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VOL. 127 | NO. 19 | Monday, January 30, 2012

Real Estate Pros Figuring Out New Reality

By Sarah Baker

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The real estate market isn’t projected to get back to the pre-bubble bursting days of 2007 anytime soon.

It’s part of the new reality that agents across the board are coping with, and it was the heart of the discussion Thursday, Jan. 26, when real estate information company Chandler Reports hosted its “Master Your Market: 4th Quarter 2011 Update.”

“For those of you who are counting, it’s been four years, five months and 26 days since real estate agents’ world was turned upside down,” said Ed Beasley of Sowell & Co. Realtors who spoke at the event.

Beasley’s sales from 2004 to 2006 were all about the same. Then in 2008, sales were down 30 percent. In 2009, sales were down 40 percent. By 2010, Beasley was reaching into his savings.

But in the last six months Sowell & Co.’s figures have seen about a 7 percent uptick.

“It’s taken four or five years to get to where we are now,” Beasley said. “It’ll take us eight years to get back up. At least we’re moving in the right direction.”

The forum, held at the Great Hall of Germantown’s Media Room, 1900 S. Germantown Road, discussed residential and commercial sales, plus new housing and loan activity.

Residential sales last year were at the lowest number since 1982 when there were 9,538. The average sales price was at the lowest level since 1998, according to Chandler Reports. Each month since July had year-over-year improvement, which was expected from last year’s expiring tax credit, but December faltered and sales were down 6 percent from December 2010.

Fifty-seven percent of all home sales in Shelby County were less than $100,000. Home sales more than $1 million were down 40 percent with 22 recorded for the year.

Lisa Reid, executive vice president with Magna Bank, said the housing crisis didn’t spare anyone, no matter what their economic status.

“It doesn’t matter if you have a high or low credit score, foreclosures are all over the board,” Reid said.

But in some parts of town, Magna Bank has seen slight appreciation, Reid said, such as certain areas in Germantown like the Enclave subdivision.

Bank sales made up 27 percent of all sales, down from 32 percent in 2010. Bank sales in Frayser’s 38127 ZIP code and Raleigh’s 38128 were down 23 percent and 27 percent respectively.

Last year had the lowest number of foreclosures since 2005, before the subprime mortgage crisis hit, and only eight of the county’s 34 ZIP codes saw an increase in foreclosure activity.

Cordova North (38016) had $31.3 million of foreclosure inventory value at the end of the year, the highest in the county. Fannie Mae continues to hold the most properties in foreclosure inventory with 522 properties valued at $70 million.

“I think residential foreclosure are going to pick up this year into 2013,” said Cleo Stevenson, regional appraiser with Synovus Bank. “I also think we’ll see an uptick in higher-end foreclosures, too.”

On the home construction front, 670 new home permits were filed last year, down 11 percent from 2010. The average permit amount totaled $232,745.

The top builder in 2011 was Regency Homebuilders who filed 169 permits averaging $224,222.

Meanwhile, local commercial sales in 2011 totaled 726, up 11 percent from 656 sales during the previous year. Last year tallied the most commercial sales in one year since 2008, averaging 60 sales and $66.6 million per month.

CRE sales averaged $1.1 million in 2011 and totaled $799 million in sales volume, compared to 2010’s average sales price of $847,558 and total sales volume of $556 million.

The largest commercial transaction was the $45 million sale on June 30 of the Preserve at Forest Creek Apartments in Southeast Shelby County. Oakhaven/Parkway Village’s 38118 ZIP code had the most sales with 62 valued at $87.5 million.

Vacant land topped the sales category with 171, up 12.5 percent from 2010. Retail sales were up 24 percent with 139 totaling $119 million. Industrial sales were up 6 percent with 92 totaling $148 million. Office sales were up 21 percent with 94 total.

Multifamily sales were up 14 percent from 2010 and had the most revenue of any property type with 92 sales totaling $298 million.

Bank sales accounted for only 7 percent of all last year’s commercial sales with 50 totaling $51.8 million. The total number of commercial bank sales, however, was up 4 percent from 2010.

It’s that inconsistency and inability to see a trend month to month that makes it hard to regain footing, Stevenson said. A real challenge right now for appraisers on both the residential and commercial side is the lack of guidelines in place.

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

PROPERTY SALES 100 375 3,773
MORTGAGES 63 202 2,481
BUILDING PERMITS 392 651 8,607
BANKRUPTCIES 38 117 2,021