCAL
Of course, the national median price is an artificial construct, since there is no such place as National Median, U.S.A. That's why the following pages provide up-close looks at seven markets: Omaha; Seattle; Saratoga Springs, N.Y.; Salt Lake City; Nashville; Austin, Tex.; and Merced, Calif. Each illustrates a different trend that will have a big impact on sales and prices across the U.S.

Local job growth is one of the most important factors to study when assessing a market's prospects. Omaha, for example, which has attracted employers such as Yahoo! (YHOO) and Google (GOOG), missed out on the boom but is likewise dodging the bust. With the city adding jobs, the prospects for home prices look good. Detroit, where home prices fell by a third from 2003 through 2008, is likely to suffer even more in coming years as the auto sector continues to shrink. Demographic change, another trend examined here, is equally influential. For instance, Salt Lake City's youthful population is primed for house buying. While the bust left prices in once-bubbly Western markets such as Phoenix and Vegas lower in 2008 than in 2003, Salt Lake prices rose 51% over that period.

Other important factors are even more local than those, such as how far a house is from the nearest supermarket. You'll know we're back to an ordinary, boring real estate market when buyers focus less on the intricacies of foreclosures, short sales, and the like and go back to the things that used to matter most: What are the schools like? How quiet is the neighborhood? When am I going to have to replace that roof or cut down that diseased oak?

Sellers Mark and Maura Rampolla, who put their house in Oradell, N.J., on the market early this year, are coping with ultra-local issues such as their house being on a fairly busy road. They're also up against the national housing crisis angst. The Rampollas bought their house for $556,000 in 2004. Now they need to sell it because they're moving to the Los Angeles area to set up a West Coast distribution hub for their coconut-water sports-drink company, Zico.

They listed the house for $599,000, which would represent a loss after factoring in closing costs and renovations. House hunters didn't even nibble on the property that the Rampollas and their two young daughters have grown to love. In mid-June the couple dropped the price to $559,000. "People say it's a beautiful house, but they're just very nervous right now," says Maura.

The Rampollas will probably end up being the first owners to lose money on the Oradell home since it was built in 1925—a phenomenon that's happening across the U.S. The classic American foursquare, with four bedrooms and original chestnut molding, was sold by the Bonavita family to the Riccio family for $47,000 in 1972, the first recorded transaction price. The Riccios made out by selling to the DeSouza family for $285,000 in 1997. The DeSouzas sold just seven years later to the Rampollas for $556,000. "We actually bought the house in a day," laughs Maura. "Mark ran through the house in 10 minutes, I kid you not, because he had to get to a meeting in Queens. ... We had nothing to sell, and we just said: 'Great!' "

The good news is that the Rampollas' loss could wind up being some first-time home buyer's gain. From now through 2012, lots of families that couldn't afford to buy when prices went through the roof will be able to get in on the ground floor. Based on today's household incomes and mortgage rates, the National Association of Realtors' Housing Affordability Index is bobbing around the highest level since recordkeeping began in 1970. "To generalize, yeah, it is a good time to buy a house. I don't think there's any urgency because I think it'll still be a great time to buy a house a year from now," says economist Richard DeKaser of Woodley Park Research in Washington.

Homebuilders are helping by absorbing their share of the pain. In general, the U.S. needs about 1.5 million new homes a year to accommodate the growing population and the demolition of decayed properties. Builders exceeded that rate during the boom, but now they're building fewer than 500,000 homes per year. Their cutback should reduce the glut of homes and bring the market into better balance by 2012, if not sooner.

A STILL-MURKY PICTURE
Most important, the economy should be growing briskly again by 2012, according to Moody's Economy.com. In May the firm predicted gross domestic product would shrink 3% this year before growing 1.4% in 2010, 4.7% in 2011, and a robust 5.8% in 2012. It's also looking for home buying and building to return to their pre-bubble paces—no higher and no lower—by 2012.

Even if the economy performs as projected, there's still plenty that could go wrong in the housing market. Because conditions have been so unusual, "it's very hard for the model to extrapolate, based on past experiences, what's going to happen this time," says Moody's Economy.com Senior Economist Celia Chen. In a study of global real estate markets, economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the University of Maryland found that home prices fall for an average of six years after a major financial crisis. That would put the U.S. bottom in 2012, or later.

Another risk is that potential buyers will stay out of the housing market, no longer trusting in home appreciation to do their saving for them. Writes David Rosenberg, the former Merrill Lynch (BAC) economist who is now chief economist at Toronto-based asset management firm Gluskin Sheff & Associates: "Baby boomers are still in the discovery process on oversized real estate being more of a ball and chain than a viable retirement investment asset." Rosenberg also is concerned that an aging population won't need the kind of big houses erected during the boom. "The high end of the market will be in a bear phase," Rosenberg says in an interview.

So much has gone wrong with housing lately that it's easy to imagine worst-case scenarios. But in the more likely case, the market will fall some more, bounce off its lows, then gradually start growing. By 2012, families like the Rampollas may even get a warm, fuzzy feeling about homeownership again.

October 2010 Sales

The Greater Nashville Association of Realtors just released their home sales report for October 2010. Last month there were 1,495 closings, down from 2,145 sales during October 2009, representing a 30.3% decrease. These numbers will probably be the 'new reality' as the market adjusts to life without the tax credit.

While sales numbers are down, the average price of sold homes has gone from $160,000in October 2009 to $173,524 in October 2010. During the same time period, Nashville condo prices have gone up from $144,000 (10/2009) to $152,950 (10/2010). The absence of the tax credit may mean fewer first time home buyers are in the market, which in turn may increase the average price of the homes being sold. This increase in prices is still a positive sign given the number of foreclosures and short sales continuing to work their way through the market.

The inventory of available homes and condos for sale in Nashville TN has remained steady (23,398 in 2009, 22,826 in 2010). With lot of choices, competitive pricing and low interest rates, this is a great time to be in the market to buy. If you would like to know more about opportunities for great deals in your area, contact Jeff Fulmer at 615-545-8611 or jeff@jefffulmer.com. If you would like to see the complete GNAR report, click here.

Fannie Mae's HomePath

Missed the tax credit? Missed the days of low down payment loans? Well, there are still opportunites out there. Fannie Mae needs to move their REO (real estate owned by an institution) off the books, so they are offering a deal that requires only 3% down. Because these homes are in foreclosure, many are already priced at steep discounts.

For owner occupants: 3% down, no mortgage insurance required, no appraisal required. Down payment can come from a gift, a loan from a non-profit, state or local government or an employer. Seller can pay up to 6% of sales price toward borrower’s closing costs. For an investor, it’s 10% down, and seller can pay up to 2% of sales price toward buyer’s closing costs. Still no appraisal and no mortgage insurance.

To find the homes which are eligible, go to www.HomePath.com and search by state and county. From the Fannie Mae site you can also get set up to receive alerts on new HomePath-eligible listings. Currently, there are several listings in Davidson and Williamson County.

Condos are also eligible, even those that do not meet standard loan criteria. Homes are sold “as is,” and buyers have a 10-day inspection period. For the first 15 days of a listing, owner-occupants get preference and have what Fannie Mae calls a “First Look” period during which only owner occupants may submit purchase contracts. Following 15 days, if the home is unsold, it’s “open season” and non-owner occupants become eligible to purchase. Some of these homes draw multiple offers and sell quickly.

Gary Moore with First Community Mortgage is a banker approved for these HomePath loans. You can contact Gary at 615-579-8658 or at gary@brentwoodhomeloan.com to see if you qualify.

If you are interested in looking at homes or condos that are approved for a HomePath loan, feel free to contact Jeff Fulmer with Main Street Real Estate at 615-545-8611 or jeff@jefffulmer.com

Sales Slow, Prices Climb in Nashville

According to the Greater Nashville Association of Realtors (or GNAR), there were 1,745 homes sold in the month of July, which is a 21 percent decrease compared to the 2,241 closings reported in July of 2009. Year-to-date closings are at 12,768, which is still an 11.5 percent increase over the 11,454 closings reported through July 2009.

On the other hand, prices for both single-family and condominums rose. The median price of a single-family residence was $181,000 and for a Nashvile condo it was $149,900. By comparison, the median price of a single family residence in July of 2009 was $171,100 and for a condominium in Nashville it was $142,146.

The tax credits brought in a lot of new buyers to the market, which helped increase the number of sales. Once the tax credits expired, it was just a matter of time before we saw sales volume drop off. On the other hand, those new buyers tended to purchase entry level priced homes and condos. Now, those average sales prices are starting to climb back up, which is good for the overall market.

Click here if you would like to see the entire GNAR's press release. If you have any questions about selling or buying home, feel free to contact Jeff Fulmer at 615-545-8611 or at jeff@jefffulmer.com

My Kentucky Home

Offered at only $84,900, 5314 Kentucky Avenue is a cute bungelow on the west side of town. This all brick 860 square foot home has been renovated with hardwood, new carpet and linolium flooring. While it has only one bedroom and one bath, an office could easily be a second bedroom. All like-new appliances stay with the house, including a refrigerator and a range. Fresh paint (inside and out), new lighting fixtures, and bathroom amenities give this 1930s home a fresh look and feel. The new back deck looks out on a spacious, level backyard. Located in an up-coming neighborhood, this great little home is really worth a look. Feel free to give Jeff Fulmer with Main Street Real Estate a call at 615-545-8611 to set up a showing.

Finally Time for Solar Energy?

On Saturday, I went to "Solar Day" sponsored by Lightwave Solar in Nashville. Already a believer in the virtues of solar, I came away even more positive about using sunlight to help meet our energy needs. To sum up the major advantages: there are NO pollutants and, after installation, it is essentially a FREE energy source. Of course, the ultimate question is, is it cost effective and does it make sense for the average consumer?

To answer that question: Yes, it does make sense, provided you have the money to invest on the front end. For example, I inquired about putting ten panels on the back side of my roof and was told the cost would be about $14,000, including installation. The federal government has a 30% tax credit going, so that reduces my costs to about $10,000. (TVA was offering a $1,000 installation credit; however, that is pending). Ten panels would generate an average of 2 1/2 kilowatts per hour and there are about five prime "sun hours" a day in this area, giving me a total of about 12 kilowatts a day. That would knock about $60.00 off my electrical bill a month, making my payback on the investment to be about 13 years.

Of course, the more panels you have, the more energy you can offset. To completely power a house, it might hypothetically cost about $35,000, including turnkey installation. In 15 years, you would break even; in 30 years, you would have made $43,000 (in electrical savings) on your original investment. Of course, that is if energy prices remain stagnant. If they rise, which many expect, then your savings could be even more significant. In a way, by purchasing a solar system, you are locking in electrical rates for decades.

Steve Johnson, Lightwave President, invited us over to his house where he has twenty to thirty panels on his roof. It actually looked pretty cool and was more than enough to run his entire home. In fact, Mr. Johnson passed around his energy bills, which showed where he was credited with almost $200 in May. As a real estate agent, I haven't seen many houses with solar panels; however, it really should be marketed as a huge upgrade. I can't think of another investment a homeowner makes that is guaranteed to pay them (or the next homeowner) back every month for twenty or thirty years.

As Mr. Johnson demonstrated, it is now commonplace to have online and wireless monitoring for your energy system. Information is gathered from data off the inverter (converts to the kilowatt) so the homeowner can literally see what their system is doing from their computer or I-phone. If excess energy is being produced, it will be added back to the grid and credited to the individuals account. If the grid goes down, then the solar user's lights will still go out, unless they have a battery system for storing their own energy. This is another expense, but may be well worth it if you want to produce and keep your own energy in case of a blackout.

Unlike coal (the biggest air polluter), solar does not have to be shipped by barge and then travel along power lines to the end user. In fact, long distance transmissions (through switches and substations) can lose up to 75% of their power along the way. Solar energy comes directly from your own house so there is no loss of power. In addition, solar produces no carbon emissions, no particulates, no mercury, no toxic sludge. It also doesn't use valuable water resources for cooling the turbines and engines used in coal and nuclear energy plants.

With just under five average hours of sunlight (including all cloudy days, etc.), Tennessee certainly has enough sun to make solar viable. For the last few years, Germany has been the biggest investor in solar energy and they have about as much sun as rainy Portland or Seattle. (China now leads the world in solar investment). Tennessee is getting a boost from the solar sector with the announcements that Hemlock Semiconductor and Wacker Chemie are opening major plants here (Clarksville and Chattenooga, respectively). This is a great opportunity for the state to embrace the new technology and the potential business it brings.

In the 70s, Jimmy Carter put solar panels on the White House and challenged the US to produce 20% of its energy from the sun by the year 2000. It was a realistic goal that would have been a significant step toward energy independence and allowed us to lead the world in this industry. Unfortunately, the solar panels were quickly torn down and we went right back to taking the easy way out by relying on oil, gas and coal. Within the last five years, solar has experienced a resurgence and now there is another opportunity to take advantage of a virtually untapped, omnipresent resource.

Another interesting factoid I learned: if you take a picture of the sun over the course of a year, every day at the same time from the same position, it will make a figure eight or more accurately, a helix or an infinity pattern in the sky. Maybe it's just a weird coincidence, or maybe it is some sort of cosmic clue that the sun has an infinite amount of energy to offer, if only we have the will to grasp it.

Despite Setbacks, the Nashville Real Estate Market Remains Strong

In aftermath of the Federal tax incentives expiration, as well as a devastating flood, the Nashville real estate market continues to look strong heading into summer.

Brentwood, TN (PRWEB) June 16, 2010 -- With the Federal tax credits expiring at the end of April, there were many doom and gloom predictions for residential real estate. Even with a flood of historic proportions to contend with, the Nashville real estate market seems to be weathering the storms and prevailing.

The Greater Nashville Association of Realtors (GNAR) reported 2,270 home closings in May, a 27.3% increase in home sales from May 2009. Median prices decreased slightly, less than one percent. Nashville condo sales rose (from 228 in May 2009 to 250 in May 2010), while condo prices dropped about 3%. Inventory of homes and condos for sale in Nashville TN also dropped to about a ten month supply.

“The tax credits expired, but buyers are still taking advantage of the incentives by having a contract signed by the end of April and not close until the end of June,” Jeff Fulmer, a Nashville Realtor, explained. “That means that buyers are still closing on homes in May and June on contracts they signed in April.”

The most significant local event in years was the Nashville flood, which displaced thousands of residents. “While most will rebuild, there is a percentage that will relocate elsewhere in Nashville,” Fulmer said. “There is some speculation that the flood may end up helping certain areas of town through relocation, although it’s been devastating to the areas hardest hit, and the people whose lives have been turned upside down.”

In neighboring Williamson County, the number of suburban single family residential closings in May 2010 increased 45% from May 2009, while the median price increased over 3 percent. Days on the market decreased by 12 days compared to the same period last year. Alan Jackson’s record breaking 28 million dollar home sale gave the average price for homes in Franklin TN a bit of a boost.

Condo sales in Williamson County were up 30% in May 2010 from twelve months ago; however prices have dropped. “The housing credit encouraged many first time home buyers, and they were often looking at lower price points,” Jeff Fulmer said. “The number of condo sales in Williamson County is encouraging; however, it is still less than half of what they were in 2007 and 2008.”

“The Franklin TN condos that have been selling the most so far in 2010 have been the lower priced developments, such as Laurelwood,” Fulmer said. “A wide variety of Nashville condos are selling well. For example, the Icon and Rose Monte Nouveau both sold several units in May.”

Evaluating an Investment Property

by Jeff Fulmer

It's a great time to invest in real estate - property values are down and so are interest rates. But, how do you go about evaluating if a property is a sound and worthwhile investment? How can you compare one duplex in Sylvan Park to another one or determine if that condo for sale in Nashville would make a good rental?

Well, how much the seller is asking has absolutely nothing to do with the actual value of a property. What the previous owner paid for the property is equally irrelevant. To ascertain a rental property, it's important to review the four basic reasons for investing in real estate:

1. Income or cash flow
2. Principal reduction
3. Tax savings, primarily depreciation
4. Appreciation

It's a wonderful thing when all of these advantages come together to maximize your overall investment. However, principal reduction takes years to pay off, and now, so does appreciation. While there is a lot to be said for tax savings (see my previous blog entry, "What Everyone Should Know before Investing in Real Estate"), it is not a good reason to pick one property over another. The most important component to evaluate a property is the income or cash flow.

So, the next question to ask is how much money or income is the property producing? This is a harder question than it sounds because there are a variety of types of income: gross scheduled income (maximum rents), gross operating income (after vacancy rates), net operating income (after operating expenses), and cash flow (after debt service, but before taxes). You will need to answer all of those questions as accurately as you can before delving into the methods of valuation:

1. "Gross Multiplier" is the price you paid divided by the gross income. This will give you a quick, rough number 'times gross.' The problem with this method is it doesn't take into consideration the financing or operating expenses.

2. "Price Per Unit" is the total price divided by the number of units and is often used when looking at multi-unit buildings. There are people who say they won't pay X amount per unit, but if they are not looking at the 'income per unit,' it's not a very useful number.

3. "Price Per Square Foot" is the total price divided by the total square footage; yet another very popular means for evaluating all types of real estate. For example, the price per square foot for a home in a Franklin TN neighborhood may be $130 a square foot, but the home you are looking at may need to be gutted, or it may be much smaller than the average, driving up the price per square foot. Yes, it's a good number to know, but it doesn't take into consideration the size or quality of a property and, in the case of rental property, it doesn't include income or expenses.

4. "Cash on Cash" measures cash flow divided by the amount of cash invested. This percentage is probably the best method to evaluate a given property since it takes into account income, expenses, financing. What it doesn't do is translate easily into a price you should pay for a property and is best used to compare with other properties.

5. "Capitalization or Cap Rate" is net operating income divided by the total price. Like "cash on cash," cap rates are useful when comparing more than one property. Another way to look at cap rates is what you'd be earning if you paid cash for the property, since it doesn't take into consideration financing. In other words, your "cap rate" needs to be higher than the interest rate at which you are borrowing money.

Now, if you know the cap rates for similar properties in your market, you can work the formula backwards to determine the value of a property. Take the Net Operating Income and divide it by the average cap rate for your area, and you should get a realistic price.

6. "Float and Desire Method" (or Debt Capacity) is what you can afford to pay given a neutral cash flow. The formula is the net operating income divided by the interest rate of your loan divided by the loan to value (if you're putting down 20%, LTV would be 80%). By working the formula backwards (price X LTV = Amount of Loan; net operating Income divided by amount of the loan), you can also determine the highest interest rate you can afford to pay. *(These formulas assume an interest only loan). The point is that financing changes the value of a property.

It's recommended to look at most, if not all, of these methods when evaluating a specific property. Knowing all the numbers going in will minimize your risk and help you find the best property possible for your budget. If carefully selected, you will end up with an investment that will pay you back for the rest of your life.

For help in looking for the right property for you, contact Jeff Fulmer at 615-545-8611 or jeff@jefffulmer.com

HOME SALES INCREASE FOR SEVENTH CONSECUTIVE MONTH

*The following is the press release from the Greater Nashville Association of Realtors April Home Sales Report. If you would like to see the actual report with the comparison of sales for 2009 and 2008, click here. If you would more information about a house or condo in the greater Nashville area, feel free to visit my web-site at http://www.jefffulmer.com/.


There were 2,145 home closings reported for the month of April, according to figures provided by the Greater Nashville Association of REALTORS®. This represents an increase of 33.7 percent from the 1,604 closings reported for April 2009.

Year-to-date closings are up compared to last year with 6,337. That is an 18 percent increase compared to the 5,366 closings reported through April 2009.

“For the seventh consecutive month, home sales in Greater Nashville have increased,” said GNAR President Lucy Smith. “Stable prices for single family homes and condominiums paired with an increase in pending sales create a hopeful sign as we move into the summer selling season.”

“Many people may be wondering about the impact the recent flooding could have on the real estate market. Clearly, the damage and loss is significant in both downtown commercial and area residential property. There may be a brief impact, but there is likely to be continuing sales activity throughout Middle Tennessee. And, the exceptional job of response by both area volunteers and community leaders confirms that Greater Nashville will continue to attract companies and families. The true heart of this city has been revealed to people around the country and what they are seeing is very compelling,” Smith said.

There were 2,505 sales pending at the end of the month, compared to the 1,865 pending sales at this time last year. The average number of days on the market for a single-family home was 87 days.

The median residential price for a single-family home during April was $164,950 and for a condominium it was $143,950. This compares with last year’s median residential and condominium prices of $164,500 and $149,900, respectively.

Inventory at the end of April was 24,352, down slightly from 24,408 in 2009.

“Inventory remains stable, down only slightly from where it was a year ago,” Smith added. “Residential and condominium inventory levels are both up from where we were last year, with farm, land and lots down. The increase in home sales over the past several months proves people are continuing to make Middle Tennessee their home. Even with the expiration of the home-buyer tax credit, low mortgage rates and median prices make this an ideal time to purchase in Greater Nashville.”

Agent: Prices will rise as waters recede

Hammond looks to post-Katrina New Orleans for indicators
Print By J.R. Lind
05-05-2010 3:03 PM

Nashville real estate agent Grant Hammond thinks housing prices will head for higher ground as the Cumberland recedes.

Hammond blogs that the basic principles of supply-and-demand are in effect – and uses a post-Katrina New Orleans as an example.

As New Orleans recovered, rental prices jumped 39 percent and home prices in the suburbs surged. Some of the Big Easy's bedroom communities had home prices increase by as much as 23 percent in the months following the hurricane.

Of course, it's not an exact parallel. Devastation was widespread in New Orleans and many people left the city completely. Rebuilding was – and continues to be – a slow process. Hammond predicts home prices in the hardest hit areas of Nashville – Bellevue, Antioch and Pennington Bend - will drop sharply. But, he suspects, widespread out-moving may not be a problem.

"However, there are several large rental complexes very near those areas that may allow displaced residents to temporarily remain close to home. This is an important fact, since the further loss of consumer spending in those specific areas would magnify the loss in real estate prices through population attrition," he writes.


Hammond predicts a spike in sales in neighborhoods near Bellevue – specifically northern Brentwood, Franklin and West Meade.

"Eastern Bellevue, Green Hills, Hillwood and West End may see an increase in rental demand. Unquestionably, downtown Nashville itself as well as the Cool Springs area will experience higher than usual demand as displaced persons attempt to secure a rental or permanent residence closer to where they work," he said.

Hammond agrees with what a North Dakota agent told NashvillePost.com earlier this week: The flood could prove to be a boon to the Nashville real estate market.

"It is true that Nashville is in the beginning stages of scratching and clawing its way out of the national economic downtown. It is also true that jobs and general optimism had also begun to return to this area. For the supporting reasons above, I am predicting that the resulting economic impact from the flood will cause the Nashville real estate market to recover faster than if the flood had not occurred. The storm has caused the total inventory of homes to decrease more than the resulting demand. While this affect many only last 6-12 months, it may seamlessly blend into a recovering national recover," Hammond said.

What Everyone Should Know Before Investing in Real Estate

Investment property is a proven way to build wealth over the long term. The key is selecting the right property, structuring the deal correctly, and knowing how to take advantage of opportunites the IRS gives you. While I was somewhat dreading it, I went to a tax seminar on investment properties this week and came away surprised with how interesting and useful the information turned out to be.

When approaching real estate investments, many people simply pick a property they hope will go up in value and then try to negotiate the best price possible. Over the long term, real estate will appreciate, but the property had better 'cash flow' in the meantime. Cash flow is the net operating income being greater than the mortgage. Obviously, this it critical for being able to hold on to a property year in and out, but it's only the first step in evaluating a property.

An important question to ask is what is the return on the investment. To answer that, you need to take pre-tax cash flow, add in the principal reduction and the taxes saved (through writing off interest payments and depreciation) and then divide that number by the actual cash invested in the deal. This can give you a fairly comprehensive number to compare and contrast with other properties.

Capitalization or "cap" rate is always a popular percentage to toss around when evaluating commerical and/or investment properties. The formula to determine the cap rate is the net operating income divided by the purchase price. There are a lot of questions about what the cap rate should be: 7%, 8%, 9%, or more if you can get it. Since this number doesn't take into consideratin the interest rate on the loan, ultimately the real question is whether the cap rate is high enough to pay for your financing - with a little left over to pay yourself.

"Cash on Cash" is another formula that simply looks at the pre-tax cash flow and divides it by the cash invested. That number will give you a quick analysis of how well you are putting your money to work. Once you find an investment property that meets the criteria you are looking for, the next step is buying it in the right way.

Most people know to depreciate, but they simply divide the property into land and the rental building at 20% and 80% respectively - or whatever the tax records tell them. The building depreciates at around 3.5% a year, while land doesn't depreciate all. More sophisted investors will 'bifercate' by including two often overlooked catagories into their offers: 'personal property' and 'land improvements.'

Appliances qualify as 'personal property' and depreciate at 20% the first year; 32% the second year. Land improvements include anything that doesn't service or need the main building (pool, shed, fence, landscaping, etc.) and depreciates at 5% the first year; 9.5% the second year. These numbers add up quickly and can help to offset any gains, making the property more valuable on an after tax basis.

What IRS giveth, it also taketh away - and it taketh away (or 'recaptures') at a tax rate of 25% for any deprecriation that was taken on the property. The way to avoid this is to use a 1031 tax deferred exchange and buy another property equaled to or greater than the original property.

There are more rules regarding 1031 exchanges, bifercation, and the rest, so make sure you consult a real estate expert and/or an accountant before acting. Feel free to respond if you have other tips regarding real estate investing, or contact me if you have any questions about investment properties.

Whether you're looking for a duplex or home in Franklin to invest in, or a condominium in Nashville TN, I will be glad to help you find the right property for you and your budget, as well as help you buy it the right way.

You can always reach me at jeff@jefffulmer.com, 615-545-8611 or through Facebook or my Greater Nashville Real Estate web-site.

Nashville Condos

If you are interested in the new luxery downtown and midtown condos in Nashville, check out this video. It's a quick overview (current prices and unit sizes) of all the major high rise and mid-rise condo developments that have gone on the market in the last few years, including West End Condos, Adelicia, Bristol on Broadway, Rhythm at Music Row, Velocity in the Gulch, Icon, Terrazzo, Encore!, and the Viridian.

If you have any questions, or would like to take a closer look at any of these condominiums in Nashville, feel free to get in touch with me at 615-545-8611 or jeff@jefffulmer.com

Williamson County Home Sales for March

Williamson County Association of REALTORS® Announces March 2010 Sales Statistics
April 8, 2010 (Franklin, TN) - The Williamson County Association of REALTORS® announces the statistics for home sales in Williamson County, TN for the month of March 2010. There were 235 residential and condominium closings reported during this period according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle Tennessee region.

The number of single-family residential closings increased by over forty (40) percent compared to March 2009, while the median sales price experienced a slight decrease of three (3) percent. The median is a typical market price where half of all homes sold for more and half sold for less. The average days on the market (DOM) for residential homes increased by eight (8) days compared to the same period last year.

“The March 2010 sales figures offer encouraging news for both the housing market and the local economy. In addition to benefiting potential buyers and sellers, increased home sales produce a tremendous ripple effect throughout the economy, impacting a variety of businesses ranging from local hardware stores to national retailers. This positive momentum will hold as the number of pending sales continues to increase, carrying us forward into the busy summer months” said Karen Baker, 2010 WCAR
President.

Click here to see the entire article and the sales reports (2008 - 2010) from WCAM. Feel free to contact me, if you have any questions about Brentwood TN Condos, Franklin TN condos, homes in Brentwood TN, or homes in Franklin TN.

HOME SALES INCREASE OVER 21% IN MARCH

There were 1,851 home closings in Greater Nashville during March, representing a 21.6 percent increase from the 1,521 closings reported during March of 2009. This makes the sixth consecutive month of home sales increases in the Greater Nashville area. The number of pending sales also rose to 2,231 sales pending at the end of this March compared to 1,731 in March of last year.

There were 4,192 closings in the first quarter of 2010, up 11.4 percent over the 3,762 closings in the first quarter of last year.

The median residential price in March was $159,250 for a single-family home and $137,450 for a condominium. That compares with median prices of $158,000 and $155,704 respectively in March of 2009.

Inventory is up almost 1,000 units over last month at 24,123. This compares to 23,886 in March of 2009. You can click here for a copy of the news release with more detail on home sales for March, including first quarter numbers. And, you can click here for access to information on home sales by county and historical home sales data available on the GNAR website.

A Sweet Deal in Sugar Valley

4036 Sweetberry Drive in Sugar Valley

Located on a quiet corner in the back of Sugar Valley in Cain Ridge, 4036 Sweetberry isn't easy to find. However, once you find it, it feels like home. Listed for $245,000, this 2400 square foot house was built in 2007. Hard wood floors, stainless steel appliances, and a gas fireplace are just a few of the features that add charm to Sweetberry.

2000 of the 2400 square feet (and all 3 bedrooms and both bathrooms) are on the first floor. The 400 remaining feet are found in a large bonus room over the garage. There are cathedral ceilings in the dining room and bonus room/playroom/ office, and both rooms also have big arched windows to maximize the light. The master bathroom comes with double vanities and a separate shower and whirlpool bath. Plus, a back deck will be nice for entertaining and relaxing.

Feel free to give me a call or schedule an appointment with your Realtor if you have an interest in taking a closer look at Sweetberry. If you have any questions about any other homes in Brentwood TN, contact me at my real estate web-site.

1016 Highland, Brentwood TN

My latest listing is in Hillview Estates in Brentwood TN. I love this neighborhood. It's centrally located between Franklin and Hillsboro Roads (just off Holly Tree), so it's convenient to Franklin, Green Hills, Cool Springs, and Brentwood. The homes here are tucked between rows of hills which are beautiful year around, especially in the fall. It's a quiet community with older (1970s) homes that have one acre or larger lots.

1016 Highland has 2333 square feet on one level and 3 or 4 bedrooms, 2 and 1/2 baths. The 4th bedroom is currently being used as a study, but has a closet and could easily be a bedroom. The large master bedroom is on one side of the house and has an extra large walk-in closet and a bathroom with seperate whirlpool tub and shower.

The kitchen is loaded with upgrades, such as hardwood flooring, newer cabinets (2 lazy susans), stainless steel appliances (dishwasher and over/range), and the refrigerator stays. The kitchen opens up to the den which has a vaulted ceiling, large windows and a fireplace. The den opens to the back deck (built-in gas grill), a private tree lined backyard and views of those Tennessee hills I was telling you about. Deer and wildlife are also included!

1016 Highland is listed at $345,000. That includes a full unfinished basement, open floorplan, big private yard, lots of upgrades, and great Brentwood schools. I hope you'll make an appointment with me or your Realtor to see it soon. Thanks!

Buffett Says U.S. Housing Will Recover by Next Year

Below is an excerpt on the article by Andrew Frye in Bloomberg on Warren's Buffet's comments on the residential real estate market.

March 1 (Bloomberg) -- Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote Feb. 27 in his annual letter to shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The worst housing decline since the Great Depression has left one in five U.S. mortgage holders owing more than their houses are worth. Record foreclosures last year flooded a real estate market already glutted with unsold property, causing new construction to fall to the lowest in at least 50 years. The fall in homebuilding is the only fix unless the U.S. decides to “blow up a lot of houses,” Buffett joked.

“People thought it was good news a few years back when housing starts -- the supply side of the picture -- were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations -- the demand side --only amounted to about 1.2 million.”

Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent.

‘Deeply Invested’

“High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.

“He’s very deeply invested in this,” said Tom Russo, partner at Gardner Russo & Gardner, which holds Berkshire stock. “Across his industrial companies, he’s massively poised to gain” from a housing recovery, Russo said.

Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”

Top Selling Condos in Franklin TN

Cue Drumroll...."The award for the top selling condo in Franklin TN for 2009 goes to...(the tension is unbearable, isn't it?).... Hardison Hills! Congratulations!"

In case you didn't know, these awards are rigged - or at least slanted in favor of new construction. Obviously, a development with twenty to thirty new units for sale all year should outsell an established community with only resales.

With that in mind, here is my official list (using MLS data)of top selling developments in Franklin:

1. Hardison Hills with 18 units, averaging a sales price of $159,513.
2. 11th off Main (another new development in downtown Franklin) with (appropriately enough) 11 sold units averaging $328,914.
3. Fieldstone Farms - with 4 units in Prescott Place and 7 units in Windsor Park. (Windsor averaged $209,428 and Prescott around $186,600).
4. McKay's Mill sold 9 condos with an average price of $203,431.
5. Orleans Manor sold 8 units at an average price of $104,362.

Hononable Mentions go to Grant Park, Parkside at Aspen Grove, and River Rest which each sold 7 condos. Andover and Ashton Park each sold 6 units. Avalon, Carriage Park, Laurelwood, Reid Hill Commons, Brentwood Pointe The View, and Westhaven each had 5 condo sales. Forrest Crossing, Gateway and Southwind each had 4 sales.

If you have any questions about any of these or other condos, don't hesitate to contact me at 615-545-8611 or at jeff@jefffulmer.com. I have a video which gives a quick overview of 12 of these developments... You can check that out here on YouTube. There is more information on my Franklin TN Condos web-page.

Top Selling Condos in Brentwood TN

According to MLS/Realtracs, there were 128 condo sales in Brentwood TN in 2009. Concord Place was far and away the best selling condo development in Brentwood with 46 sales. Of course, this large Centex complex on Nolensville Road had more condos on the market than the competition. Fredericksburg and Brentwood Pointe finished 2nd and 3rd with 16 and 15 units respectively. Below are the other top selling condos in Brentwood TN.

If you would like to view a video of the condos in Brentwood, click here. Next up - Franklin TN condos.


Concord Place sold 46 units and the average sales price was $162,486.
Fredericksburg had 16 sales with an average sales price of $219, 168.
Brentwood Pointe had 15 sales with an average sale price of $183,595. *(This only includes the condos in Brentwood and not Franklin).
Brentwood Trace had 14 sales with an average sales price of $141,731.
The Terraces of Brentwood (in Brentwood Chase) had 13 sales with an average price of $221,000.
Mooreland Estates had 8 sales and averages $193,206.

FEBRUARY HOME SALES INCREASE; PENDING SALES CONTINUE TO RISE

There were 1,308 home closings reported for the month of February, according to figures provided by the Greater Nashville Association of REALTORS®.

This represents an increase of 3.2 percent from the 1,267 closings reported in February 2009. Year-to-date closings through February are 2,341, a 4.5 percent increase from the 2,241 closings reported through February 2009.

“The number of closings are up from last year, which has been the case now for five consecutive months. Pending sales have also increased, which is a positive sign for what we can anticipate for the spring,” said GNAR President Lucy Smith. “With median residential prices virtually the same as last year, median condo price down slightly and interest rates still remarkably low, the overall market remains stable with some cause for optimism as people take advantage of these conditions.

“It was expected that the market would stabilize after the significant increases in closings at the end of 2009 due to the tax credit deadline. But, with the next deadline at the end of April, it is reasonable to think that we could see another burst of activity in spring and early summer. And, with increased activity and energy in the marketplace, it is possible that there will be more closings beyond first-time homebuyers in the upcoming months,” Smith continued.

There were 1,614 sales pending at the end of the month, compared with 1,452 pending sales at this time last year. The average number of days on the market for a single-family home was 89 days.

The median residential price for a single-family home during February was $159,900, and for a condominium it was $149,950. This compares with median residential and condominium prices of $160,000 and $151,120, respectively at this time last year.

Inventory at the end of February was 23,159 up from 23,122 in February 2009.

“Inventory is up slightly from last month and pretty even with levels from last year,” added Smith. “With less than 60 days left until the homebuyer tax credit deadline, excellent interest rates and a good variety of homes available in the Greater Nashville market, the spring and summer selling seasons could be better than what was the case during the past two years.”

To see this whole article, complete with graphs, click here. For more information on homes and condominiums in Nashville, feel free to contact me, at 615-545-8611.

What Buyers Want

Or What's Hot (and Not) in New Construction

The Tennessean recently ran an article that looked at the new trends in construction and what selective buyers are currently looing for in their next homes. Not surprisingly, smaller, one-level houses are very popular, as opposed to the bigger three story homes. Large two story high great rooms are less in favor, now considered a waste of space of energy.

Outdoor living space, including outdoor fireplaces are hot. Living rooms are viewd as less important. Buyers are looking for at least one home office and having at least one bedroom on the main floor is a plus, two being even better. If possible, buyers prefer a private bathroom for every bedroom. Less popular: shared or "jack and jill" baths.

Back doors with foyers or 'mudrooms' with built-in cabinets or cubbies are popular. Formal foyers with grand staircases are less sought after.

IN - Granite countertops, trim painted cream, textured faux wall treatments, bronze
OUT - Corlan countertops, white painted trim, small patterned wall paper, brass
HOT - Italian style villa and English French country style homes
NOT - Greek revivial and colonial/traditional homes

ALWAYS HOT - Kitchens that connect with living spaces, hardwood floors, spa like bathrooms, storm protected living areas, and dining rooms.

Check out the article and pictures at The Tennessean.

For more information on homes in Franklin TN, homes in Brentwood TN, Brentwood TN condos, Franklin TN condos, or Condominiums in Nashville that are hot - or not so hot - feel free to contact me at 615-545-8611 or jeff@jefffulmer.com

New Listing in Brentwood Pointe, The View

"The View" is the final edition to Brentwood Pointe, the expansive condo development in Cool Springs. Located on Gen. George Patton between Moores Lane and Mallory Station, convenience to shopping, dining, and I-65 have always been a big selling point for these condominiums. As its name implies, most of Brentwood Pointe is in Brentwood; however, some of the newer units, like "The View," actually fall into Franklin. *(If you would like to watch a five minute overview of the whole development, check out my Brentwood Pointe video).

The newest of the new View are the units in the 1800s (go up the hill, hang a left at the pool). Most have sold out; however, the developers (Haury and Smith) still have a cul-de-sac to finish. They are currently asking $295,000 for the new construction with three bedrooms. My new listing, 1847 Brentwood Pointe, was built in 2006, has loads of upgrades, and is on the market for $284,500.

1847 Brentwood Pointe has three bedrooms (master down), two and a half baths. With a vaulted ceiling and gas fireplace, the living room manages to feel simultaneously spacious and cozy. The kitchen boasts granite countertops and stainless steel appliances. Take your coffee from the kitchen outside to the very private back deck. Or relax in the oversized whirlpooltub in the master bathroom, which also has a seperate shower. Upstairs is a loft space (great for an office or media room) which overlooks the living room. Two more bedrooms on the second floor share a bathroom. There is also a suprisingly large utility room for a washer/dryer, along with easily accessiable storage space. It's also nice to be able to pull your car inside the garage on cold winter days.

Other upgrades include high grade Berber carpet up and downstairs, custom moldings, recessed and upgraded light fixtures, designer painting, ceiling fans, window coverings and treatments, cable access in every room, and storm doors with screens. The deck has outdoor carpet, a collapsible picnic table, and an additional privacy gate. The associatin fee ($150 a month) include trash pick-up, insurance, pool upkeep, building exterior, and grounds maintenance. This is an end unit that maximizes privacy and the ease of condo living.

Contact me at 615-545-8611 if you are interested in taking a look at 1847 Brentwood Pointe. There is a little additional information on area condos on my Franklin and Brentwood TN condos page. You can look at all homes and condos listed in Middle Tennesse from my web-site's home search page. If you would like to discuss condos in Franklin, Brentwood or Nashville, don't hesitate to get in touch with me.

2010 BEGINS WITH INCREASE IN HOME SALES

There were 1,033 home closings in Greater Nashville during January, representing a 6 percent increase from the 974 closings reported during January of 2009. Nashville condominium sales were up considerably.

The median residential price in January was $159,000 for a single-family home and $154,550 for a condominium. That compares with median prices of $165,000 for both condominiums and residential in January of last year. There were 1,295 sales pending at the end of January, compared with 1,282 at the end of January 2009.

Inventory is down to 22,233, compared with 22,509 in January of 2009. You can click here for a copy of the news release with more detail on home sales for January. And, you can click here for access to information on home sales by county and historical home sales data available on the GNAR website.

West End Condos Update

The auction a couple of months ago at the West End Condos was a great opportunity for buyers to pick up a bargain. These luxury one, two, and three bedrom units went for around 60% of their asking price. For example, a three bedroom on the 5th floor with 2,633 square feet that was asking $810,000 went for $365,000. A two bedroom on the 4th floor with views of downtown that was listed at $710,000 went for $340,000. A one-bedroom on the 8th floor went for $242,500 at auction that had been priced $595,000.

Unfortunately, those deals seem to be gone. The sales agent representing West End Condos said that only two of the buyers at the auction have backed out. The rest have closed or are in the process of closing. There were a few units that were not sold at auction - either because they were held back or the developer wouldn't let them go at auction prices. There are still a handful of 2 and 3 bedrooms left, atlhough the developer is flatly turning down auction prices. Expect to pay 30% to 35% off the asking price, which still may be a good deal... Just not as good a deal as two months ago.

If you have questions regarding the West End condos or any condos in Nashville, TN, I hope you'll consider getting in touch with Nashville Realtor, Jeff Fulmer at 615-545-8611.

New Price on 1005 Gracelawn Drive in Brentwood

Looking for an affordable home in Brentwood with a great yard and beautiful views... 1005 Gracelawn Drive is located in the Hillview subdivision which is just off of Manley and Holly Tree Gap (close to Murray). Hillview Estates feels tucked away in the Tennessee hills, but is less than 10 minutes to Brentwood, Cool Springs and Hillsboro Road/Grassland area. It is also zoned for Scales Elementary, Brentwood Middle and High School.

At 1604 square feet, this is one of the smaller house in Hillview and is priced accordingly at only $285,000. Orginally priced at $309,000 (and appraised in October 09 for $300,000, this is going to be a great deal for someone. The property has a level 1.25 acre lot with a fenced backyard, mature trees, and wonderful views from every side of the house.

The recently remodeled house is on one level and features hardwoods in the living and dining room, tile floors in the kitchen. There is a buckstove fireplace in the living room which helps to efficiently heat the house. Three bedrooms and two full baths are situated on one side of the house. On the other side is a two-car rear entry garage.

If you have any questions or would like to take a closer look at 1005 Gracelawn, feel free to contact Brentwood Realtor, Jeff Fulmer, at 615-545-0080. Also, if you are interested in any other homes in Brentwood TN, don't hesitate to let me know.

Pending Home Sales Stabilize, Remain Above Year-Ago Levels

Washington, February 02, 2010

Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in December, increased 1.0 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1. In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.

Lawrence Yun, NAR chief economist, said it’s important to recognize how the tax credit is skewing market data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”


Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

The PHSI in the Northeast rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008. In the Midwest the index increased 5.2 percent to 86.9 and is 8.7 percent above a year ago. Pending home sales in the South rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008. In the West the index fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. “While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun said. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices. “For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilize.”

Williamson's top-selling subdivisions for 2009

Price diversity, choice, seen as key to sales
By Nancy Mueller • FOR WILLIAMSON A.M. • January 15, 2010

In a year marked by economic recession and continued job loss, the Williamson County neighborhoods with the most real estate sales in 2009 were the big ones with diverse price points: Westhaven, McKay's Mill and Fieldstone Farms.

According to the Williamson County Association of Realtors, these three exceeded sales of 75 homes each during 2009, putting them at the top of the heap, sales wise.

The sprawling, 2,115-home Fieldstone Farms, on Hillsboro Road, was built out several years ago, so the sales activity there is composed completely of existing homes.

Broker Diane Christian of Keller Williams sold about a dozen houses in Fieldstone Farms last year and has five listings in the neighborhood now.

She said there are several reasons this subdivision remains popular with buyers.
"One reason that it's popular is its incredible location," she said, which is near downtown Franklin. "Then you have diversity of styles of homes and price ranges.

"There are little communities within the larger community," she added, "And there is a lot of nearby neighborhood shopping, whether you need to get to the dry cleaners, the grocery, the hair salon. It just has a great quality of life, with an elementary school that is within walking distance."

As of this week, there were 44 homes listed for sale on Realtracs.com in Fieldstone Farms, and they ranged in price from $182,000 to $699,000.

Factors aid Westhaven

This fall there will be another Franklin neighborhood that offers walking distance to an elementary school: the ever-growing Westhaven development off Highway 96, west of Franklin.

Ninety homes were sold in Westhaven in 2009, according to Jim Cheney, who is vice president of communications for the developer, Southern Land Co.

Cheney said about 62 of those sales were new homes, "so resale activity was good, but so were new home sales, a point we are very proud of, given the context of the larger market and the demands of the economy."

Westhaven offers diverse housing products, too, from condos and town houses to very large single-family homes.

There were 57 listings in Westhaven on Realtracs.com this week, and they ranged in price from $250,000 to $1,549,000.

"Southern Land feels very fortunate to have performed this well in 2009," Cheney said. "We attribute it to a number of factors: strong builders, classic design and architecture, and they deliver of some pretty significant amenities such as the golf course and Harris Teeter." The grocery opened in the fall in a spot directly adjacent to Westhaven.

Southern Land also began offering an "empowerment program" to buyers in late 2009 that offers a 5 percent discount off the builder's price that can be applied by the buyer toward other expenses.

Price guarantee offered

McKay's Mill delivered 24 new homes to buyers last year, according to Bridget Wright, the marketing director for The Jones Co., which is the builder and developer of this large neighborhood on the east side of Franklin.

Those new home sales along with resales pushed McKay's Mill into the top-selling category.

"We did what I suspect most of the builders who 'survived' 2009 did, and that is make our organization even more efficient," Wright said. He said the company spent time in 2009 on staff training and improvements in processes.

The company also began offering buyers a "purchase price guarantee" for five years on the resale value of their new homes.

Wright said the company believes that the program "tips the scales in our favor" when buyers are comparing the products of different builders.

There were 32 homes listed for sale in McKay's Mill, ranging from condos to executive homes, with prices from $269,962 to $650,000.

The Jones Co. is still building condominiums in Park Run, in Boardgate, which has single-family homes from the $340,000s, and in Hadden Hall, which has executive homes from the $460,000s.

Discounts help drive sales

A group of subdivisions had sales figures following just behind these big three neighborhoods. According to the WCAR, they had sales of between 20 and 37 homes.
At the top of this list is Silver Stream Farm in Nolensville, where 33 new homes were built and sold last year.

"How did we do it? We got our prices down to rock bottom, and we kept them there," said developer Tom Moon. "We reduced prices of the homes, and we reduced prices on the lots, by at least 30 percent."

Silver Stream homes range from the low $200,000s to $375,000 compared with the original plan for home prices in the $500,000s. The neigborhood will have 325 houses when it is completed.

With a swimming pool, clubhouse and 80 acres of walking trails, plus proximity to the new Nolensville Elementary School, Silver Stream is attracting a lot of young families.

Other high-selling subdivisions last year, according to WCAR, were Cherry Grove and Ridgeport in the southern end of the county; Sullivan Farms, Franklin Green, the Villages of Clovercroft and Avalon in Franklin; Ballenger Farms in Nolensville and Temple Hills in northwest Williamson

Colliers: Real estate market ripe for entrepreneurs

Nashville Business Journal - by Eric Snyder Staff Writer

A preview of the year ahead in commercial real estate, released this week by the Nashville office of Colliers Turley Martin Tucker, suggests that some bright spots lie ahead on the path toward complete recovery, but some problem areas remain.

The report, written by Nick Minadeo, research director at the Nashville office, cites an outlook survey conducted in November by the National Association for Business Economics. In it, NABE panelists agreed that the recent recession is over, and while they expect consumer spending to remain lackluster in 2010, they expect a “sizable housing rebound, low inflation and further rise in stock prices,” according to the Colliers report.

Though NABE panelists are “extremely” concerned about high federal deficits, they are optimistic that the Federal Reserve’s policies will not lead to higher inflation.

Nashville fares better than most

The Colliers report often reiterates that the Nashville area’s varied industries allowed it to weather the recession better than most, and should recover earlier as a result. Commercial real-estate in Nashville, meanwhile, “remains focused on small space activity.”

“Decreased consumer spending and high unemployment rates make expansions by most existing tenants an improbability in the near-term,” according to the report. The solution, then, is to draw new companies to Nashville, and while Nashville remains attractive for relocations, the report says hurdles remain: “(E)conomic conditions have prevented corporate decision makers from ‘pulling the trigger’ on possible relocations.”

Office leasing expected to grow

In the office sector, the report forecasts “moderate growth and improvement” through the year. This is expected to first be visible in the suburban markets, especially Brentwood and Cool Springs/Franklin. Speculative construction, meanwhile, may begin tward the end of 2010 or early 2011.

Retail space may not recover in 2010

On the retail front, the report doesn’t expect significant new construction until 2011, with retail rents continuing to decline through 2011 and into 2012. “If you are an entrepreneur, this is the perfect time to start a company,” according to the report. “Rental rates are more reasonable now and staffing costs are less than previous years.”

Don't expect fire sales locally

The report expects that distressed sales in several sectors may increase, though not dramatically.

“(B)ecause the vast majority of Nashville real estate has maintained decent operating fundamentals and a limited number of properties have had loan maturities, the distressed sales that have driven the supply in the market nationwide have not been as prevalent in Nashville over the last year,” according to the report. That is expected to continue this year, though a “slight uptick” in distressed selling is expected, particularly in the retail and multi-family sectors.

“However, for the opportunistic buyer anticipating a significant glut of supply pouring into the market and buying opportunities to be plentiful in the coming months, 2010 may prove to be as disappointing as 2009 in terms of overall transaction volume,” reads the report.

Germantown rowhouses 4th & Monroe bought back by Cadence Bank

Nashville Business Journal - by Eric Snyder Staff Writer


A luxury rowhouse project in Germantown, 4th and Monroe, has been bought back by its lender.

According to Davidson County Register of Deeds documents, Starkville, Miss.-based Cadence Bank N.A. purchased 4th and Monroe’s 39 units, and 1.64 acres of land on which they sit, from Traditional Urban Concepts Inc. on Dec. 31. The transfer, valued at $4.25 million, was recorded on Jan. 12.

The Special Warranty Deed represents “the partial release and discharge of certain debts, obligations and charges …” stemming from a $9 million loan Cadence Bank made to Traditional Urban Concepts. That Deed of Trust was executed in late April 2007. A review of Davidson County property appraisals indicates no units, on which construction began in 2007, have sold.

Attempts to reach Joey Smith, president of Traditional Urban Concepts, have been unsuccessful.

The transfer comes as Cadence Bank, which has offices in Brentwood and Franklin, is weathering its own financial turmoil.

Cadence Financial Corporation, whose principal subsidiary is Cadence Bank N.A., reported a net loss of $13.1 million after the third quarter.

Two members of its board of directors, which recently voted to suspend all director compensation, have recently resigned. One such member, Jimmy Graham, believed the bank’s best option was to sell itself off.

“Now that we know a sale is not going to happen anytime soon, I believe it right and appropriate that I vacate my seat,” he wrote in a letter to the board, made public in an SEC filing. He apologized for leaving “at such a dark hour.”

Nashville foreclosure rate climbs

Nashville Business Journal - by Eric Snyder Staff Writer

Home foreclosure rates in the Nashville area again ticked up in November, according to data released today by California-based First American CoreLogic.

In November, 1.36 percent of mortgages were in foreclosure, according to the company. That's compared to 1.27 percent in October, and compared to .59 percent in November 2008.

However, the November foreclosure rate in the Nashville-Davidson-Murfreesboro-Franklin area remained under the national average of 3.09 percent, and under the statewide average of 1.46 percent.

According to First American CoreLogic, the percentage of mortgages that are more than 90 days delinquent in the area continued to increase, to 5.59 percent in November. That's up from 5.32 percent in October, but still lower than the national average of 8.14 percent and the statewide average of 6.53 percent.

For the year, Tennessee was one of just nine states and the District of Columbia where the total number of residential foreclosures fell, according to California-based RealtyTrac.

According to RealtyTrac’s Year-End 2009 Foreclosure Market Report, Tennessee had 40,733 foreclosure filings — default notices, scheduled auctions and bank repossessions — last year. That was a drop of 7.75 percent compared to 2008, but a 57.19 percent jump from 2007.

Tennessee ranked No. 17 nationally for its foreclosure rate. Nevada, Arizona and Florida rank No. 1, 2 and 3 respectively.

Washington, D.C.'s foreclosure rate fell between 2009 and 2008; other states that saw their rate fall include Connecticut, Indiana, Massachusetts, Missouri, Nebraska, North Carolina, Ohio and Rhodes Island.

Foreclosure filings were reported on 349,519 U.S. properties in December — an increase of nearly 14 percent from November and a 15 percent spike from December 2008.

James J. Saccacio, CEO of RealtyTrac, said in a statement that December was the 10th straight month where notices were over 300,000.

Buying into the Nashville Real Estate Market

The Nashville Residential Real Estate Market for 2008, 2009, and 2010

The Greater Nashville Association of Realtors (GNAR) released their monthly sales report last week. As expected, GNAR finds bright spots in the sales numbers. That is their job after all.

For example, there were 1612 homes sales in December 2009 compared to 1422 sales in 2008, representing a 13% increase. During the 4th quarter there were 5,730 closings in the region, which is a 29.8 percent increase over the 4,413 closings in the 4th quarter of 2008.

Of course, many of these sales can be attributed to the $8,000 tax credit being offered to first time home buyers. A "first time home buyer" is anyone who has not owned a home in the last three years, so many people were eligible to take advantage of this generous federal incentive. Since the credit was supposed to expire December 1st, st, there was a rush of home buyers trying to get in before the deadline. The net effect increased sales numbers, albeit often for less expensive (first-time buyer/entry level) homes.

As it turns out, no one really had to rush since the tax credit was extended - and even expanded. Now, in order to receive the $8,000 tax credit, the "first time home buyers" have until April 30th 2010 to put a contract on their new home, and until June 30th to close. However, this time, it's not just first-time home buyers who are getting into the action. If you have owned your home for five years or more and are moving to a new place, you are eligible for a $6,500 tax credit. (For complete information on the tax credits, click here).

Once again, this should stimulate some real estate activity through the first quarter of 2010. With so many home owners still struggling and the market in the doldrums, keeping the market on some form of artificial life support is probably necessary at this point.

The other (non headline) part of the GNAR report tells a less optimistic story. For example, if you step back and look at the entire year, there were 21,183 closings at year-end for 2009, which is 12.6 percent lower than the 24,246 closings for 2008. We are still in a down (buyer's) market and probably will be for some time.

One positive that I took from the report was pricing levels. The median residential price in December of 2009 was $164,000 and for a condominium the median price was $149,900. That compares with median prices of $163,750 and $132,062 respectively in December of 2008. Without reading too much into those numbers, that at least indicates some stability in the marketplace - and right now, that's a good thing.

So what to expect for 2010? Fortune Magazine (using Moody data) forecast a 6.36% decrease in homes values for Nashville in 2011 (followed by a minor increase in 2012). Personally, that seems overly negative to me, but the main drag on the overall homes values continues to be the number of foreclosures. Once those work their way through the system, we should see more stability and even appreciation. Ultimately, underlying the housing market is the economy and employment. When people feel better about their jobs and finances, they'll become better buyers and that will further support prices.

While it's tough to call a bottom, I think we are close - if not already there. There are truly great deals out there, so if you are thinking about buying, I would encourage you to go for it. Even if you have a place to sell, it may be worth it to test the market. Interest rates are ridiculously low and Congress was pretty clear that there won't be another extension of tax credits, so this should be 'it' in terms of government incentives.

This is not a market to make for a fast buck. I can't imagine another bubble for decade or more (and that's a good thing). As always, look to hold a property for at least five years in order to get your investment back. All that to say, if you are in a position to buy, this is probably as good as it gets. Be patient, do your research, and, of course, hire a good Realtor.

If you have any questions or would like more information, feel free to contact me at jeff@jefffulmer.com or at 615-545-8611. If you would like to see the entire GNAR report, click here.