VOL. 127 | NO. 46 | Wednesday, March 07, 2012
Housing Increase Marred by Bank Sales
By Sarah Baker
Local home sales posted a 36 percent increase in February, but many of those sales were executed by banks and investors.
Shelby County saw 997 home sales last month, compared to February 2011’s 735 sales, according to real estate information company Chandler Reports, www.chandlerreports.com.
Almost half – 46 percent – of residential sales in Shelby County sold for less than $50,000, driven mostly by bank (or foreclosure) sales and investor activity.
Bank sales made up 31 percent of total home sales with 312 recorded, compared to 228 during the same month a year ago. Bank sales averaged $61,811 for the month, a 21 percent plunge from February 2011’s averages.
“Unfortunately, what I’m seeing and hearing is that there’s going to be another big round of foreclosures to come,” said Wendy McNeil, broker with Keller Williams Realty. “That’s not going to help anybody. And of course, the devaluation of the dollar is not helping any market across the board – not just real estate, but our whole economic system.”
And because nontraditional home sales such as foreclosures and short sales are predicted to rise, seasoned agents like Regina Hubbard of ERA Legacy Realty are reinventing their personal real estate business and sharpening their skills.
“One of my goals this year is to become … extremely knowledgeable in short sales,” Hubbard said. “Two of the listings I did just over the past couple of weeks will both be short sales. Right now, economists … are saying about 35 percent of our transactions will be short sales this year. As a Realtor, we’ve got to have knowledge and have a handle about how to make those things work.”
Plenty of positives also emerged from last month’s data. February’s home sales increased 8 percent from January’s 924. And 2012 has shown a 21 percent improvement through the first two months. Total sales revenue was up 13 percent from February 2011 with $97.4 million, compared to $86.5 million last year.
But McNeil isn’t convinced that last month’s boost is indicative of the remainder of the year.
“There’s a huge disparity between the Realtors that are doing business and those that are not doing a lot of business,” McNeil said. “2011 was the worst year to date for real estate. Looking at all of the economic indicators and not just looking at real estate by itself, I think we’ve still got a long way to go.”
One gauge of the state of local real estate can be seen in February’s weak average home sales prices. That category fell 17 percent to $97,704 from the prior year and was also down 11 percent from January.
Frayser (38127) had the most home sales with 68, followed by 64 in Raleigh (38128). Collierville (38017) had the highest revenue with $10.7 million across 40 sales. Home sales in Eads (38028) posted the highest average sales price, with three averaging $364,483.
Of the county’s 34 ZIP codes, areas with a 25 percent or more decrease in home sales prices included: North Memphis (38107), Westwood (38109), Rhodes College (38112), East Central/Poplar Perkins (38117), Southeast Shelby County (38125) and Germantown East (38139).
McNeil said the housing crisis is affecting every homeowner, no matter what demographic or income level.
“It doesn’t matter whether you’re talking about people that are making $12 an hour or people that are making $250,000 a year. It doesn’t matter if it’s a $50,000 house or a $500,000 house, the economic situation hits people across the board,” McNeil said. “I’ve been in my home for 15 years and I have no equity and it’s basically due to all of the foreclosures around me. It’s just devastating.”
On the plus side, nonbank (or traditional) sales posted an increase – up 35 percent from February 2011 – with 685 total recorded. But the average sales price in that category saw a decrease too, to $114,053 last month from $135,509 in February 2011.
But houses at inexpensive price points are not always negative, Hubbard said, especially on the buyer’s behalf.
“It’s a great time to buy for a buyer because they can get a super value,” Hubbard said. “The sellers, on the other hand, may not see it that way. But it’s about working through the foreclosures that are still out there.”
New home sales saw a 19 percent drop-off with 38 recorded for the month compared to 47 during February 2011. Sales prices in that category averaged $219,925 and totaled $8.4 million.
Conversely, existing home sales reached 959 last month, a 39 percent increase from 688 during February 2011. Existing Shelby County home sales averaged $92,861 in February and totaled $89 million.
Regardless of one’s preference of new or existing homes, Hubbard and other real estate practitioners stand by the mantra that now is the best time to buy.
“I was reading an article by Warren Buffet and he said if he could, he would buy up 1 million residential properties across the country because there’s no better investment right now,” Hubbard said. “That’s the way we look at the market too.”
Chandler Reports is a division of The Daily News Publishing Co. Inc.