Year End Real Estate Updates and 2012 Predictions!

The old saying is that all real estate markets are local, and that is certainly true. In the media you hear statistics being quoted , some of which may be conflicting. Are the statistics for local or national sales; new homes or existing homes. Well this update strictly looks at Sumner County real estate.

The easiest way to describe our market in 2011 as compared to 2010 was that it was about the same. In 2011 there were 1,862 residential homes sold at an average price of $194,076. In 2010 there were three more homes sold (1,865), at an average price of $206,435. This translates to a little more then 3% drop in value for 2011. The only encouraging statistic in comparing 2010 and 2011 is that the inventory of homes fell by 13% to 1,622 average number of actively listed homes in 2011. That number while smaller still represents a 12-month supply of homes as the market. By comparison in the excellent market of 2006 there were 45% more homes sold (3,346) in Sumner County and the active inventory was only a 4.5-month supply.

So what does the new year hold for the local real estate market. These predictions are based on the opinions of experts plus my own observations for our real estate market.

(1) The real estate market should slightly improve for 2012.

(2) Home values should stabilize in 2012.

(3) Interest rates should remain very low in 2012.

(4) Home ownership rates will continue to drop and rents will continue to rise in 2012.

(5) As much as 30% of all residential sales will be distressed sales (short sales, foreclosures, and individuals taking personal losses) in 2012.

(6) Banks will do a better job of streamlining and making more efficient foreclosures and short sales purchases. Banks will also release more of the distressed properties to the marketplace in 2012.

(7) The number of licensed realtors in Tennessee will stabilize in 2012.

In my next post I will explain some of the reasons for these trends and the many opportunities they present for buyers and sellers in the coming year.

Have a good and prosperous 2012...

The New Normal For Real Estate!

I see the term "new normal" being used frequently to describe the real estate market in today's world. After five depressed years with no upturn in sight the phrase has real meaning to me. For several years my clients were in denial of the changes and lost values. Now we have just settled into a new paradigm accepting current conditions as normal.

So what is the "new normal"? From the perspective of a professional realtor who started taking pre-licensing classes in 1979, here are a few observations about how business has changed.

The most obvious change is in my volume of sales. In my best years I would sell about sixty homes a year. In the last five years the volume has been reduced to around twenty per year. Not only has the total number of homes sold much smaller, the prices for an average home have also dropped substantially. In 2006 probably 50% of the homes I sold were over $350,000. This year only one topped the $350k range.

Another change has been selling almost exclusively resale homes. In my old business model, 50% of my business was listing and selling new homes of small builders and developers. Sadly many of my small builder and developer clients went bankrupt, some retired, and the survivors have stopped building speculative new homes. Yes, we Realtors have been hurt by this downturn, but builders and developers have been devastated.

Another aspect of this business that has changed drastically in the last five years is the difficulty of getting the signed contract to a successful closing. Banks have been under such pressure from their past mistakes that more loans than ever are not approved. It takes a larger
down payment than I have ever seen in my career to get a loan.

If you are qualified for the loan, the pressures of banks and foreclosure sales have made it difficult to work out the appraisals which can torpedo a solid sale. And if the contract is signed, the loan is approved, and the appraisal, is OK, the professional home inspection can be a major factor in a sale not closing. The "new normal" is that every successful sale that makes it through to closing will have its nail biting, teeth gnashing moments of fear and stress.

Our roles as Realtors have also been changing. With the depressed economy, loss of a job and declining home values, our role as Realtors often turn to therapists and advisers. When prices are rising it is hard to make a real estate mistake. Now everyone is running scared and
consumer confidence is at the lowest level that I have ever seen.

The role of the Realtor has never been more important. The "new normal" is all about playing the cards you are dealt, so to speak, and helping your client to the best of your abilities. The job isn't easy, but if it was easy my clients would not need my services.

It is true that real estate has always experienced its ups and downs and this market too will turn around one day. I started to pursue a real estate career in 1979. While taking my pre-licensing course, interest rates went through the roof so I delayed my entry into the real estate business until 1983. I experienced the savings and loan debacle and the dot com bubble, but this housing recession may follow me to the end of my career. I turn 65 this month, a traditional retirement age, but I plan on working well into my 70's. And for us "baby boomers" this too may be part of the "new normal".

Death Of A Realtor!

Frances Almany passed away last week. She left this earth in the same way she lived her life and ran her business... on her own terms.

Frances was one generation older than me in age and social outlook. She was the top selling agent in Sumner County when I entered the business. Frances was definiely "old school" in her approach to real estate. She probably went to her grave angry about the fact that contracts expanded from a one page to a twenty seven or more page document.

Frances never embraced the computer age. I would guess that she would have liked to have continued using her MLS book. For you younger agents the MLS book was the size of Nashville telephone books published weekly with all the active listings in the area. The books were used until to 1995 when MLS went to a net based system.

Yes, Frances was old school, but there was not another agent that I would rather conduct business with. Frances knew what was important; and that was cutting through the bull shit and getting the deal done. She knew what was best for her clients even when they did not.
When I was president of our local realtor organization I asked Frances to be on a panel of top producers for an association meeting. During the discussion I ask her for a word of advice for the newer agents in attendance. She said that everyone has major business disappointments. A good friend will list or buy from another agent, a big deal will fall through, etc. She said that when it happened to be her she only gave herself twenty four hours to grieve about it, then she gave it up and went on to something positive. I think this was also a life philosophy for her as well as a business philosophy.

Another way that Frances influenced me was as a role model for being a success. Every new agent gets their license then sets foot on a career path without a road map or GPS. I know when I entered the business I looked at the successful generation of realtors before me and tried to measure up to their success and win their acceptance as a peer. I have never been highly motivated by money so my drive to succeed was simply a competition with other realtors like a football or soccer match. My first goal was to be number one in my company, and my ultimate goal was to out sell Frances Almany. I achieved that goal in the mid 90's. I don't think Frances was very pleased with my accomplishment, but I was also grateful to her for setting the bar higher.

Real estate is an odd career. You are an independent contractor and there is no mandatory retirement age. Many of the agents who I looked up to when entering the business have passed on. Very few ever retired. Now that I am becoming one of the "old timers" they still chart courses for a career path that I hope to extend into my 70's.

Thanks Frances, I'll miss you!

Is There a New Normal in the Real Estate Market?

Watching for the real estate market recovery is like chasing a mirage on the desert. You know that national economist are saying that the economy is improving. Unemployment rates are slowly dropping. Activity is increasing. But just when you think you can touch the improving real estate market it disappears before your eyes. This housing recession has gone on for so long you begin to wonder, "Is this the new normal?"

I saw the downturn begin in August of 2006. I was working alot in Fairview Plantation where buyers were coming through daily from all over the country, and my resale business was robust. July 2006 was the best month for closings that I had ever experienced, and the future "was so bright I had to wear shades."

Then in August something happened. Activity greatly diminished, as if cut off by an invisible faucet. There were talks of problems in California, Arizona and Florida, but no one seemed to think that our market was subject to the problems of these out of control appreciating markets. Every drywall subcontractor had turned into a builder, and new construction was continuing at a furious pace. Banks were giving out money like candy on Halloween. I started to watch closely the existing inventories of active listings, and they increased by over 5,000 in just three months.

The ugly truths of the market were beginning to sink in with the realtors and builders a year later in 2007 and early 2008. Then the hammer fell, almost taking out the entire banking system with it in the fall of 2008.

Since then we have languished in a market that has seen an end to speculative construction except for the lower end of the market. Excessively high inventories are chasing a small pool of buyers. Foreclosures have brought down values, and the process of closing a sale can feel like a root canal.

From time to time we see an improvement in sale statistics for a given month, but the numbers are based on sales that are at very low levels when compared to the excellent market of the past. A month of increase will often be followed by a month of declining comparative sales.

So is there "a new normal in real estate?" Probably not, but turning around this market is like turning around a cruse ship; it is going to take a long time.

There have always been up and down cycles in real estate. I started my real estate career in the early 80's when stagflation and high interest rates depressed the markets. 1985 and 1986 were recovery years, and then the tax law changes started another downturn that persisted for four years and brought down the savings and loan institutions with it.

There have been other brief downturn in the 90's like the dot-com bubble and 2001 the 9/11 crisis, but none of these cycles have had the impact of this current housing recession.

I personally plan to continue to work productively in my real estate profession well after most people's retirement age. I enjoy my career and the stimulation it provides. I can only hope that I will work and live long enough to see a return to the good times again.

The 10 Things You Must Do Before You Call Yourself a Nashvillian!

OK, so I'm from Hendersonville, but if I was anywhere else in the world and someone asked me where I am from my answer would be Nashville. Hendersonville was incorporated in 1952 and is a fine place to live, but let's face it, we are first and foremost a Nashville bedroom community.

I personally am not bothered by Hendersonville's split personality because I love Nashville "Music City". For a city of it's size Nashville has a distinctive personality and so much going on that a week does not pass that my wife and I do not make the 30 minute drive to experience it's pleasures. So I offer up 10 things that you should do before calling yourself a Nashvillian.

1. Attend the Ryman Auditorium for a performance of the Grand Ole Opry.
The Opry is first and foremost a radio show. In the 30's the 50,000 watt WLAC radio tower was constructed. It broadcast music to most corners of the USA and contributed greatly to not only the exposure of country music, but also R & B and Rock and Roll building audiences and influencing countless future musicians from around the country. The WLAC radio tower was the spark that started Nashville's reputation as "Music City".

2. See the Athena at the Parthenon.
Centenial Park dates back to the 100 year anniversary of Nashville which was celebrated with a Worlds Fair. Canals were formed for Venice, pyamids were were erected to potray ancient Egypt, and an exact replica of the Greek Parthenon was built. There are lots of free art fairs and events held at Centential park, but not so many people pay the admission to see the very nice art gallery in the basement of the Partheon and see the incredible statue of Athena by Nashville sculptor Alan Le Quire.

3. Go see the Time Jumpers Monday night show at the Station Inn .
The Station Inn is one of the country's best venues for American Music, and it doesn't get any better than on Monday nights when the Time Jumpers perform. Yes, there are famous people in the band like Vince Gill, but the group is made up of the top sessions players in Nashville and the level of musicianship is incredible. The only place you might ever get to see them will be Monday nights at the Station Inn.


4. Take in a TPAC performance.
The Tennessee Performing Arts Center hosts a variety of entertainment options. Three theaters host Broadway touring plays, the Tennessee Repertory Theater and the Circle Players. You can also catch many concerts, comedy and other touring events.

5. Parks on the East side of the Cumberland River walk over the Pedestrian Bridge and hit Tootsies, Roberts Western World and all the honky tonk bars on Broadway.
Tootsies and Roberts Western World are the most noted venues on Broadway, but a great evening can be had on a walk around Broadway, up 2nd Avenue and through Printers Alley to see and hear the music of Nashville.


6. The Frist Center for Visual Arts.
Nashville now has a fabulous Arts Center with the conversion of the art deco Post Office into a great space for touring art events. Be sure to take the architectural tour, then stop off at Union Station or the Flying Saucer at the end of the day.

7. Attend a Titans or Predators game.
Nashville has always been a good town for minor league baseball, but the addition of the Tennessee Titans football team and the Nashville Predators hockey team has brought a new enthusiasm for sports to Nashville. The community is not jaded about their new teams, and a game is a great way to spend a Sunday afternoon of football or an evening of hockey action.

8. Take in a local Festival in East Nashville or Germantown.
A vibrant rebirth of life has returned to the historic neighborhoods of East Nashville and Germantown. The special events like the St. Patrick Pub Crawl and festivals like the Tomato Fest are great fun, but searching out the fine independent restaurants, bars and music venues while taking in the charm of the neighborhood is a great time in any season.


9. Check out a Pat McLaughlin once a month show at Douglas Corner.
You may wonder about this obscure event, but this is just one of many musical events that you can only see in Nashville. It could be a pop performance at the Schermerhorn Symphony Center or a writers night at the Blue Bird Cafe, but with a little inside information you an find incredible performances of original material that you can't find any where else but Nashville.

10. Tour the Opryland Hotel.
Anyone living in their home town can get jaded to the wonders around them, but recently I toured the Opryland Hotel after the renovations from the 2010 flood and once again was impressed by the area of tropical paradise under the three stories of glass canopy.

Many residents of Nashville would have their own take on the 10 things that make Music City unique. I have left out many of my own favorites like Cheekwood. But for a city of its size I cannot think of a more enjoyable place to spend time than our own Nasville, Tennessee.

Day Vacations from Sumner County #2

At the end of the coldest winter season in many years my wife and I needed to escape the sofa and experience the out of doors. In the last week of January the sun reappeared, the temperatures soared to the 50's, and we decided to take a thirty minute drive to Nashville for a trek around Radnor Lake.

Radnor Lake is an unexpected jewel inside of Nashville/Davidson County. Radnor is not a natural lake. Located in a deep hollow surrounded by high ridges in southern Davidson Co., the lake was built in 1913 by the L & N Railroad.

Built at a high elevation the reservoir offered a gravity flow of water to fill the many steam locomotives and water for livestock at the Radnor Yards just south of 100 Oaks Shopping Center. The beautiful lake surrounded by forest was also a great hunting and fishing preserve for L & N officials and guest.

During the ten years after construction the lake became a haven for indigenous wildlife and migratory birds. Hunting was suspended at the request of the Ornithological Society, and the lake became a wildlife sanctuary.

The land had a quiet existence for sixty years while the areas of south Nashville and into Brentwood became the most sought after residential destinations in the greater Nashville area. The quiet existence ended when in 1962 a construction firm purchased the 747 acres around Radnor Lake for a luxury residential development. The public outcry was immediate. This started an eleven year battle to preserve the lake as a protected area. Through government, private sector and enlightened conservationists the land was preserved as Tennessee's first natural area and protected ecosystem.

It is events like this that make our country great. The beautiful area is now available to everyone during daylight hours to stroll around the lake or hike the rigorous ridge trails, to enjoy the natural beauty and observe the abundant wildlife.

On our late January hike, water foul were fishing the waters, turtles were baking on the first high 50 degree sunny day of the year, and beavers were rearranging the environment. My best memory of the day was the wind blowing across the lake and breaking up the ice which sounded like a thousand glass wind chimes.

This is a beautiful area in every season of the year. Radnor Lake can be accessed from both Granny White Pike and Franklin Road (Hwy 31) and turning on to Otter Creek Road. So take a little time, disconnect from the phone, television and computer and rest your mind and spirit in the beautiful surroundings.