Local Home Sales Improving

By Eric Smith

Steady MARKET: Realtors have been touting the $8,000 first-time homebuyers tax credit, and efforts seem to be working. In July, Shelby County saw 1,477 home sales, down 6 percent from 1,565 sales in July 2008 but up 15 percent from 1,289 sales in June. -- PHOTO BY ERIC SMITH

For 25 of his 30 years as a Realtor, Terry Stonebrook has sent clients, colleagues and other contacts a real estate newsletter called the Stonebrook Letter, which chronicles the latest stats and news from the industry.

In a regular feature called “How’s Real Estate?” he provides a rundown of the local residential market, something he is acutely familiar with as a native Memphian and a longtime practitioner.

Stonebrook, who owns Stonebrook Realtors, said the summary for the coming issue of his newsletter will revolve around how the current market is merely a correction from the torrid – but misleading – sales pace of the mid-2000s.

“We’re going through an adjustment back to where things historically were. I don’t think it’s a bad thing. I think it’s kind of natural,” he said. “Things got sort of overheated with lending money, where (lenders) got away from the old rules of lending money, so that gave us record sales for consecutive years.”

Inching on up

Similar to what’s happened the past couple of months, home sales are a mixed bag – shy of last year’s pace but steadily improving as 2009 progresses.

In July, Shelby County saw 1,477 home sales, a 6 percent decrease from 1,565 sales – bank and nonbank combined – in July 2008 but a 15 percent increase from 1,289 sales in June, according to the latest information from real estate information company Chandler Reports, www.chandlerreports.com.

Home sales averaged $131,839 in July, a 12 percent decline from $149,238 in July 2008 but a 5 percent increase from $125,836 in June – the third straight month that the average price has increased and the highest total of 2009.

As for total sales in terms of dollar amount, July notched $194.7 million, marking a 17 percent dip from 233.6 million in July 2008 but a 20 percent uptick from $162.2 million in June. The increase has some in the industry cautiously optimistic about a recovery.

UNDER CONSTRUCTION: A slight increase in sales could lead to more homebuilding activity in Shelby County. -- PHOTO BY ERIC SMITH

“I think we’re seeing that in the marketplace right now there is some strength that we haven’t seen before,” said Dick Leike, co-founder of Crye-Leike Realtors Inc. “It’s certainly not bouncing out of the trough yet, but at least it’s coming along.”

Leike heard an economist speak a few months ago about a “less worse” housing market and economy. He said that is perhaps the most accurate depiction of the current trends.

“I think we’re seeing fruitions of a ‘less worse’ economy, so that’s probably prior to seeing some increases month over month,” he said, “but we’re not there yet.”

Bank vs. nonbank sales

Per usual, breaking out bank from nonbank sales paints a different picture of the market. Nonbank sales accounted for 937 sales, or 63.4 percent, of the monthly total. That number was down 12 percent from 1,064 nonbank sales in July 2008 but up 15 percent from 815 sales in June.

Nonbank sales averaged $170,515, a 9 percent decline from $186,851 in July 2008 but a 4 percent increase from $163,574 in June. Also, the total amount of combined sales in terms of dollar amount reached $159.8 million, down 20 percent from $198.8 million in July and up 20 percent from $133.3 million in June.

Bank sales totaled 540 in July, up 8 percent from 501 bank sales in July 2008 and up 14 percent from 474 bank sales in June. Bank sales averaged $64,728 last month, a 7 percent dropoff from $69,358 in July 2008 and a 6 percent improvement from $60,950 in June. Also, bank sales totaled $35 million, up 1 percent from $34.7 million in July 2008 and 21 percent from $28.9 million in June.

Though foreclosure sales rose, they accounted for a smaller percentage of the overall total, providing another positive sign for local real estate as it emerges from its subprime hangover.

Melissa Hayes, an affiliate broker at Crye-Leike, agreed the market is beginning to turn around as the housing inventory falls, consumer confidence picks up and the $8,000 first-time homebuyers tax credit gains steam.

“It’s definitely improving, especially with anything under the $200,000 range,” Hayes said. “They’re getting FHA loan limits – so it’s not a ton of money down, 3.5 percent – and then they’ve got the $8,000 tax credit as well.”

Leveling out?

The top ZIP code in July in terms of number of combined sales was Cordova North’s 38016, with 104 sales averaging $146,183. Germantown East’s 38139 was the top ZIP for average sales price at $409,531 (based on 29 sales).

When looking at just nonbank transactions, Collierville’s 38017 had the most sales with 79 averaging $318,212. Germantown East again led the way in average sales price at $410,607 (based on 27 sales).

As for bank sales, Frayser’s 38127 was tops with 52 sales averaging $15,289. The 38028 ZIP code for Eads had one sale in July, a foreclosure, that fetched a county-leading $395,000, while Germantown East had two sales averaging that same amount.

Year to date (through July 31), Shelby County has seen 8,378 home sales, 17 percent off 2008’s total of 10,101 sales. Despite this year’s numbers lagging behind the previous year’s pace, most Realtors do see brighter days ahead. At the very least, the seeds of recovery are being planted and tended to, even if they’re not fully sprouting, Stonebrook noted.

“I think things are going to quit going the other direction,” he said. “I think things are going to stabilize.”