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.

Condos: Frenzied building turns to bidding

Nashville’s early projects were met with open arms, but a credit crunch and oversupply left some developers out in the cold

Nashville Business Journal - by Eric Snyder Staff Writer

Within a few years, all of the condo units downtown that didn’t exist a decade ago will have sold — but tracing that trajectory hardly makes for a straight line.

Over the past 10 years, hundreds of millions of dollars in glass-and-steel condos went up, while other grand plans fell apart, leaving behind only pretty pictures and ambitiously optimistic feasibility studies. Square-footage rates also have been up and down — from topping $400 a square foot as confident investors awaited even higher rates in planned buildings that never came to be, to plummeting below $150 a square foot as investors snatched up units at auction.

It all began in 2004, when Tony Giarratana and the Atlanta-based Novare Group broke ground on Viridian. Units in the $70 million, 31-story development were sold out months before it was complete. Within months of opening, several buyers put their units, many bought for between $260 and $270 a square foot, back on the market. They fetched upwards of $380 a square foot; a few non-penthouse units broke through the $400 ceiling.

People took notice.

Bristol Development Group wasn’t even thinking about condos as it built The Bristol on Broadway, a 171-unit development they’d conceived as apartments. According to Ashlyn Hines, a Bristol principal and co-founder, construction was halfway complete when Village Real Estate Services approached and said they believed they could sell the units outright.

Bristol became sold on the idea and halted construction for months as it retooled aesthetics. The project was a hit, selling out in October 2006. Bristol West End, also conceived as an apartment development, was switched to a condo before construction commenced.

Sales also were strong for the Adelicia, a luxury Midtown tower developed by Ray Hensler, now president of Market Realty Advisors, that opened in December 2007.

“They were looking at a demographic that was completely underserved, and probably continues to be underserved,” said Grant Hammond, a real estate broker with an emphasis on condos.

Bristol Development Group, born in 1999 as an apartment developer, went on to build two more condo projects — the Gulch’s Icon, which opened in the spring of 2008, and Velocity, which opened in the fall of 2009.

By this time, the Nashville condo market was no longer an uncontested one, the result of bountiful capital for developers and exceedingly accessible mortgages for buyers. In addition to the Icon, 2008 saw the opening of Giarratana’s Encore and Affordable Housing Resource’s 5th & Main. Crosland Tennessee’s Terrazzo and Rhythm Partners LLC’s Rhythm at Music Row both opened in 2009.

The ground floor

Nashville codes forbade residential uses downtown until the mid-1990s, but early in the past decade, city officials and downtown advocates began championing a livable downtown.

In 2003, the office of then-mayor Bill Purcell issued the Downtown Living Initiative, which was created to “encourage the production of well-designed market-rate and affordable housing in a healthy downtown neighborhood.” The initiative touted Economics Research Associates’ 2003 findings that Nashville had a “deficit” of 4,400 residential units.

Then as now, advocates for downtown living pointed at the huge numbers of downtown residents in cities like Charlotte, Indianapolis and Memphis, compared to the 5,000 or so living in downtown Nashville.

But the momentum didn’t last. As the economy tanked and more units came on the market, many buyers with contracts got cold feet.

“Just like everywhere else — our demand curve, at a certain price level, turned out to be much smaller than we thought,” Hensler said.

Bristol Development Group sent letters to Bristol West End and Icon buyers, threatening legal action if they did not close on their contract. Rhythm Partners sued some of its would-be condo buyers.

The 5th & Main project, built by Nashville nonprofit Affordable Housing Resources, was taken over by Wachovia Wells Fargo & Co. in February after the developer fell into default. Wachovia is now offering discounted units itself.

Three condos at Rolling Mill Hill, a housing development spearheaded by MDHA, also fell into receivership last year when RMH Development 1 LLC, MDHA’s development partner, couldn’t pay $21.4 million in construction loans.

Several other projects were floated — and in some cases, widely trumpeted — but never got off the ground.

RCR Construction scrapped plans for The Meridian at West End Park, a 52-unit project off West End Avenue, in 2006 after high asking prices — about $300 per square foot — resulted in little pre-construction interest from buyers.

Developers Sonny Belew and Mark Lineberry announced plans in 2007 for The SoBro, a $50 million, 16-story condo tower south of Broadway with more than 200 units. Construction never commenced, and the project’s Knoxville bank won back the site at a December foreclosure sale.

Giarratana announced plans for Signature Tower in early 2005, with original plans calling for office and hotel space in addition to hundreds of condominiums in what was to be the Southeast’s tallest building. The project now is on hold, its loan having defaulted multiple times.

More visibly stalled is Alex Palmer’s West End Summit. Palmer acquired the last of the necessary parcels in 2005 for what was to include more than a half-million square feet of office space, a luxury hotel and 60 deluxe condominiums. A billboard is still vaunting the project on-site, where ad-covered fencing obscures the dormant construction area, whose large pond resembles an abandoned quarry.

Possible sales momentum

Hines, of Bristol Development Group, disputes claims that condo sales have “stalled.”

“That’s not true. People are buying condos. It’s just a matter of how much supply you’ve got on the market,” she said, claiming that 200 Icon units have sold since August 2008.

Dozens of units were sold at auctions in the fall: 27 were sold at auction for Terrazzo at an average discount of 33 percent, while 32 were sold for roughly half off in John Coleman Hayes’ West End luxury condo weeks later.

“The momentum that I’m seeing is in the velocity of sales,” Hammond said. He expects the drop in prices that have lubricated a higher sales volume to continue this year. Several said today’s current inventory will be sold in the near term; Hines estimated this could take between 18 months and two years, while Hammond predicted 36 months.

“My sense is that we’ve hit a lull with the world economy, but we’re still underserved downtown with our working population,” said Mark Deutschmann, CEO of Village Real Estate.

Hensler said a stabilized market will bring smaller projects with it: “I suspect the next much smaller wave of density we’ll see will come from smaller rental projects. As a market, I think we’ll have to more gradually work ourselves back up to doing large projects.”