VOL. 126 | NO. 133 | Monday, July 11, 2011
Housing Market Plunges 16 Pct. in Q2
By Sarah Baker
Residential sales during the second quarter of 2011 proved to be an improvement from the previous quarter but still shy of totals during the same period last year.
Shelby County saw just 3,453 new and existing home sales in the second quarter (April 1 to June 30), a 16 percent drop from Q2 2010, which totaled 4,099, according to real estate information company Chandler Reports, www.chandlerreports.com.
While the second quarter also represented a 30 percent increase from first quarter 2011’s 2,658 units, the year-to-date total of 6,111 sales is down 15 percent compared to 7,194 halfway through 2010.
Joe Spake, broker with Incity Realty, said it’s hard to tell if the local market will regain footing in the foreseeable future.
“I see buyer interest in some segments, but there has been nothing consistent enough to relate to a trend,” Spake said. “No one can really call any trends in this market. Everyone has a different interpretation of the numbers.”
Both average sales price and total dollar volume are down year over year for the quarter, but are up compared to Q1. Home sales averaged $118,676 in Q2, signaling an 8 percent decrease from $128,355 in Q2 2010 but a 2 percent increase from $116,506 in Q1 2011.
Total sales volume hit $409.8 million last quarter, marking a 22 percent decrease from $526 million in Q2 2010 and a 32 percent improvement from $309.7 million in Q1.
While there are still areas with decent activity, Spake said, the market seems soft in the $300,000-and-up range.
“You always hear that real estate is local; I think it is micro-local,” he said. “A large proportion of sales are in less-expensive properties – less than $50,000 – which skew the median and average prices downward.”
The housing slump has even caused real estate veterans like Spake to take a closer look at his business strategy.
He’s not alone. Frances Anderson, affiliate broker with Crye-Leike Realtors Inc., has shifted her focus to client retention, since about 85 percent of her business stems from referrals.
“I reach out to my past clients, via more phone calls, emails, e-cards, postcards, newsletters and social media like Facebook and Twitter,” said Anderson, who also serves on the board of directors for the Memphis Area Association of Realtors. “I attend weddings, housewarmings, baby showers, barbecues, church, graduations and anything involving my clients. It adds a personal touch, and I make sure they know that I care; it is almost as if I am part of the family.”
June Home Sales Mirror Q2 Decline
June 2011 painted a similar picture to the second quarter’s hodgepodge. While home sales in the country totaled 1,242 – a 21 percent drop-off from 1,570 in June 2010 – it marked an 11 percent jump from 1,972 in May.
Also, June had the most monthly sales since June 2010, which was the highest producing month last year.
Home sales in June averaged $128,566, a 4 percent dip from $133,531 in June 2010. Year to date, however, average sale price is at the highest level county has seen since December 2010, when average sale price was recorded at $129,769.
Total sales volume in June reached $159.7 million, a 24 percent decrease from $209.4 million in June 2010, but a 21 percent bump from $132.3 million in May 2011.
Another bright spot can be seen in June’s 325 bank sales, which declined 23 percent from June 2010’s 423 sales and were 2 percent lower from May 2011’s 330. Foreclosure sales in the county averaged $73,168 – up 16 percent from the prior month – and totaled $23.8 million.
Meanwhile, nonbank sales in June totaled 917 – a 20 percent dip from 1,145 year over year – but a 17 percent uptick from May. Traditional sales averaged $148,200 last month and reached $135.9 million in total sales volume.
New home sales totaled 77 in June, up 25 percent from May’s 57. New home sales averaged $220,335 and totaled $16.9 million. Year over year, however, new home sales are down 45 percent.
On the other hand, existing home sales totaled 1,165 in June, an 18 percent decrease from June 2010 and a 10 percent increase from May of this year. Home sales in the category averaged $122,501 and totaled $142.7 million.
Like the Q2 totals, the highest producing ZIP in June was Frayer’s 38127 with 85 sales averaging $25,083 and totaling $2.1 million. Twenty-four of those 85 were bank sales.
Other high producing ZIPs in June were Collierville’s 38017 (83 sales averaging $279,102 and totaling $23.2 million, and University of Memphis’ 38111 (72 sales averaging $111,308 and totaling $8 million).
– Sarah Baker
Among Shelby County’s 34 ZIP codes, the most active sales area was Frayser’s 38127, with 219 sales averaging totaling $5.9 million. But 40 percent of those sales were bank, or foreclosure, sales averaging $18,849.
The ZIP with the highest average sales price was Germantown East’s 38139 at $354,036 for its 84 sales. And topping off the total sales volume category was Collierville’s 38017, which reached $55.1 million (on 197 sales) in Q2.
Nonbank, or traditional sales, totaled 2,440 in the second quarter, marking a 16 percent decrease from 2,899 during the same quarter last year, but a 34 percent boost from Q1 2011’s 1,826. Q2’s nonbank sales averaged $140,788 and totaled $343.5 million.
Bank sales also saw a mixed bag during the past three months. Shelby County saw 1,013 total bank sales, a 16 percent drop from Q2 2010’s 1,200, but a 22 percent increase from Q1 2011’s 832. Q2’s nonbank sales averaged $85,413 and totaled $66.3 million.
Banks are still in the midst of approving more short sales and loan modifications, Anderson said. But it’s likely for foreclosure totals to dwindle in the future, and communication with borrowers is the key.
“The foreclosure moratorium that allowed some banks to stop the foreclosure process held up some pending foreclosures that were already in the pipeline, which attributed to a Q1 increase,” Anderson said. “Most banks would rather not foreclose, so the key is to educate the borrowers as to how to get help through free government-assisted agencies as well as nonprofit agencies when they have a problem.”
Existing home sales during the quarter totaled 3,260, down 14 percent from Q2 2010. Year to date, existing home sales total 5,755, a 13 percent decline from 6,651 at the midpoint of 2010. Existing home sales from April to June averaged $112,862 and totaled $367.9 million.
Meanwhile, only 193 new homes were sold during Q2, a staggering 38 percent drop-off from 310 in Q2 2010. Year to date, new home sales total 356, down 34 percent from 543 at the midpoint of 201. New home sales from April to June averaged $216,868 and totaled $41.9 million.
Moving forward, market progress will be directly tied to national economic and job recovery, Spake said. Until then, the industry will continue to suffer casualties and see more dips along the way.
“You are going to see a lot more agents get out of the business and a lot more small and one-person companies with little or no brick-and-mortar investment,” Spake said.
Chandler Reports is a division of The Daily News Publishing Co. Inc.