» Subscribe Today!
The Power of Information
Home
The Ledger - EST. 1978 - Nashville Edition
X
Skip Navigation LinksHome > Article
VOL. 35 | NO. 28 | Friday, July 15, 2011

Rich getting richer? Look deeper at the data

Print | Front Page | Email this story

There have been numerous reports in the media that the middle class is shrinking -- if not vanishing -- from the population of the United States, and that the gap is widening between the upper class and the lower class.

There is the suggestion, or observation, that the US is becoming a country of “haves” and “have-nots.” An NPR story reported that CEO pay was up 23 percent since 2009, while middle class wage earners were down a percent.

In Nashville, there is evidence that upper end sales are faring better than those in the median prices.

The Greater Nashville Association of Realtors (GNAR) reported last week that sales for June 2011 were down 16 percent from the sales recorded in June 2010. In the same period, sales of more than $1 million were up 11.6 percent. That could be interpreted that Nashville sales support the theory that the gap is widening. However, the drop in unit sales overall reflects 2,031 homes, while the sales over $1 million totaled only 19 in June, 2011 as compared to 17 in June 2010 and is a small segment of the overall market.

It should be noted that prices per square foot in the $1 million range rose from $191 per square foot in 2010 to $223 per square foot in 2011, an increase of 16.7 percent. The average sales price increased from $1,265,769 to $1,602,128, or an increase of 26.5 percent while area wide the median price fell 17 percent, a differential of 43 percent.

However, in order to determine the effect of the recession, a consideration of the data from 2007, Nashville’s peak, should be considered. As has been cited by Chamber of Commerce president Ralph Schultz, the Nashville area is late to enter into recessions and early to depart. Such has been the case in the most recent recession.

As many real estate markets began to crumble in 2004 and 2005, Nashville continued on its path of steady growth. This growth continued into 2006 and well into 2007, before succumbing in the fourth quarter of 2007.

As for the rich getting richer, that is not the case in the Nashville area, at least until the recent turn. In 2007, with the market peaking, homes over $1 million were selling for $251 per square foot, 10 percent higher than the most recent sales which are up 17 percent. To recap, sales in the $1 million range are regaining their value, but are not where they were in 2007. If this positive trend continues, upper end homes should reach break even of their values in 2007 by the third quarter of 2012.

There is more positive news in the GNAR numbers for all homeowners, and that is that pending sales are up over 10 percent for June, 2011 versus June 2010. Pending sales represent properties under contract that have had all of the contingencies removed and should, therefore, close. In many cases, sales close that were never categorized as pending, so the number is even more encouraging.

The first time homebuyers’ tax credit expired at the end of July 2010 and inflated the sales figures for more than a year as the program expired once and was extended by the Congress. For the first time in almost two years, sales data will reflect what may be considered normal activity when August numbers are released.

Upper end sales are up and gaining strength in pricing and the midrange sales are increasing without the assistance of the federal government. Is that light we see at the end of that tunnel? Seems so.

Richard Courtney is a residential real estate broker with Pilkerton Realtors and the author of Come Together: the Business Wisdom of the Beatles and can be reached at richard@richardcourtney.com.

Follow us on Facebook, Twitter & RSS:
Sign-Up For Our FREE email edition
Get the news first with our free weekly email
Name
Email  
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