VOL. 123 | NO. 9 | Monday, January 14, 2008
Q4 Home Sales Decline 25%
By Eric Smith
Q4 2007 Highlights
Total residential sales declined 25.8% in Q4 2007 (4,225 sales) from the same time a year ago (5,696 sales).
Total sales dollars dropped 33.1%, from $877.8 million in Q4 2006 to $587.2 million in Q4 2007.
Average residential sales prices dropped nearly 10%, from about $154,000 in Q4 2006 to about $139,000 in Q4 2007.
Source: Chandler Reports, www.chandlerreports.com
Following the trend that plagued Shelby County throughout 2007, the fourth quarter suffered a 25.8 percent decline in residential home sales, signaling an ignominious - yet appropriate - end to a tumultuous year.
Just 4,225 homes sold between Oct. 1 and Dec. 31, down from the 5,696 in the same period of 2006, according to the most recent data from real estate information company Chandler Reports, www.chandlerreports.com.
Granted, 2006 wound up being the best year ever in local real estate, but the slide in 2007 from that record sales pace was swift and steep - an avalanche of subprime fallout, foreclosure woes and consumer doubt.
In many ways, a perfect storm.
"Some of it is just a correction from the record year, and some has to be attributed to the issue of subprime - loans were too readily accessible to people who didn't have the credit scores and income for the houses they were buying," said Doug Collins, president of the Memphis Area Home Builders Association as well as owner of both real estate company Prudential Collins-Maury Inc. and building company Sovereign Homes LLC.
Total sales dollars declined 33.1 percent, from $877.8 million in Q4 2006 to $587.2 million in Q4 2007, while the average home sales price also fell - from about $154,000 to about $139,000 during the same period, marking a 9.8 percent dropoff.
Memphis' surrounding submarkets highlighted the quarter. Collierville's 38017 ZIP led the way with the highest total of sales dollars at $70.5 million, while Germantown's 38139 ZIP notched the top average sales price at about $474,000 and largest average size at 3,743 square feet.
Meanwhile, Frayser's 38127 ZIP edged Cordova's 38016 ZIP for the top number of sales. Frayser rang up 241 home sales during Q4 and Cordova registered 239. They were followed by the 38111 ZIP of the University of Memphis area with 230 sales and the 38017 ZIP of Collierville with 222 sales.
One factor that could help the market has been a dropoff in building permits. During Q3 - for just the fourth time in almost four years - Shelby County home sales exceeded building permits in a single quarter, chipping away at inventory and showing initial signs of market correction.
If that continues, it could bring some balance back to the local housing market.
"If you just go to basic 'Econ 101' - supply and demand - builders have been reducing their supply at a rapid rate, i.e., they're not pulling as many permits, they're not building as many houses, and they're selling the ones they've got in inventory," Collins said.