VOL. 114 | NO. 88 | Friday, May 5, 2000
The Memphis area residential real estate market continued to strengthen in March 1999 and surpassed first-quarter 1998s record pace by 3
First quarter home sales
shatter previous records
By LAURIE JOHNSON
The Daily News
Memphis area home sales and sales volumes proceeded to rise to new heights during first quarter 2000, despite predictions of a nationwide slowdown this year.
Home sales for the first quarter surpassed first quarter 1999s record pace by more than 12 percent, according to local housing sales figures. Sales volume jumped more than 5 percent.
As of March 31, 2,972 homes registered by the Multiple Listing Service sold this year, compared to 2,635 sold in the first quarter of 1999, a 12.7 percent increase, according to the Memphis Area Association of Realtors.
Sales dollar volume of MLS-listed homes increased 5.9 percent to $377.7 million during the first quarter of 2000, from $356.5 million in first quarter 1999. Dollar volume indicates the total monetary value of sold properties.
In Memphis and Shelby County, the number of properties from homes to vacant lots to distribution centers changing hands during the first quarter rose, but the total dollar volume dipped slightly, according to warranty deeds filed in the Shelby County Registers Office and compiled by the Daily News Online.
During the first three months of 2000, 4,285 deeds were filed with a total value of $606.2 million, compared to 4,110 deeds with a total of $616.4 million filed in the same period of 1999.
One reason behind the decline in sales volume is that not only were there fewer major land transactions in 2000 than in 1999, they also were not as high-dollar.
In 1999, there were seven transactions ranging in value from $5 million to $17.5 million; in 2000, there were five, ranging in value from $6 million to $10.7 million.
Major transactions last year included Germantown Vineyards Ltd.s $17.5 million purchase of The Vineyards Apartments; Fair Oak LLCs $10 million acquisition of property at 1669 Randolph Place from Condor One Inc. and Wal-Marts $9.6 million purchase of property on Winchester Road.
Major transactions for 2000 included Mitchell Investments $10.7 million purchase of property at 5300 Hickory Hill Road; Anderson-Tullys $7 million acquisition of property at 4655 E. Shelby Drive and Principal Life Insurance Co.s $6 million purchase of property at 4550 Quality Drive.
The area recording the highest number of property transactions in first quarter 2000 was the 38018 ZIP Code containing Cordova, with 357 parcels of property, with a total value of $55.4 million, changing hands. The same area led in 1999, with 343 transactions with a total value of $55.2 million, according to Registers Office records.
"Despite national predictions to the contrary, our local residential real estate market has continued to strengthen, with increases recorded in the number of homes sold and in total dollar volume for the third month in a row," said MAAR president Pat Beech. "Consumers continue to find the present moment a perfect time to buy or sell a home, with sellers earning nice returns on their investments and buyers finding a good selection of affordable homes."
The median sales price of MLS-registered homes sold during the quarter was $109,750, down slightly from first quarter 1999s median sales price of $112,000.
During the first quarter of 2000, the best selling home price ranges in Memphis were $100,000-$119,999 (265 sales); $120,000-$139,999 (252 sales); $50,0000-$59,999 (212 sales) and $60,000-$69,999 (211 sales), according to MAAR.
New home sales in Memphis increased more than 4 percent and existing home sales rose almost 8 percent during first quarter 2000, compared to the same quarter a year ago, according to the latest data by Chandler Reports.
Homebuilders sold 794 new homes during the first quarter, with an average price of $186,452. This marks a 4.3 percent increase over the number of new homes sold in the first quarter last year, as well as an average price increase of 1.9 percent.
Homeowners and real estate agents sold a total of 3,454 existing houses both MLS and non-MLS homes during the first quarter 2000, with an average price of $105,211. The number of homes sold represents a 7.8 percent increase from last year. The average sales price, however, declined 1.9 percent from last years first quarter average of $107,200, Chandler reported.
Though home sales in other markets may be on the slippery slope downward, the Memphis residential real estate market is so far managing to buck the trend because of the areas continued healthy economy coupled with low mortgage interest rates.
"The biggest factor is that we have low unemployment. People have jobs and theyre working," Beech said. "We also have people who have done well in the stock market.
"And yes, interest rates have clicked up a little bit; however, theyre still very good. When you look at where theyve been in the past, were really still in a good position."
A relatively mild, dry winter also helped boost property sales as well as new home construction, she said.
Nationwide, sales of existing single-family homes continue to reflect steady consumer demand despite higher mortgage rates, according to the National Association of Realtors.
Existing home sales rose 1.5 percent in March to a seasonally adjusted annual rate of 4.83 million units from a 4.76-million unit pace in February.
NAR President Dennis R. Cronk said the solid pace of sales showed home buyers are largely undeterred by the fact that mortgage rates are up from last year.
"In todays market, buyers dont get as spooked by higher rates. The wide variety of home financing available gives them many options," Cronk said. "We have yet to see demand taper off. People are still coming out, sizing up what they can afford and moving ahead with their purchases."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 8.24 percent in March, down marginally from 8.33 percent in February; the average rate was 7.02 percent in March 1999.
Although rates have risen from a year ago, they remain affordable and relatively stable, particularly in comparison to the recent wild fluctuations in the stock markets, Cronk said.
"The sharp changes in the financial markets over the past month underscore the stability of residential real estate as a safe choice for consumers," Cronk said. "Homeownership should be approached as a long-term investment, providing both equity accumulation and tax benefits over time."
NAR is projecting existing-home sales to total 4.74 million units in 2000, the third highest total on record, but dropping 8.7 percent from the record high of 5.2 million sales recorded in 1999.
The association expects the 30-year fixed mortgage rate to average 8.5 percent during the second half of the year.