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VOL. 42 | NO. 29 | Friday, July 20, 2018

New construction builds rare Midstate buyers’ market

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A Nashville real estate broker joined a relocating couple last week in their search for a home in the area. While they knew they needed to be close to their place of employment, there was no other criterion. They have no children, no pets and no preference as far as attached, unattached or yard size.

While showing them properties all over town, her takeaway was that the long-awaited rise in inventory is not among existing houses but in new construction.

Inventory has risen from 8,876 in April to 9,511 in May to 11,087 in June, the result of new construction dominating both single-family houses and apartments.

Information listed in Realtracs reveals that there are 591 single-family homes constructed in 2018 that are on the market. Sales of houses built in 2018 are averaging 122 per month, leaving a five-month supply of listed properties.

What those numbers do not include is the number of homes under construction, a number that seems to dwarf those of completed inventory.

As for condominiums, there are 96 listed that were built in 2018 with an average of 19 per month closing. That’s a five-month supply, and the National Association of Realtors deems a six-month supply even ground between buyers and sellers with neither having an edge.

With all of the houses being built, the table is set to tilt to the buyer’s side, a rarity during the past five years.

To further grasp the impact of the availability of newness, add the 617 active listings of homes built in 2017 to the 591 homes built in 2018 that are on the market. That total is 1,208.

With absorption of 120 per month, that leaves a 10-month supply of new homes, definitely signaling a buyer’s market.

The same holds true for condominiums. There are 134 condos built in 2017 on the market. That number, when added to the 96 built in 2018, reaches 230 with 19 units closing per month. That’s a 12-month supply, once again a market in favor of the buyer.

Sale of the Week

Real estate brokers in the Nashville area have been inundated by friends, acquaintances and clients wishing to cash in on the area real estate boom.

“If you ever see a good deal,” they offer, “Let me know. I have some extra cash lying around and I would love a flip or a great investment.”

Grace Clayton recently listed one of the original Townhomes of Fredericksburg, unit No. 1 to be exact, and it is the perfect example of a great investment. Grace listed the condo on May 31 and had it under contract by June 4, not an unusual feat in this market,

What is not that common is that Grace gave birth to her daughter, Anne Fleming, 13 days later and closed this sale 19 days after that. Diapers are not cheap.

Grace Clayton is the niece of her principal broker Neal Clayton, and there is little doubt that young Anne will be pushing real estate signs into the ground as soon as she is out of her onesies.

The Fredericksburg condo is an example of how to get rich slowly. Most who attempt to gain wealth rapidly find that method comes in handy on April 15 when they are able to deduct the loss.

Original investors in Fredericksburg paid $149,500 for the 1,678-square-foot homes in 2001. This unit sold for $201,000 in 2005 and $230,000 in 2007 to the seller in the most recent sale.

This year, Grace Clayton listed the unit for $307,500 and sold it after only four days of realty gestation.

With three bedrooms, two full baths and one half bath, Furlong (Kintar) Qiao spotted the condo and beat the others to the punch. Qiao would be a helpful Scrabble word were it not a proper noun. Qiao hails from Mossy Oak Properties and was able to finagle $2,000 in closing costs from the seller.

In her comments, Clayton noted the condo is “minutes from any restaurant you could want” and only a “hop, skip, and a jump” from Interstate 65.

To recap, one way to get rich in Nashville-area real estate is to buy low, meaning a low price point in an established area that commands an affordable rent.

With rates as low as they are, permanent fixed rates loans are attractive, even for investor loans. The allow the renter to pay the loan down and the market to appreciate over time.

If the property is in an area that has a significant increase in value, cash out of one and utilize the 1031 tax free property exchange and repeat the process. While investing, ignore the temptation to buy the higher-priced properties in any given neighborhood.

There is a saying floating around town that states: “Sell to the masses and eat with the classes. Sell to the classes and eat with the masses.”

Keep properties that are affordable to the masses.

Richard Courtney is a licensed real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at

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