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.

The Three Reasons Why Now Is The Right Time For A Move!

For the last three years we have experienced a dreadful real estate market. The national economy has made everyone afraid to spend money or make changes in their housing status, but I am optimistic this will be a turn around year.

If you have thought about downsizing, buying an investment property for retirement, moving up in value, or moving to a lower maintenance home, there are three reasons this may be the best year ever to make a move.

The first reason is the direction of mortgage interest rates. After seeing rates hit record lows in November of about 4% on a 30 year loan, the interest rates have risen about 1% in the last two months according to TAR Digest . I am afraid that with the emergence of inflation rates will continue to rise, but current rates are still fabulous. A 2% increase in a $200,000 30 year note is a monthly payment increase of $258.00. Think monthly payment not pricing.

The second reason for making a move now is better selling conditions for existing homes. So far this year there are signs of improved consumer confidence. According to Credit.com consumers are using their credit cards again, and in my own business I see a definite increase in calls and real estate activity. Foreclosures and short sales are in decline in all but the lower price ranges in Sumner County according to Realtytrac.com. My greatest problem in sales during the past two years has been competition from foreclosures and short sales. This should be a better year for selling resale homes.

The third reason to move now is that there is a great selection of homes at excellent prices. There have been far fewer new homes built in the last three years. As homes sell and are not replaced we should see declining inventories and increasing prices. Now is a great time to find good selections before inventories decrease and prices significantly increase.

So if you need to sell or just desire to make a move, please give me a call. Let me analyze your home value, home marketability, and availability of homes in the price range in which you are interested. It is time for action to take advantage of excellent interest rates, improved selling market, and a large inventory of homes with excellent values.

Tennessee Foreclosures

It was another record year for foreclosures in 2010 according to RealtyTrac. This occurred despite the fact that many banks slowed down their foreclosure activities during the last quarter of the year due to the widely reported problems of improper documentation and procedures.

Foreclosures are the biggest problems facing real estate recovery. So how did we get to this point? It certainly started with the international belief that real estate can only go up in value. Easy and creative financing with little or no money down made perfect sense if you bought into the assumption that real estate values would continue to go up quickly. Soon after the banks found big prospects ( see blog 2/2/11 Getting Drunk and Throwing Up) in making bad loans to unqualified buyers the first wave of foreclosures began.

Demand for homes started falling, and so did home values. This led to the second wave of foreclosures. Builders and developers that were highly leveraged, and anyone who bought homes between 2001 and 2006 found themselves upside down with value less than their home loans.

These problems started on the West Coast, but within a year had spread to the entire nation plunging the country into the worst recession since the Depression. The unemployment and underemployment that resulted from the recession started the current third wave of foreclosures. People just could not afford their payments, sell their home, or refinance leaving foreclosure the only option.

When you hear the shocking statistics of foreclosure it is easy to forget that the problem is not shared equally by the country. Five states account for 51% of all foreclosures in 2010. They were California, Florida, Arizona, Illinois and Michigan. Georgia, Texas, Ohio and Nevada were other states that accounted for large percentages of the national foreclosures.

When it came to the largest numbers of foreclosures per households, Nevada, Arizona and Florida lead the nation. In Nevada one out every 11 homeowners received a foreclosure notice in 2010.

Tennessee's foreclosure problems are not as bad as many other areas of the country. Still they had a tremendous impact on our real estate market causing excessive inventory and declining values.

In Sumner County, Realty Tracs reports 691 banks owned properties. Most are single family homes, some are lots and there are even a couple of golf courses with club houses. That's a lot of future sales that will go at depressed values. The most shocking statistic is that of the 691 bank owned properties, only 57 are currently for sale at this time. Maybe I just do not understand the complexities of modern banking, but there must be a better and more profitable way to address foreclosures and liquidate this backlog of bank owned properties.

One Day Vacation Ideas

Bluegrass Underground

One of the joys of living in the Hendersonville, TN and the Sumner County area are all the great one day trips that make you feel like you are on Vacation.

Last week my wife said that we needed to find a brief getaway to move us off the sofa and end our winter hibernation. Then in the Friday Tennessean there was an article about an event that I had always wanted to attend, Bluegrass Underground.

Bluegrass Underground is a once a month concert and radio show. It showcases some of the best bluegrass musical talent in the country with performances in what might be the most unique venue in the USA.

Bluegrass Underground takes place once a month in Cumberland Caverns which is located near McMinville, Tennessee. This beautiful area of the Tennessee Ridge is home to some of the most dramatic scenery in the state. The cave is open for tours throughout the year.

The Bluegrass Underground show is located 333 feet below the caves entrance about a 15 minute escorted walk. You come to one of the caves many offshoots and walk down into the Volcano Room which has high ceilings and other cave intersections for snack bars and green room. The complete absence of outside noise and the asymmetrical room make a wonderful venue for acoustic music. I ask about the attendance for past events and they range from 250 to 800+ when Ricky Scaggs performed last year.

On the day we attended Rides In The Sky a Grammy award winning Western group headlined, and the hilarious Cleverly's did Black Eyed Peas and other techno dance music bluegrass style. Lots of fun!

If you go, enjoy the scenic drive. The Caverns are located near Fall Creek Falls, Savage Gulf, and Rock Island State Park. Take some time to explore this beautiful area of the State.

Hendersonville, TN Morning Commute

It's 7:00AM and I'm headed to the gym opposite the Nashville commuter traffic on the bypass (Hwy. 386). Brake lights are flashing at Exit 6, and all of these drivers will need another 45 minutes to cover the 18 miles to Nashville at the height of rush hour. That is unless there is rain, snow or a hiccup at Trinity Lane.

Normally there are about 75,000 cars a day running the two lanes of 386 according to the Tennessee Department of Transportation. There are alternatives to 386 like Gallatin Rd. (Hwy. 31) or Long Hollow Pike (Hwy 257), but 386 with no traffic lights or stop signs is the choice of most commuters. One of Hendersonville's and Gallatin's greatest assets is also its greatest liability for commuter traffic, Old Hickory Lake. The lake forms the southern border of all of Sumner County, and there are only two bridges spanning Old Hickory within our border.

So why do commuters go through so much stress time and expense to live in Sumner County and commute to Nashville? The simple answer is that it is worth it.

Some people move here for the great public and private schools, some for the lake, parks, and recreation, some for the lower taxes and others for the variety of houses in new safe neighborhoods. There are many compelling reasons to live in Sumner County that make the commute worthwhile.

Actually the commute to Nashville is a lot easier now than when I first moved here 33 years ago. At that time there were only two lanes of I65 into Nashville, a one lane bridge (no kidding) on Long Hollow Pike, and no Hwy 386. We have better commuting now, and we are better off than many of Nashville's other commuter cities, but the only way we can keep pace is with mass transit. Stop 30 road in Hendersonville was named for what used to be the 30th stop on the Nashville Commuter Train in the 1930's. It is time we visited their old ideas.

Commuting has never been a picnic even in the days of Hendersonville's first settler Daniel Smith. Daniel Smith's house Rock Castle still stands proud today, but two of his carpenters and his son-in-law were killed by Indians on their commute across the county. The only traffic jams were the herds of buffalo that wandered the valleys, but there were numerous other stresses and hazards from the river and animal trails that were the first area commuter routes in the 1790's.

So as you make your commute to Nashville, remember no texting, checking your emails or traveling too close to the car in front of you... and watch out for the buffalo and arrows.

2011 Predictions and Perscriptions on Life and Real Estate!

I must confess that I was happy to take down my 2010 calendar and start a new year. Everything looks good at the starting line to paraphrase an old song.

2010 was no exception. I started the first two months of 2010 building a nice inventory of properties, and in March and April I had sold more homes than I had sold for all of the previous year. Then on the first weekend of May storm clouds gathered, the flood came, the tax credit disappeared and pending sales dropped each of the next eight months from the previous year. A drop of approximately 30% from 2009's pitiful sales figures created a lot of pain and stress for home owners, the real estate industry, and banks. My year in real estate was parallel with the Tennessee Titans season, which started great, collapsed, and ended with a terrible finish.

So what is the forecast for the real estate market at the starting line of this brand new year. Well it looks like we still have continuing problems that will make this race uphill and difficult. Foreclosures, unemployment, high inventories, deflated prices, and a lack of consumer confidence did not magically disappear with the new year. But with that being said I do see some signs of improvement for the coming year. I am seeing fewer foreclosures coming on the market especially in the higher price ranges. The lack of competition from foreclosures and short sales should drive prices higher in the coming year. It is projected that the national economy will grow and improve in 2011. The improved economy plus excellent interest rates should bolster consumer confidence and bring more buyers back into the market. I believe we will start seeing the real estate market turn around this year, however it will most likely be a slow process.

The start of a new year is both a time to look forward and to reflect on the past. I was thinking back to 10 years ago. The year 2000 started off great with a Millennium celebration in New Orleans, the best year in real estate sales that my wife and I had ever had and great fun and accomplishments of family and friends, and a final 2000 Titans Victory on Christmas night. Life seemed too perfect.

Then in the first week of January 2001 we found out that my wife had cancer which was terminal by July, then followed by 9/11, the endless wars and fear and decline in our entire nation. The lesson learned is that the performance of the housing market and economy are of little importance as compared to your family and your health. So regardless of how the real estate market is doing focus on the most important things in life and everyone have a great 2011.