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VOL. 35 | NO. 19 | Friday, May 13, 2011

Rental market overshadows April sales

By Bill Lewis

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Home sales tumbled in April in much of the Nashville area as would-be buyers, frustrated by the difficulty of qualifying for a mortgage loan or unable to sell their existing house before buying another one, increasingly gave up and became renters.

“The rental market is crazy,” says Marcie Sweet, a Realtor with Keller Williams Realty.

April home sales in Nashville dipped 20.4 percent compared to a year ago, according to a market survey by Chandler Reports. Prices remained stable, however, which indicates that sellers were not willing to offer steep discounts. Last month, 773 houses were sold in Davidson County for an average price of $179,247. In April 2010, 971 homes were sold for an average price of $179,124.

In Wilson County, sales declined 24.3 percent but prices rose almost 8 percent. In April 2010, 177 houses were sold at an average price of $179,324. Last month, there were 134 sales. The average price was $193,511.

Williamson County’s housing market showed the greatest strength, with sales rising 22.6 percent and the average price increasing 9.9 percent. A total of 304 homes found new owners in April 2011 at an average price of $377,193. A year ago there were 248 sales at an average price of $343,275.

A number of factors are turning prospective buyers into renters:

• Mortgages can be hard to get, with some lenders requiring unprecedented amounts of documentation proving a borrower’s income, job security and credit worthiness. It’s a reaction to the so-called “no-doc,” or no-documentation, loans that encouraged fraud and contributed to the housing crisis. But now those requirements seem to be discouraging qualified home buyers, Sweet says.

“It’s better (than allowing no-documentation loans), but you have to wonder where they’re coming from,” she says of lenders’ requirements.

• The market is “locked.” Many potential buyers can’t purchase their next home until they sell the one the already own. For people already living in the area, that means delaying the purchase of a move-up home. For people moving to the area for job opportunities, renting may be the only option.

“I am extremely busy and 100 percent leased on over 50 houses. I recently rented two houses in Nolensville one week after they became available for $300 more per month per house than I was getting from the previous tenant,” says real estate investor Bruce McNeilage, who owns rental properties across the region.

“I am getting dozens of phone calls and emails each time I put a house on line when they are available. Many people are coming from out of state for job transfers,” he adds.

• Unemployment and the economy in general have damaged the financial prospects of many potential homeowners, leaving them unable to buy a house. But even people who have lost their home to foreclosure or a short sale have to live somewhere. They are becoming renters.

“I also get the people that have been through bankruptcy and need a few years to repair their credit but have good incomes (of) $100,000-plus. Many have expressed an interest in buying once their credit clears up. Many ask to do a lease purchase,” McNeilage says.

• Unrealistic appraisals are hurting short sales, which are an important part of today’s housing market, Sweet says.

Parks Properties Realtor Alice Garner says she believes today’s reluctant renters will eventually re-enter the home-buying market.

“I think they are going to turn into buyers down the road. People renting don’t want to be renting,” Garner says.

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TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
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