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VOL. 46 | NO. 20 | Friday, May 20, 2022

Don’t misjudge deceptive signs of slowing market

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Has the Midstate real estate market slowed? This is a question asked by potential buyers hoping the answer is “yes.” And there are some signs that point in that direction.

Don’t be fooled.

Last week, the house at 4317 Wallace Lane sold for $4 million, $100,000 more than list price. And it sold in mid-month in its first day on the market.

In normal times, such a sale might receive good placement in the Wall Street Journal. In 2022 Nashville, some might think it should have sold for more and the fact that it didn’t is a sign the market is crashing.

No, this is not the real estate market spiraling downward. That would be the stock market. In fairness, the stock market needed a correction. It will rebound someday. The housing market in Nashville only corrects itself in Recessions, and we might be headed there.

As far as Nashville real estate goes, now is not the time to anchor down.

While scads of houses sell for hundreds of thousands of dollars more than list price, many are selling at list price, slightly below or slightly above, the higher prices resulting from three years of bidding-war sales that are now the comps – comparable sales – on which the new prices are based.

The Wallace sale is a good example, selling for $625 per square foot. The husband-and-wife team of Franklin and Lana Pargh, both stars with Compass, listed the house at a price that benefited from the last two years of real estate wildness.

Jake Griffin of Village, realizing the freneticism was built into the pricing from past sales, offered just enough to get the buyers their house without wrecking their pocketbook. The house, in keeping with current sales in the area, sold for much less than a similar house two blocks away in Belle Meade would have.

A look to the past is in order to help understand the higher prices of this real estate culture:

In 2018, houses on Wallace were selling for $319 per square foot. By 2019, the prices had jumped to $374 per square foot. Last year, that figure had risen to $562 per square foot. This house went for $625.

Prices in that area will continue to rise, but not with the alacrity of 2018-2022. Or will they?

Many sellers are now listing prices based on the appreciation that occurred in the past and are disappointed when their properties do not bring hundreds of thousands of dollars more than asking. Some now take for granted that appraisal contingencies and financing contingencies are things of the past, as are typical inspection contingencies.

Sellers no longer need sweat whether or not the house will appraise at the exorbitant – and it is – price or if the buyers will seek tens of thousands of dollars in repairs. All of these are indications of a buyers’ market, and Nashville remains in that state, regardless of whether houses are selling for more than list price.

One scenario not to be considered in determining whether buyer or sellers rule is new construction sold before completion.

For example, 6105 Gardendale, which sold for $3.6 million after being listed by new-construction guru Becca Sempkowski. Veteran agent Fiona King got the house – built by Baird Graham, highly regarded for his business acumen and quality of construction – under contract for her client in February and closed last week.

By locking in, the buyer need not worry about Putin, interest rates or the stock market. The fact that the house did not sell for more than list was not in play as it was listed in order to sell.

At $700 per square foot, it’s more expensive than most homes in the area. The last upper-end house to sell on Gardendale was 6204 Gardendale at $1,246,500 in a multiple-offer scenario. That property sold for the “outrageous” price of $305 per square foot.

Interest rates may climb and fall, but home prices in Nashville continue to rise. Pay no attention to how much above list the houses are selling. The prices are loaded.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty, LLC and can be reached at richard@richardcourtney.com.

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PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0