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VOL. 124 | NO. 71 | Monday, April 13, 2009

Home Sales Freefall Continues in Q1

By Eric Smith

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WAITING ON A BUYER: Home sales in Shelby County continued at a slow clip in the first quarter of 2009, falling 25 percent from the same quarter a year ago. Most neighborhoods – such as the East Central/Poplar-Perkins ZIP code of 38117, where this home is on the market – saw double-digit declines in sales from Q1 2008. -- PHOTO BY ERIC SMITH

Shelby County home sales continued their downward spiral during the first quarter of 2009, proof that consumer confidence has yet to be restored and that credit issues have yet to be resolved.

Just 3,078 homes were sold in the first three months of 2009, down 25 percent from 4,101 in Q1 2008, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com. The period’s total marked the lowest first quarter since Q1 2001, which saw 3,107 home sales.

“We’re still working on people having a comfort level with the economy,” said Jon Albright, president of Memphis Area Association of Realtors and a partner at Investec Realty Services LLC. “Hopefully that will continue to improve, and hopefully consumer confidence, which is an important component, will improve.”

To no one’s surprise, sales haven’t shown the desired improvement to begin 2009, dropping for the third straight quarter. Also, 32 of 33 ZIP codes registered a decline from Q1 the previous year, with most of those showing double-digit dropoffs.

The average sales price for homes last quarter was $115,248, an 11 percent decline from $129,098 in Q1 2008, while the total sales amount in dollars was $354.7 million, a 33 percent decline from $529.4 million in Q1 2008.

A foreclosed market

Like the past few quarters, bank sales, or foreclosures, have provided the most compelling storyline in residential real estate, while non-bank sales, or traditional home transactions, have lagged behind.

For the first quarter, bank sales totaled 1,438, accounting for 46 percent of all home sales for the period. That marked a 4 percent decline from 1,493 in Q1 2008, when bank sales were only 36 percent of the total market.

Bank sales averaged $61,680, down 7 percent from $66,247, while the total amount of bank sales in terms of dollars was $88.7 million, down 10 percent from $98.9 million the same quarter a year ago.

As for traditional sales, there were 1,640 of those last quarter, a 37 percent dip from 2,608 in Q1 2008. Non-bank sales averaged $162,218 last quarter, down 2 percent from $165,078 while the total amount of non-bank sales in dollars was $266 million, down 38 percent from $165.1 million the same quarter a year ago.

The top ZIP code for home sales last quarter was Frayser’s 38127 with 203, although that number was slanted heavily toward foreclosures with 121 bank sales, tops in Shelby County.

As for non-bank sales, Collierville’s 38017 led the way with 144. Eads’ 38028 ranked No. 1 in terms of average sales amount at $628,800.

As for the top sellers, U.S. Housing and Urban Development came in first with 199 sales totaling $7.5 million. It edged out Fannie Mae, which posted 195 sales totaling $5.7 million.

Glimmer of hope

While there wasn’t much good news that came out of the latest quarterly figures, the month of March had a decent showing. March saw 1,179 sales, up from 871 in February and also up from 1,028 in January. Granted, that increase could be chalked up to the spring – always a busier time in real estate – but the industry will take any kind of improvement in the market.

Albright has been hearing good things from member brokers around town about the traffic in offices. Whether that means anything remains to be seen.

“It’s got to translate into home sales,” Albright said, “but it does seem like the activity is encouraging.”

A sampling of managing brokers from around town confirmed that. Neil Hubbard, principal broker at Prudential Collins-Maury Inc. and past president of MAAR, agreed that showing appointments are up significantly, the first domino that has to fall before sales pick up.

“Our pendings are continuing to build, and that’s always a good sign,” Hubbard said. “It’s got to be pending before it can close, and we’re seeing a nice uptick in activity.”

Leon Dickson, owner/broker of BenchMark Realtors and Mortgage at Southwind and secretary/treasurer for MAAR, said that despite the low sales numbers, balance is being restored thanks to inventory being chipped away as builders hold back on starts.

“Pending sales are up from last month, and inventory is down from where it was last year, so those are good signs we’re seeing,” Dickson said. “I feel like we’re moving in the right direction. We’re going to ride the wave as long as we can.”

And Steve Young, team leader for the Forest Hill-Irene branch of Keller Williams Realty, noted that unlike the perception the sky has fallen on real estate – the Chicken Little factor – the industry is doing what it can to cope with the shifted market.

“The sky’s still up,” he said. “The sun comes up every day, and we’ve got to get on with it.”

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

PROPERTY SALES 51 180 16,377
MORTGAGES 21 57 10,144
BUILDING PERMITS 103 665 39,209
BANKRUPTCIES 31 107 7,704