VOL. 133 | NO. 47 | Tuesday, March 6, 2018
Home Sweet Home
By Patrick Lantrip
Almost every facet of the Shelby County housing market showed improvement or promise in 2017, and the stellar year saw a new record high for average home sales price and a historic low number foreclosures.
Three real estate panelists – Jason Woods, Dan Butler and Gary Thompson – gave their take on the market at Chandler Reports’ 2017 Year-in-Review Seminar held Thursday, March 1, at the Memphis Botanic Garden. It was hosted by The Daily News and The Memphis News publisher Eric Barnes.
In addition to 2017’s average home sales price of $165,644, which outpaced last year’s record high by 5 percent, foreclosures, or bank-owned sales, were down 24 percent from last year and every ZIP code in the county enjoyed an average sales price increase.
“I had my record year last year in volume,” Jason Woods, a branch manager at Community Mortgage and 2018 president of the Mortgage Bankers Association of Memphis, said. “Rates started a little high last year at the beginning of the year, tapered off and went back down.”
Moderator Eric Barnes, left, Jason Woods, Dan Butler and Gary Thompson discuss the residential real estate market at Chandler Reports’ Year-in-Review Seminar. (Daily News/Patrick Lantrip)
Dan Butler, business development officer at CrestCore Realty LLC, said his company is seeing prices climb due to no shortage of demand from outside investors.
“Investors are coming from all over the world,” Butler said. “California probably accounted for half of the investors and the other half is from out of the country – Israel, Australia, New Zealand, places like that.”
Gary Thompson, vice president of Boyle Investment Co., said development and homebuilding are getting stronger as well.
“We’re starting to see a lot more activity on the new-home construction side,” Thompson said. “The headwinds of that I would say were affordable lots, which is the difficulty that we’re all having now.”
In 2007 lot supply was 10,599, but more than 10 years later it’s down to 4,789.
While the average price of home-new sales was the highest on record in 2017 at $340,216, the 915 new-homes starts during the year was actually down 9 percent from 2016 and the 947 new homes in inventory was down 1 percent from a year ago.
Thompson said that in addition to the shortage of lots, weather had a noticeable effect on the number of houses being developed.
Jason Woods, from left, with Community Mortgage, Dan Butler with CrestCore Realty LLC and Gary Thompson with Boyle Investment Co. were panelists at this year’s Chandler Reports’ Year-in-Review Seminar. (Daily News/Patrick Lantrip)
“There was 122 (days of rain) last year, so if you’re trying to do dirt work, if you get any amount of measurable rain, with our soil, it stops you,” Thompson said. “So nearly every third day we were getting rain, so it was just very hard to get in a rhythm.”
The impacts of a rising number of out-of-town investors looking to capitalize of the affordability of Memphis’ housing market was also a topic at the seminar.
In 2017, more than 40 percent of residential sales were investor purchases. Some feel that is having a negative impact on the housing inventory.
However, Shelby County Trustee David Lenoir, who attended the seminar, said he was most concerned about the exit strategies of these out-of-town investors in the market.
“When they go to sell, it’s going to put pricing pressure on the inventory,” Lenoir said. “But at the end of the day we want responsible property owners. I really don’t care where they live.”
Commercial real estate sales were also discussed at the Chandler seminar, which echo many of the same trends as the residential side.
Though average commercial sales prices were down 5 percent from last year, 2017 saw the most recorded sales since 2007.
On the retail side, massive mixed-use and adaptive reuse projects, such as the Crosstown Concourse, Bakery Development in the Edge District and Lake District in Lakeland, defined the commercial real estate market in 2017 and should continue to be the trend into 2018.
Wrapping up, the panelist was asked to give his prediction for 2018.
“The demand is just so high, I think that we’re just going to have to shift investor expectations coming into Memphis, because they are going to have to take a lesser return if they want to keep buying in Memphis,” Butler said.
On the construction side, Thompson said that 2018 should be a good year if the developers can get the houses on the market, while Woods spoke about the future of interest rates.
“In the past week and a half, rates probably went up three quarters of a point, and that is tremendous,” Woods said. “But going forward, I don’t think it’s going to stop people from buying. Rates are still historically low compared to what we were in 2006 and 2007.”