VOL. 36 | NO. 37 | Friday, September 14, 2012
Interest rates, confidence spur 27% jump in Midstate home sales
By Bill Lewis
Consumer confidence is rising, workers aren’t as worried about losing their jobs, European investors are buying U.S. Treasury securities and driving down mortgage interest rates, and home prices are as affordable as they’ve ever been.
It’s no surprise home sales were up more than 27 percent in August.
If the experience of Realtor Terry DeSelms is any indication, the Nashville region’s housing market is emerging strongly from the recession.
August, he says, was “the best month I’ve ever had.”
The greater Nashville Association of Realtors reports there were 2,606 closings in August throughout the multi-county Nashville region, a 27.3 percent increase over last year.
So far this year, DeSelms and his team have completed 370 sales, an average of 46 each month. In August, they had 72 closings. If he did that every month, DeSelms would have 846 closings in a year.
“I’ve closed as many as 445 sales (in a year),” says DeSelms. “This year we’re going to blow past that. This is the best year ever.”
Buyers are benefiting from historically low mortgage interest rates, says Steve Smith, executive vice president of Mortgage Investors Group. For a 15 year mortgage, the interest rate is in the “high 2s.” For a 30-year loan, the interest rate is just above 3 percent.
The Federal Reserve is intentionally keeping rates low, but there is another reason they’ve fallen recently. European investors, worried about the weakness of the Euro, are snapping up 10-year U.S. Treasury securities. As demand for the securities goes up, the interest they pay goes down. And since mortgage rates are pegged to the interest rate on Treasury securities, the cost of borrowing to buy a home has gone down as well.
“When Europe has a bad day, people put their money in the U.S.,” says Smith.
Rising rents and a return of consumer confidence are encouraging first-time buyers to purchase a home, Smith says. That allows move-up buyers to sell their existing home and purchase their next one.
“Folks who have jobs are fairly confident. Confidence is back. It’s not roaring, but its back,” he says.
It’s still true that in real estate, the three most important things are location, location and location. Sales and prices in some neighborhoods are strong, while in others they are lagging.
In Davidson County, there were 1,249 sales last month, nearly 25 percent more than in August 2011 when there were 1,000, according to a market survey by Chandler Reports. The average price was $204,881, a 2.6 percent decline. In August 2011 the average price was $207,126
In Nashville, two neighborhoods tell the uneven story of the housing market as it puts the downturn behind it.
In the 37212 zip code that includes Hillsboro-West End, 42 homes changed hands, a 50 percent increase. The average price of $343,040 was more than 17 percent higher than the August 2011 average of $292,707.
In the 37215 zip code, which encompasses Green Hills, 73 homes were sold, a 78 percent increase over the 41 sales in August 2011. The average price, however, was down almost 23 percent. The average home sold for $443,438 last month. A year ago the average price was $574,866.
In Rutherford County, there were 523 homes sales last month, nearly 35 percent more than the 388 sales in August 2011. Last month’s average price was $165,918, nearly 13 percent higher than the $147,083 average a year ago, according to Chandler Reports.
LaVergne was one of the hottest markets. There were 51 sales, nearly 46 percent more than in August 2011, when there were 35. The average price was $102,005, a 7.7 percent increase over the average of $94,854 a year ago.
Smyrna, another active market, had 82 sales, nearly 44 percent more than in August 2011 when there were 57. The average price was up nearly 16 percent to $156,228. A year ago it was $134,788.
In Williamson County, sales were up but the average price was down. There were 505 sales last month, almost 23 percent more than the 411 closings in August 2011. The average price was $369,682, a 3.1 percent decline from the August 2011 price of $381,613.
Thompson’s Station, near I-65 on the south side of the county, was particularly strong. There were 28 closings, a 33.3 percent increase over the 21 sales in August 2011. The average price rose 5.8 percent to $236,405. A year ago it was $223,388.
In Wilson County, sales and prices were both higher. There were 257 closings last month, nearly 39 percent more than the 185 sales in August 2011. The average price rose 5.3 percent to $199,242. A year ago it was $189,160.
Lebanon’s 37087 zip code was active. There were 76 closings, a 26.7 percent increase over the 60 sales in August 2011. The average price rose more than 29 percent to $177,741. A year ago it was $137,609.