The Shelby County housing market continues to improve with 1,407 home sales recorded in October, up 36 percent from the 1,034 sales tallied in October 2011.
And year-to-date home sales activity is up 18 percent, with 12,585 sales recorded through October, according to real estate information company Chandler Reports, www.chandlerreports.com.
Landis Foy, managing broker and vice president of Crye-Leike Realtors Inc.’s Quail Hollow office, said his office has seen an increase every month so far this year, and he anticipates the momentum to carry on.
“Because our office is the largest in the Mid-South, it gives you a pretty good idea of overall what’s going on in the market because we sell everywhere and not in one particular area,” Foy said. “In doing this over 40 years, it seems that the residential real estate market is one of the first industries into a recession and we’re one of the first out. If that holds true, then I do expect it to continue.”
Average home sales prices were up 1 percent for October to $123,644. Total sales volume reached $174 million, a 38 percent uptick from October 2011.
Nineteen of the 32 available ZIP codes within the county had year-over-year increases in average sales prices. Germantown East’s 38139 led the county in average sales price with $389,473, and Collierville’s 38017 saw the most sales, with 98 transactions.
Foy said prices will continue to climb up because of the shortage of listing inventory on the market – a substantial difference from where levels were just a year ago.
“Lawrence Yun, chief economist for the National Association of Realtors, made a comment several years ago that the builders weren’t building anymore, the developers weren’t developing anymore, and when things start getting better, they’re going to get caught flat footed where the existing property will be the only thing on the market,” Foy said. “There will be a shortage, so prices will start to go up. That would be I would think exactly where we are right now.”
What’s more, Chandler Reports data show that the average foreclosure amount is creeping upwards. The average price of a bank sale was $68,371, up 14 percent from October 2011.
Thomas Murphree of Hackmeyer Realty and a Memphis Area Association of Realtors director said bank sale prices being up are encouraging.
“Some of the banks are beginning to put some money into these homes and do some slight improvements before they put them on the market,” Murphree said. “That’s improved their marketability, it’s certainly improved the price, and it’s had a positive effect on the market.”
Twenty-two percent of home sales in October, or 314 units, were bank sales, up 21 percent from last year. Year-to-date bank sales are up 13 percent from 2011.
Short sale activity also appears to be on the upswing. A short sale is a house that is being sold for less than is owed against it. The buyer negotiates with the mortgage lender to take less than the outstanding remaining balance for the lender to release the lien and allow it to be sold.
“Short sales are important for lenders, it minimizes their loss,” Murphree said. “It typically is much better for the market as far as values are concerned than a foreclosure is.”
The last report from the Mortgage Bankers Association shows 9 percent of loans in Tennessee are delinquent. While that’s down from the peak of 11 percent in 2009, a lot of delinquent loans could foreclose over the next couple of years and impact the local market.
Foy said his office has seen a lot more short sales this year than foreclosures.
“I would guess that’s because of the mortgage companies really not wanting the property and their being eager to work with short sales to make something work,” Foy said. “It just seems like that’s going to be a part of our market for the next year or more, just working through folks and getting them out of things on short sales.”
Conversely, nonbank (or traditional) home sales in October totaled 1,093, a 41 percent increase from October 2011. Nonbank sales averaged $139,523, a 2 percent dip from the same month last year. Year to date, however, average price of a nonbank sale is up 1 percent to $145,093.
Meanwhile, the new housing market continues to gain momentum. New home sales were up 29 percent with 84 sales recorded compared to 65 in October 2011. The average sales price of a new home was up 16 percent to $257,061.
Year to date, new home sales are up 3 percent and average sales prices are up 16 percent. Arlington’s 38002 ZIP code had the most new home sales for the month with 23 total averaging $239,870, followed by Collierville’s 38017 with 20 sales averaging $330,797.
There were 1,323 existing homes sold in October, a 37 percent increase from October 2011. The average price of an existing home was flat year over year at $115,173, but total sales volume saw a 37 percent jump to $152.4 million.
Chandler Reports is a division of The Daily News Publishing Co. Inc.