VOL. 126 | NO. 90 | Monday, May 09, 2011
Housing Market Desperately Seeks Turnaround
By Sarah Baker
With residential sales down and the majority of commercial sectors flat, it’s hard to say if 2011 will provide any traction in the local real estate market.
That was the message a room full of real estate professionals received last week when real estate information company Chandler Reports hosted “Master Your Market,” its quarterly seminar on Shelby County market trends.
Shelby County saw 2,661 homes sold in Q1 (Jan. 1-March 31), a 14 percent dip from the same period a year ago when the area saw 3,095. This decline is partially attributed to the first-time homebuyers tax credit that was available in 2010.
“A lot of us were hoping that 2010 was the bottom of the market but unfortunately we haven’t found the bottom yet,” said Hank Hogue, broker and vice president with Crye-Leike Realtors Inc. who spoke at the event. “The good news is that the ones of us who are in this room are still in the business, and hopefully we will still be when it rebounds and we’ll be able to take advantage of it.”
Hogue said a market turnaround relies on several factors that are ultimately out of the real estate professional’s control, like better employment numbers and gas prices.
While average sales price was up 5 percent year over year, it was largely due to the increase in average sales price of bank sales, which were up 18 percent from Q1 2010. A staggering 60 percent of homes sold last year in Shelby Country were under $100,000.
The most improved areas were Millington, East Memphis, River Oaks and Germantown East, where increase in sales toppled 20 percent. Also, the county did see its first $3 million home sale in Germantown’s 38139 ZIP code, marking the first sale of that magnitude since the third quarter of 2009.
Hogue cited the recently released Standard & Poor’s Case-Shiller Home Price Index of homes, which indicated the falling average home prices in most metro areas for the eighth consecutive month. The firm projected home values to continue to decline throughout the remainder of 2011.
“All of those out of the country investors that are coming in, they may be getting a great buy, but they maybe wished they would’ve waited until later on in the year,” Hogue said.
Crye-Leike’s Cordova office numbers are down about 15 percent from last year, Hogue said. And since 2006, the Memphis Area Association of Realtors has lost 40 percent of its membership.
“I’ve got some agents in my office that are having great years, I’ve got some that are having not so great years,” Hogue said. “But when you put everything together and look at the total MLS (Multiple Listing Service), that’s a reflection of what the market is.”
Still, deals are taking much longer now due to too many options, said Todd Glidewell of C&I Appraisal Services Inc., who also spoke at the event.
“What we are seeing and what the remaining players are telling us is that lots are going to be scarce,” said Glidewell said. “Unincorporated Shelby County will continue see some bright spots, and of course, Fayette and DeSoto County will have their moments in the sun, too.”
The market is plagued with “bottom-feeders,” Glidewell said, which is in turn pressing the permit price down. Leasing concessions are still prevalent, but not as prevalent as they have been.
On the commercial side, sales were up 14 percent year over year, to 166 in the first quarter from 145 in Q1 2010. In addition, average sale amount increased an impressive 47 percent, to $811,665 in 2011 from $553,416 in 2010.
Bank sales accounted for only 6 percent of all commercial sales with nine totaling $3.8 million, and overall, the number of commercial bank sales was down 36 percent from Q1 2010.
There were eight industrial sales of more than $1 million last quarter, the highest recorded being a $6 million warehouse at 4834 Mendenhall Road, the Mallory Distribution Center. The most revenue was generated from the industrial sector with $58.4 million total sales volume, followed by retail with $23.2 million.
All commercial property types saw an increase in the total number of sales except for automotive and office. Vacant land sales had the highest sales with 42 followed by retail with 35 sales.
“Materials continue to rise, labor cost hasn’t moved, the only thing that can move is land value,” Glidewell said.
Chandler Reports is a division of The Daily News Publishing Co. Inc.