Stars Start to Align In Residential Real Estate Market

By Eric Smith

The first week of November brought a double dose of good news for the beleaguered real estate industry. Not only did Congress extend and expand its first-time homebuyers tax credit, but the most recent local sales report was peppered with positive signs.

Congress on Thursday extended the $8,000 tax credit until April 30. The expanded bill raises income limits and also introduces a $6,500 tax credit for current homeowners who have been in their homes consecutively for five of the previous eight years.

President Obama signed the bill Friday morning, a move real estate professionals hailed as a critical step on what has become a long and winding road to economic recovery.

Glenn Moore, president-elect of the Memphis Area Association of Realtors and owner of Glenn Moore Realty, said the upgraded bill should do even more than help people afford homes – it will improve the overall financial climate

“I think it’s a wise move in the economy, because whenever someone buys a home, there’s a ripple effect,” Moore said. “People tend to buy appliances, furniture (and) household goods. I do think that it will help the economy as a whole. The signs we see in the numbers show we’re heading in that direction.”

’Bout time

Shelby County saw 1,289 home sales (bank and nonbank combined) in October, a 2 percent decline from 1,318 sales in October 2008 but a 6 percent increase from 1,221 sales in September, according to the latest data from real estate information company Chandler Reports,

October marked the fourth-highest sales total in the past year and the highest among non-summer months, ranking behind only July (1,475 sales), August (1,293) and June (1,290). Also, nonbank sales saw a month-over-month increase this year with 805 versus 775 a year ago.

“We’re continuing to see stabilization. We’re starting to see consistency with some of the numbers and that’s a good sign,” said Jon Albright, MAAR president and partner at Investec Realty Services LLC. “Now, what we really want to see is those numbers rise again, but I think we’ve definitely seen the bottom of the market. It would appear – again, cautiously optimistic – that we’re going to start to see some type of modest appreciation with our numbers.”

Sales last month averaged $120,943, down 2 percent from $123,011 in October 2008 and down 12 percent from $136,710 in September. The total sales volume in October was $155.9 million, a 4 percent decrease from $162.1 million the same month a year ago and a 7 percent decrease from $166.9 million in September.

Steady on the uptick

Nonbank (traditional) sales continued to outpace bank (foreclosure) sales by about a 2-to-1 ratio. Last month saw 805 nonbank sales, up 4 percent from 775 in October 2008 but down 1 percent from 810 in September.

Nonbank sales averaged $156,230, a 4 percent decrease from $162,849 in October 2008 and a 10 percent decrease from $174,427 in September. The total sales volume for nonbank sales was $125.8 million, less than a percentage point down from $126.2 million in October 2008 and 11 percent down from $141.3 million in September.

Bank sales last month totaled 484, an 11 percent dropoff from 543 in October 2008 but an 18 percent increase from 411 in September.

October’s bank sales averaged $62,254, down 6 percent from October 2008’s $66,151 and unchanged from September’s $62,378. The total volume for bank sales was $30.1 million, a 16 percent decline from $35.9 million in October 2008 but an 18 percent increase from $25.6 million in September.

The top ZIP code last month for nonbank and bank sales combined in terms of total sales was Cordova North’s 38016 with 89. The top ZIP code in terms of average sales price was Germantown East’s 38139, which notched 28 sales that averaged $395,040.

Cordova North’s 70 nonbank sales led the county in that category, and the Germantown East data was tops for nonbank sales average.

On the bank sales side, Frayser’s 38127 was tops with 43 sales. The highest sales average was found in River Oaks’ 38120, where two sales averaged $273,000.

Time for some discipline

Shelby County’s year-to-date figures show 2009 continues to lag 2008. Through October, the county has seen 12,180 sales (bank and nonbank combined), down 15 percent from 14,264 during the same period of 2008. Sales this year have averaged $122,807 and totaled $1.5 billion, down from $135,019 and $1.93 billion, respectively, in 2008.

Nonbank sales have totaled 7,251, down 20 percent from 9,066 in 2008; and bank sales have totaled 4,929, down 5 percent from 5,198 in 2008.

The most recent numbers have given Realtors hope that the market is rebounding. What’s important to note, Moore said, is the early signs of recovery don’t rely on subprime lending, a trend that got housing into trouble in the first place.

“The people that are buying homes right now have gone through a strict process of qualification,” he said. “The pickup that we see in activity is not the type of activity we’ve seen in the past. It’s more stable.”

Chandler Reports is a division of The Daily News Publishing Co. Inc.